Dynacor Group Inc. (TSX: DNG)
The World’s Publically Traded Processor of Artisanal Gold
The S&P/TSX Composite Index posted its strongest weekly performance in four months, gaining 3.3% this week to close at a record 36,381 on Friday. Yet for investors who sat out this rally, the sea of green on their screens has instead brought a wave of FOMO (Fear of Missing Out).
However, a record-high index doesn’t mean every stock has become expensive. Markets often rise first on the strength of a few heavyweight sectors, then broaden as investors discover companies whose earnings are improving faster than their valuations — and this second stage is often the golden window for patient investors to capture quality names.
Manulife Financial: Earnings Growth Meets Risk Reduction
Manulife Financial (TSX:MFC) is an insurance and wealth management giant with operations across Canada, Asia, and the United States. Its global footprint gives it multiple avenues for growth without relying solely on the Canadian borrowing market. Second-quarter core earnings rose 12% to C$1.9 billion, while core earnings per share increased 16%, and core return on equity reached 16.3% — indicating that the company is not merely expanding in scale, but also delivering improving returns on shareholder capital.
The balance sheet is also strengthening. Manulife has agreed to transfer the biometric risk on C$3.2 billion of long-term-care reserves to Munich Re. Upon completion, its three recent transactions will have reduced long-term-care risk sensitivity by a cumulative 24%, removing some of the uncertainty that has historically concerned the market. At a recent close of C$61.78, the annual dividend of C$1.94 per share yields 3.1%. The stock is not bargain-bin cheap, but better earnings and reduced legacy risk can continue to drive this Canadian blue-chip name higher.
Air Canada: Low Valuation Hides Earnings Catalyst Potential
Air Canada (TSX:AC) offers a more dramatic opportunity. As Canada’s largest airline, its business encompasses international routes, the Aeroplan loyalty program, and cargo services — all of which benefit from strong employment, consumer confidence, and robust travel demand. First-quarter revenue reached a record C$5.8 billion, while free cash flow hit C$1.6 billion.
The stock recently traded around C$26.58, near its 52-week high, yet still carries a price-to-earnings multiple of only about 10 times trailing earnings. Management has previously stated that demand remains resilient and expects that pricing strategies, hedging operations, and cost-control measures will offset the majority of higher fuel expenses. A strong earnings report could prompt investors to quickly re-evaluate this modest valuation. Of course, fuel prices, labour costs, debt burdens, and an economic slowdown remain significant risks, so I would keep this position smaller than that of Manulife.
Bottom Line
Taken together, Manulife Financial offers a steadier long-term compounding story suitable for gradual accumulation, while Air Canada presents a more opportunistic play that can be taken in smaller size before earnings — provided the investor can tolerate the associated turbulence. Waiting for both companies to remove every uncertainty may feel safer, but markets tend to charge a higher entry price once earnings improvements, risk reductions, and recovery trends become obvious to everyone staring at the same green screen.
