Dykstra's Deep-in-the-Money Call: Manulife

Last week the company said its income fell by 11.9% in its first quarter and that CEO, Dominic D'Alessandro, will step down in May 2009. The firm expects to announce a successor by the end of this year. Its profits were $869 million, or 57 cents a share, shy of the $986 million, or 63 cents a share in the year-ago period. Manulife said the global equity market decline is to blame for its shortcoming this quarter.

Maybe so, but I like this company for a handful of reasons. It has $7.42 billion in operating cash flow and over $12 billion in cash on hand. Its debt is standing at $6.53 billion.

However, the most critical factor for me is the street's take on the stock. Right now, Manulife's been unfairly punished and that means there is an opening for us to take advantage of -- a key landscape for scooping up a win. It traded as high $39.63 last week, before it reported its numbers. But it was down after that , closing at $37.13 on Friday.

That leaves the stock trading much closer to the bottom of its 52-week range, which is $33.44 to $46.61. It achieved that peak in November.

The bottom line, this stock is undervalued and could provide a quick win. This morning, I will place limit order to buy 10 contracts of the January $30 calls (VICAF) for $7.90, or better. As a reminder, once the order is filled, I immediately place a good-till cancel (GTC) order to sell at $1.00 above the entry price. That way, we'll lock in a $1,000 win when the stock moves our way.

Always remember: Life is a journey, enjoy the ride.

Know What You Own: MFC operates in the life insurance industry, and some of the other stocks in its field include American International Group(AIG Quote - Cramer on AIG - Stock Picks), AXA(AXA Quote - Cramer on AXA - Stock Picks) and Allianz(AZ Quote - Cramer on AZ - Stock Picks). These stocks closed at $40.28, $36.36 and $19.94, respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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