The fast-food business is generally associated with inexpensive food and plain décor. It is rarely associated with healthy eating. But one U.S. chain has adopted a higher quality approach, so far with success.

CHIPOTLE MEXICAN GRILL (New York symbol CMG; www.chipotle.com) is a Denver-based Mexican-restaurant chain. The company charges slightly higher prices than fast-food chains, but it offers higher-quality food, including naturally raised meat, and better decor and service.

In the three months ended September 30, 2011, sales rose 24.1%, to $591.9 million from $476.9 million a year earlier. The company’s restaurants attracted more customers during the quarter, and it raised its prices. That pushed up same-restaurant sales by 11.3%. As well, Chipotle opened 32 new outlets. Earnings per share rose 24.5%, to $1.93 from $1.55.

New natural food restaurant has “a line out the door every day”

Chipotle now has 1,163 locations, including the ShopHouse Southeast Asian Kitchen test restaurant it opened in Washington, D.C., in September 2011. ShopHouse sells meat made from naturally raised animals and buys vegetables and other ingredients—including garlic, lemongrass, ginger, turmeric and galangal (blue ginger)—locally.

The company says the ShopHouse restaurant has been successful, with “a line out the door every day.” It is already planning to open a second location.

Chipotle trades at nearly 44 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems.

In the latest issue of Stock Pickers Digest, we examine whether Chipotle can continue to increase its following among health-conscious baby boomers in the fickle and competitive U.S. restaurant market. We conclude with our clear buy-hold-sell advice.

If you’re looking for growth stocks in sectors with fast-developing trends that have the potential for gains of 50% or more in 6 months or less you should subscribe to Stock Pickers Digest.

The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. What’s more, you can save $50.00 off regular annual subscription rate. Click here to learn how.

This week, one Inner Circle member asked for an assessment of a company that at times has been one of Canada’s most impressive growth stocks, but has also seen some sharp declines in its shares, as it did in December.

Q: Pat: I currently hold a significant portfolio position of Gildan Activewear. At current levels, does Gildan look attractive? Any views? Thanks in advance.

A: Gildan Activewear Inc., (symbol GIL on Toronto; www.gildan.com), makes and sells T-shirts, fleece sweatshirts and sweatpants, sport shirts, underwear and socks in a variety of weights, sizes, colours and styles. Its customers are in Canada, the U.S., Europe and other countries.

Gildan makes most of its products from 100% cotton, blended cotton and polyester. It doesn’t add designs to its clothes; instead, it sells them to wholesale distributors as blanks. The distributors then sell Gildan’s clothing to screen printers and embroiderers who add their own images.

The company competes with Fruit of the Loom Inc., Hanesbrands Inc., Delta Apparel Inc. and Anvil Knitwear Inc.

In its fiscal 2011 fourth quarter, which ended October 2, 2011, Gildan’s revenue rose 30.6%, to $481.8 million from $368.9 million a year earlier. (All figures in U.S. dollars.) However, earnings fell 14.6%, to $48.5 million, or $0.40 a share, from $56.8 million, or $0.47 a share. That mainly reflects a sharp rise in the price of cotton.

Growth stocks: Gildan has lower earnings forecast for 2012

Gildan’s shares fell 31% on December 1, 2011, when the company announced its latest results. The lower earnings were part of the reason for the drop, but it was mostly because the company lowered its earnings forecast: it now expects to lose $0.40 a share in the first quarter of fiscal 2012.

That’s because the company’s customers are drawing down their inventories and holding off on restocking. As well, Gildan’s profit margins have shrunk, because it has been forced to cut its prices to clear out higher-cost inventory (made from cotton purchased at higher prices).

In addition, the company now expects to earn just $1.30 a share in fiscal 2012, compared to $1.97 a share in fiscal 2011.

Gildan’s $208 million of long-term debt is just 9.0% of its market cap. The shares yield 1.5%.

One of Gildan’s key risk factors is that it sells what is basically a commodity product. Although it has moved most of its production to low-cost countries, such as Honduras and the Dominican Republic, it is still vulnerable to competitors that make their products in other low-wage countries, such as China or Bangladesh.

In the Inner Circle Q&A, Pat looks at Gildan’s near-term prospects for profit margin improvement and higher revenue. He also considers this growth stock’s long-term outlook in light of the fact that cotton prices have retreated significantly since last March. He concludes with his clear buy-hold-sell advice.

Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away.

Today’s tip: “There are 2 fundamental things you should know about making growth stock picks.”

Growth stocks are companies whose earnings growth has been above the market average, and is likely to remain above average. It is often the case that these firms pay small dividends or none at all. Instead, they invest their cash flow in promoting their growth.

Although these stocks can be highly volatile, they often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, for years or decades.

Here are 2 fundamental factors that will help you make winning growth stock picks—and avoid mistakes that can kill your profits:

1. Know the difference between momentum stocks and growth stocks: It’s very easy to confuse growth stocks with momentum stocks. Like growth stocks, momentum stocks often move up faster than the market averages. But momentum stocks attract a different kind of investor. Growth-stock investors are in for the long haul, while momentum investors aim to profit from short-term trades. Momentum investors are particularly keen to jump in on a so-called “positive earnings surprise.” That’s when a company outdoes brokers’ earnings estimates.
   
   Momentum investors see a “negative earnings surprise” (or lower-than-expected earnings) as a sell signal. They use a number of formulas to make buy and sell decisions, but all come down to “buy on strength and sell on weakness.” So they tend to pile into the same stocks all at once, and the gains that follow are something of a self-fulfilling prophecy.
   
   The trouble is that when the stock’s rise falters, momentum investors also try to get out as a group. The trouble is, there are never enough buyers to accommodate them. That leads to violent fluctuations in the stock’s price.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

2. Value stocks can lower your portfolio’s volatility: Most successful investors hold some growth stock picks and some value stocks at any given time, depending on where they discover the best opportunities.
   
   Value stocks are stocks trading lower than their fundamentals suggest. They are perceived as undervalued, and have the potential to rise. Many technology stocks, for instance, start out as growth stocks and transition into value stocks. One company that appears to be making the transition, for example, is security and anti-virus specialist Symantec, symbol SYMC on Nasdaq (a stock we analyze in our Stock Pickers Digest newsletter).
   
   Together, growth stocks and value stocks can form a winning combination. A growth stock can be a top performer while the company is growing. However, a single quarter of bad earnings can send it into a deep, though often temporary, slide. Value stocks can test your patience by moving sluggishly for months, if not years. But they can make up for it by rising sharply when investors discover their true value.

Our advice: If you invest as we advise—by spreading your investments out across the five main economic sectors, investing mainly in well-established companies and staying away from stocks in the broker/public relations limelight—you will automatically have some growth stocks and some value stocks.

That helps you achieve good results while reducing volatility. But in the end, we think the relative amounts you invest in growth and value stocks should be secondary to your portfolio’s diversification and overall investment quality.

If you are looking for advice on the best growth stocks – the ones that will grow into value stocks – you really should have a subscription to Stock Pickers Digest.

You can save $50.00 off the regular rate with our introductory subscription (exclusively for new subscribers). The latest issue gives you our very latest analysis—and clear buy/sell/hold advice—on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. Click here to take advantage of our special subscription offer.

As the post-Christmas shopping season opens, we look at one of the most interesting growth stocks in the retail industry. This stock began by allowing shoppers to buy and sell items from the comfort of their home computers, but it has since aggressively added to the array of online transactions it handles.

EBAY INC. (Nasdaq symbol EBAY; www.ebay.com) operates the world’s largest online auction website, with over 99 million users in 39 countries. The company charges users fees to list and sell their goods through its websites.

The company also operates several other websites, including StubHub (live event ticket sales), Shopping.com (comparison shopping) and Rent.com (apartment and house rentals).

In all, these websites account for 55% of eBay’s overall revenue. The company gets a further 35% of its revenue by processing online financial transactions, mostly through its PayPal subsidiary.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

Growth stocks: eBay earnings jumped even without Skype

The remaining 10% of this growth stock’s revenue comes from GSI Commerce Inc., which eBay bought for $2.4 billion in June 2011. GSI, which has over 500 business clients, sells services that help its customers process orders from their websites and increase their online sales.

In 2009, eBay sold 70% of Skype, which lets users make free voice and video calls over the Internet. eBay received $2.0 billion for this interest, and received an additional $2.3 billion for its remaining 30% stake when software giant Microsoft Corp. (Nasdaq symbol MSFT) completed its purchase of Skype in October 2011. Even without Skype’s full contribution, eBay’s earnings jumped 35.3% in 2010, to $1.8 billion, or $1.36 a share.

eBay is investing heavily in technology that makes it easier for users of smartphones, tablet computers and other mobile devices to access its websites. These investments will also help PayPal securely process payments from mobile devices.

The stock trades at 14.3 times the $2.10 a share that eBay will probably earn in 2011 and 13.3 times the company’s likely 2012 earnings of $2.25 a share. These are low multiples in light of the company’s large share of the fast-growing e-commerce market.

In the latest edition of Wall Street Stock Forecaster, we assess eBay’s chances of continued success in a fiercely competitive and rapidly changing industry and its plans to continue raising its spending on technology and buying other companies. We conclude with our clear buy-hold-sell advice.

You can get Wall Street Stock Forecaster, with our advice on U.S. growth stocks and value stocks written especially for Canadian investors, along with 5 in-depth Special Reports FREE, as well as FREE access to our weekly Email/Telephone Hotlines (which keep you up to date on our U.S. stock market investments between issues) when you subscribe now. And as a new subscriber you can save $50.00 on an introductory subscription. Click here to get started right away.

Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.

A question this week touched on the well-established trend of overseas outsourcing. Specifically, an Inner Circle member asked about a leading specialist in the field with rising sales and profits and a large store of cash.

Q: Could I please have your opinion on Cognizant Technologies? Thank you.

A: Cognizant Technology Solutions (symbol on CTSH on Nasdaq; www.cognizant.com), helps businesses outsource their information technology functions. Cognizant’s services are provided by professionals who work with the client and in conjunction with development centres that are mainly located in India. Cognizant’s workforce includes over 130,000 employees.

With offshore outsourcing, companies in the U.S. and other developed countries can send their information technology-related work to countries like India, which have political stability and lower labour costs.

This is particularly common with, for instance, the help desks of software providers and cellular phone companies. High-speed Internet connections and the falling cost of long-distance telephone calling make it possible for information technology outsourcing to be carried out anywhere in the world.

Growth stocks: Cognizant looks for growing demand to offset stiffer competition

Cognizant gets its revenue from customers in the following industries: financial services (42%), healthcare services (26%), retail/manufacturing/logistics (18%) and other (14%).

In the three months ended September 30, 2011, this growth stock’s revenue rose 31.6%, to $1.6 billion from $1.2 billion. Earnings rose 11.5%, to $227.1 million, or $0.75 a share, from $203.7 million, or $0.68 a share. Cognizant holds cash of $2.3 billion, or $7.44 a share, and has no debt.

Demand for Cognizant’s services will likely continue to rise across most industries and geographic regions (especially emerging markets). In addition, Cognizant will likely continue to add new services, including through small acquisitions.

However, wages are rising in India, and competition is intensifying from global rivals, including IBM, Tata, Accenture and others.

You can see Pat’s assessment of this company’s opportunities and risks and his buy-hold-sell analysis on Cognizant Technologies — and other growth stocks — in this week’s Inner Circle Q&A.

Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.

This week, there was a question about the world’s largest maker of generic drugs. While an aging population is good for drug stocks, there are still a number of thorny issues to consider, such as patent regulations and increasing competition, as Pat observed in his response.

Q: Pat: Can I have your view on Teva Pharmaceutical? Thank you.

A: Teva Pharmaceutical Industries Ltd. (ADRs, symbol TEVA on Nasdaq; www.tevapharm.com), is the world’s largest generic drug maker.

Israel-based Teva makes and sells more than 500 generic drugs in North America, which accounts for 50% of its sales. Europe provides 31% of Teva’s sales and the rest of the world accounts for 19%.

Teva also develops and markets some of its own name-brand drugs, including Copaxone, the second-highest-selling multiple-sclerosis drug, and Azilect, a Parkinson’s drug. Together, these two drugs accounted for 23% of the company’s 2010 sales.

Teva is one of the most successful firms in the competitive generic-drug business. It regularly wins first-to-file applications on drugs whose U.S. patents are expiring.

The company continues to grow by acquisition. In August 2010, it paid $5.2 billion for Ratiopharm, Germany’s second-largest generic drug maker. As a result, Teva is now Europe’s largest generic-drug company.

Drug stocks: Teva faces competition with its key multiple sclerosis drug

Teva’s shares have moved down from $57 in early 2011, mainly due to concerns over rising competition to its multiple sclerosis drug Copaxone. Rival drugmaker Novartis AG recently started selling Gilenya, a new oral multiple sclerosis drug. Because it’s in pill form, this drug is much more convenient to take than Copaxone, which must be injected.

However, doctors may be reluctant to switch patients to a new drug if they are responding well to Copaxone. As well, Teva is now developing its own oral multiple-sclerosis therapy, called laquinimod, as well as a low-dose form of Copaxone.

Drug stocks: Teva aims to sell more non-prescription drugs

Meanwhile, Teva has over 180 generic drug applications awaiting FDA approval. The company also has a number of late-stage drugs under development, including treatments for women’s health, respiratory conditions and wound care.

Teva also aims to sell more non-prescription drugs. It recently formed a joint venture with Procter & Gamble Co. (New York symbol PG) that will make and sell over-the-counter drugs outside North America. Procter will own 51% of this new business, called PGT Healthcare, and Teva will own the other 49%.

You can see Pat’s recommendation on Teva Pharmaceuticals in this week’s Inner Circle Q&A. In his buy-hold-sell analysis, he examines the likely effects of long-term demographic trends on generic drug sales. He also looks at how greater competition might affect profit margins for Teva and other generic drug makers.

Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

The fast food industry is notoriously competitive. It can give rise to some powerful growth stocks—but it is not always easy for companies to keep growing. Today we examine the world’s largest pizza takeout chain to see whether it can sustain the success it has had in 2011.

DOMINO’S PIZZA $32.21 (New York symbol DPZ; www.dominos.com) is the world’s largest chain of pizza stores that offer takeout and delivery. The company operates 9,541 stores in the U.S. and over 70 other countries. Franchisees run most of these outlets.

In the three months ended September 11, 2011, Domino’s earnings per share jumped 33.3%, to $0.36 from $0.27. Sales rose 8.3%, to $376.3 million from $347.4 million. U.S. same-store sales rose 3.0%. International same-store sales jumped 8.1%.

International sales have risen for 71 consecutive quarters, and should keep growing. Domino’s plans to add 300 stores a year outside the U.S., and has lots of room to expand in Europe, Latin America and Asia.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

Growth stocks: Domino’s shares rose 130% over the past year

Domino’s continues to boost its sales by aggressively promoting its “New Inspired Pizza.” The company has changed its main pizza recipe by adding new tomato sauces and cheeses, as well as seasoned crusts.

Domino’s long-term debt is still very high, at $1.5 billion, or 75% of its market cap. However, the company continues to steadily pay down its debt, and it has no major loans coming due until 2014.

The shares have risen 130.0% for us over the past year. They now trade at 17.7 times the company’s forecast 2012 earnings of $1.82 a share.

In the latest edition of Stock Pickers Digest, we look at whether Domino’s innovations in new products will help it maintain its record of success—and whether its shares can go higher. We conclude with our clear buy-hold-sell advice.

If you’re looking for growth stocks with the potential for gains of 50% or more in 6 months or less, you should subscribe to Stock Pickers Digest.

The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. What’s more, you can get this issue ABSOLUTELY FREE. Click here to learn how.

This business publishes free daily newspapers for commuters in Toronto, Ottawa, Vancouver, Calgary and Edmonton. In April 2011, the joint venture launched new free papers in Winnipeg and London, Ontario.

Torstar recently paid $51.5 million to increase its stake in this business to 90%. This makes it easier for Torstar to launch new free commuter papers and integrate them with its web sites.

Torstar is a buy.

Heinz continues to expand overseas, while ConAgra prefers to focus on its domestic business. Both companies continue to cut costs and improve their efficiency.

Both strategies should help Heinz and ConAgra spur their longterm growth, and give them lots of room to keep raising their dividends. As well, both continue to trade at attractive multiples to earnings.

H.J. HEINZ CO. $53 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 321.0 million; Market cap: $17.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.heinz.com) makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and baby food. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales.

Heinz’s sales rose 18.9%, from $9.0 billion in 2007 to $10.7 billion in 2011 (fiscal years end April 30).

Earnings rose 16.6%, from $791.6 million in 2007 to $923.1 million in 2009. Earnings per share rose 21.8%, from $2.38 to $2.90, on fewer shares outstanding. Unfavourable foreign-exchange rates cut Heinz’s earnings to $914.5 million, or $2.87 a share, in 2010. In 2011, earnings rebounded to $991.9 million, or $3.08 a share.

The company’s sales continue to increase in fast-growing markets, like China and Brazil. It now gets two-thirds of its sales from outside the U.S.

Heinz continues to expand its international presence. Recently, it paid $165 million for privately held Foodstar, a leading soy sauce maker in China. In addition, Heinz recently bought 80% of Brazil’s leading maker of tomato pastes, sauces and condiments for $493.5 million.

Fast-growing markets such as China, India and Russia accounted for 16.2% of Heinz’s sales in fiscal 2011. The company aims to raise this to 25% by 2016, and eventually to 35% to 40%.

New packaging gives Heinz an edge

In addition to its international expansion, Heinz plans to spur its sales with innovative new products and packaging. For example, it recently replaced its fast-food ketchup packet with a new, easier-to-use plastic container called Dip & Squeeze. Major fast-food chains, like McDonald’s and Dairy Queen, have already switched to the new package. Consumers can also buy 10 packs of Dip & Squeeze ketchup in retail stores.

Heinz has also put together a new restructuring plan to further improve its profitability. Under this plan, the company will close five of its 81 factories and cut 3% of its workforce.

The restructuring will cost Heinz $0.35 a share. However, the plan should add $0.15 a share to its annual earnings, starting in fiscal 2013. These savings will help Heinz absorb rising costs for corn, wheat and other ingredients.

The company’s strong balance sheet will let it keep making acquisitions and investing in new products. Its long-term debt of $3.9 billion is a moderate 23% of its market cap. Heinz holds cash of $677.7 million, or $2.11 a share.

The company will probably earn $3.33 a share in fiscal 2011. The stock trades at 15.9 times that figure.

Heinz continues to raise its dividend annually. The current rate of $1.92 a share yields 3.6%.

Heinz is a buy.

CONAGRA FOODS INC. $25 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 414.5 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Average; www.conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn.

The company gets 65% of its sales from consumers. Businesses, such as restaurants, account for the remaining 35%.

The company’s sales fell 3.5%, from $12.0 billion in 2007 to $11.6 billion in 2008. That’s because ConAgra sold its commodity trading operations. Sales rebounded to $12.7 billion in 2009, but fell 5.1%, to $12.1 billion, in 2010. Sales rose to $12.3 billion in 2011, thanks to acquisitions and price increases.

Earnings fell from $1.35 a share (or a total of $683.8 million) in 2007 to $1.06 a share (or $518.7 million) in 2008. Earnings improved to $1.75 a share (or $761.0 million) in 2011.

Unlike Heinz, ConAgra prefers to focus on the U.S., which accounts for 90% of its sales. Recently, it tried to buy rival food company Ralcorp Holdings Inc. (New York symbol RAH) for $7.7 billion. Buying Ralcorp would have made ConAgra the third-largest packaged food maker in the U.S. However, ConAgra dropped its bid after Ralcorp moved ahead with its plan to spin off its cereals business.

Lower costs will support dividend

Meanwhile, ConAgra continues to cut costs, mainly by closing older plants, streamlining its distribution network and selling slow-growing, low-margin businesses. These savings will let it keep raising its annual dividend. The current rate of $0.96 yields 3.8%.

ConAgra’s long-term debt of $2.9 billion is a manageable 28% of its market cap. It holds cash of $1.1 billion, or $2.64 a share.

The company will probably earn $1.79 a share in fiscal 2012. The stock trades at 14.0 times that estimate.

ConAgra is a buy.

Technological advances can spur on some powerful growth stocks. However, when a company bases its future growth on the widespread adoption of a single technological breakthrough, it can also add risk.

Intuitive Surgical (Nasdaq symbol ISRG; www.intuitivesurgical.com) makes the da Vinci, a computerized surgical system.

Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This process is safer and less invasive than regular surgery, and helps cut a patient’s recovery time and post-operative discomfort. It also reduces scarring and the risk of infection.

In the three months ended September 30, 2011, Intuitive earned $122.4 million, or $3.13 a share. That’s up 41.3% from $86.6 million, or $2.20 a share, a year earlier. Revenue rose 29.7%, to $446.7 million from $344.4 million.

Pat McKeough's ValuVesting System generated a whopping 383.9% return since 1995 (164.1% above the 219.8% gain of the S&P/TSX) in one of the most volatile markets in history. That means if you had invested $100,000 in 1995, you would have $483,900 today! Click here to learn more about how you can profit from Pat McKeough's The Successful Investor newsletter.

Growth stocks: Intuitive Surgical continues high research spending

Revenue from replenishable supplies rose 37.9%. Intuitive gets almost 40% of its revenue from stable and steady sales of replacement parts, training and other services.

The company spends a high 8% of its revenue on research. Intuitive is debt-free, and holds cash of $1.9 billion, or $47.15 a share.

The company’s long-term outlook depends on more hospitals using robots to perform a wider range of surgeries. Intuitive continues to make vigorous marketing efforts to encourage this trend.

In the meantime, the stock has moved up substantially since the start of this year.

Our analysis of Intuitive Surgical in the latest edition of Stock Pickers Digest looks at whether or not the share price can continue to climb. It concludes with our clear buy-sell-hold advice on the stock.

If you’re looking for growth stocks with the potential for gains of 50% or more in 6 months or less, you should subscribe to Stock Pickers Digest.

The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. What’s more, you can get this issue ABSOLUTELY FREE. Click here to learn how.