Power Corporation $31.55 – Toronto symbol POW

POWER CORPORATION $31.55 (Toronto symbol POW; SI Rating: Above average) is a diversified holding company. Power Corp. controls one of Canada’s largest mutual-fund companies, IGM Financial, and Great-West Lifeco, one of the largest life insurers. Power Financial, 66.4% held, is a holding company for Power Corp.'s financial assets, including 72.9% of Great-West Lifeco and 58.4% of IGM Financial. As well, Power Financial holds 50% of Parjointco, which in turn owns a 54.3% interest in Swiss-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste services) and Lafarge SA (cement and building materials). In the three months ended June 30, 2008, Power Corp.'s earnings excluding one-time items rose 3.5%, to $382 million or $0.82 a share, from $369 million or $0.79. Great-West Lifeco contributed $254 million to earnings and IGM Financial contributed $88 million. Power Corp.'s shares yield a high 3.7%, and the stock now trades at only 10.2 times this year’s forecast earnings. Like many holding companies, Power Corp. trades at a discount to the break-up value of its assets, currently estimated at 18%. That’s a plus, because you have more assets working for you. Power Corp.'s exposure to the U.S. liquidity crisis through companies such as AIG, Lehman Brothers and Washington Mutual is minimal. Power Corp. is still a safety-conscious buy.