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TSX Stocks in the Financial Sector: Which Ones Will Outperform?

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Written by Ambrose O'Callaghan at The Motley Fool Canada

The S&P/TSX Composite Index was down 150 points in early afternoon trading on May 25. Meanwhile, the S&P/TSX Capped Financial Index was down just shy of 1% in the same trading session. Today, I want to look at some of my favourite TSX stocks to target in the financial sector. These equities have a shot at overperforming in the weeks and months ahead. Let’s jump in.

Here’s why I’m still loving this undervalued TSX stock

Manulife Financial (TSX:MFC) is a Toronto-based company that provides financial products and services in Asia, the United States, and around the world. Shares of this TSX stock have dropped 2.4% However, Manulife stock is still up 3.4% in the year-to-date period. Investors who want to see more can play with the interactive price chart below.

In the first quarter, Manulife reported net income attributed to shareholders of $1.4 billion – up $0.1 billion compared to the previous year. Moreover, core earnings rose 6% on a constant currency basis to $1.5 billion or 11% to $0.79. Asia APE sales rose to $1.2 billion compared to $1.1 billion in the first quarter of fiscal 2022. Meanwhile, Asia’s new business value hit $372 million, which was up marginally from the prior year.

Shares of this TSX stock currently possess a very favourable price-to-earnings ratio of 8.7. Manulife offers a quarterly dividend of $0.365 per share. That represents a strong 5.7% yield.

Don’t sleep on this under-the-radar equity that could outperform expectations

Intact Financial (TSX:IFC) is based in Toronto and provides property and casualty insurance products to individuals and businesses in North America, the United Kingdom, and around the world. This TSX stock is down 1.9% over the past month. Its shares are up 2.1% so far in 2023.

This company unveiled its first quarter fiscal 2023 earnings on May 10. Intact reported 4% growth in operating premiums written. Meanwhile, net operating income attributable to common shareholders also jumped 4% to $537 million. Operating direct premiums written suffered a slide in its U.K. and International segment while Canada and the U.S. delivered operating direct premiums written growth of 4% and 15%, respectively.

Intact Financial last had an attractive P/E ratio of 15 at the time of this writing. Meanwhile, it currently offers a quarterly distribution of $1.10 per share, which represents a 2.2% yield.

One more TSX stock that could make you rich this decade

Goeasy (TSX:GSY) is the third and final TSX financial stock I’d look to snatch up in the final days of May. This Mississauga-based company provides non-prime leasing and lending services under the easyhome, easyfinancial, and LendCare brands to Canadian clients. Its shares have surged 15% over the past month. The stock is still down 1.2% in the year-to-date period.

In Q1 2023, goeasy achieved loan growth of 58% to $124 million. Moreover, the company reported total revenue of $287 million – up 24% compared to the previous year. Adjusted diluted earnings per share (EPS) climbed 14% to $2.72.

This TSX stock possesses a favourable P/E ratio of 10. Goeasy also offers a quarterly dividend of $0.96 per share, representing a 3.6% yield. The company has delivered nine consecutive years of dividend growth, which makes this promising growth stock a Canadian dividend aristocrat.

The post TSX Stocks in the Financial Sector: Which Ones Will Outperform? appeared first on The Motley Fool Canada.

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Fool contributor Ambrose O'Callaghan has positions in Goeasy. The Motley Fool recommends Intact Financial. The Motley Fool has a disclosure policy.