Growth Stocks
Although growth stock picks can be highly volatile, they can 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, and could keep growing for years or decades.
And keep in mind that we focus on growth stocks, which have a good long-term history and favourable prospects. We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades.
There’s room for growth stock investing in your portfolio, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
Make better stock picks when you read this FREE Special Report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and More.
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We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification. Still, investing internationally remains riskier than investing in North America. With stocks markets around the globe, you may face language barriers, uncertain investor-protection laws, and in some cases a less pronounced commitment to openness, fairness and other qualities we tend to take for granted in established markets. One of the best ways to make it easier to profit on foreign markets is with American Depositary Receipts (ADRs). An American Depositary Receipt is an investment unit for foreign companies that trade on a U.S. stock market. These units can represent fractions of shares, whole shares, or multiple shares in the foreign company. ADRs can help you simplify your international investing by letting you buy foreign shares on U.S. exchanges without the complications of buying or selling on a foreign exchange, in a foreign currency....
ENERFLEX LTD. $14.35 (Toronto symbol EFX; TSINetwork Rating: Extra Risk)(403-387-6377; www.enerflex.com; Shares outstanding: 78.7 million; Market cap: $1.1 billion; Dividend yield: 2.4%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators.
On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the three months ended March 31, 2015, Enerflex’s revenue gained 43.0%, to $475.3 million from $332.4 million a year earlier. Earnings per share jumped sharply, to $0.29 from $0.05.
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On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the three months ended March 31, 2015, Enerflex’s revenue gained 43.0%, to $475.3 million from $332.4 million a year earlier. Earnings per share jumped sharply, to $0.29 from $0.05.
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TOROMONT INDUSTRIES LTD. $31.87 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.5 million; Market cap: $2.5 billion; Dividend yield: 2.1%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.
The company completed the spinoff of Enerflex Ltd. (see right) in 2011. Shareholders received shares of both the new Toromont Industries and Enerflex.
In the three months ended March 31, 2015, revenue rose 9.1%, to $340.2 million from $311.7 million a year earlier. Earnings gained 8.1%, to $20.1 million, or $0.26 a share, from $18.6 million or $0.24. The first quarter is typically Toromont’s slowest because of winter shutdowns in the construction industry.
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The company completed the spinoff of Enerflex Ltd. (see right) in 2011. Shareholders received shares of both the new Toromont Industries and Enerflex.
In the three months ended March 31, 2015, revenue rose 9.1%, to $340.2 million from $311.7 million a year earlier. Earnings gained 8.1%, to $20.1 million, or $0.26 a share, from $18.6 million or $0.24. The first quarter is typically Toromont’s slowest because of winter shutdowns in the construction industry.
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RESTAURANT BRANDS INTERNATIONAL $41.07 (New York symbol QSR; TSINetwork Rating: Average) (212-333-3810; www.rbi.com; Shares outstanding: 467.0 million; Market cap: $19.2 billion; Dividend yield: 1.0%) is the world’s thirdlargest fast-food operator, after McDonald’s and Yum Brands, with 14,387 Burger King outlets and 4,724 Tim Hortons locations in 100 countries.
Excluding one-time items, Restaurant Brands earned $0.18 a share in the three months ended March 31, 2015, up 38.5% from $0.13 a year earlier. Sales crept up to $932.0 million from $931.6 million, but that’s because the high U.S. dollar cut the contribution from Restaurant Brands’ overseas operations. On a constant-currency basis, sales gained 10.6%.
Same-store sales rose 5.3% at Tim Hortons, thanks to new menu items like Philly steak and cheese and crispy chicken sandwiches. Burger King’s same-store sales rose 4.6%, also thanks to new products, such as a spicy BLT sandwich, and special promotions.
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Excluding one-time items, Restaurant Brands earned $0.18 a share in the three months ended March 31, 2015, up 38.5% from $0.13 a year earlier. Sales crept up to $932.0 million from $931.6 million, but that’s because the high U.S. dollar cut the contribution from Restaurant Brands’ overseas operations. On a constant-currency basis, sales gained 10.6%.
Same-store sales rose 5.3% at Tim Hortons, thanks to new menu items like Philly steak and cheese and crispy chicken sandwiches. Burger King’s same-store sales rose 4.6%, also thanks to new products, such as a spicy BLT sandwich, and special promotions.
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AMAZON.COM $423.86 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk)(206-266-1000; www.amazon.com; Shares outstanding: 465.7 million; Market cap: $196.4 billion; No dividends paid) continues to expand its Amazon Prime service.
Amazon recently formed an alliance with JetBlue that will let Prime members stream movies and TV shows through the airline’s in-plane Wi-Fi system to their mobile devices at no extra cost. They can also listen to over one million songs. Non-members can also access the service for a small fee.
The company launched Prime in 2005. For $99 a year, members get two-day shipping on all of their purchases. U.S. members also get three additional free services: streaming from Amazon Instant Video, streaming from Prime Music and cloud photo storage with Prime Photos.
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Amazon recently formed an alliance with JetBlue that will let Prime members stream movies and TV shows through the airline’s in-plane Wi-Fi system to their mobile devices at no extra cost. They can also listen to over one million songs. Non-members can also access the service for a small fee.
The company launched Prime in 2005. For $99 a year, members get two-day shipping on all of their purchases. U.S. members also get three additional free services: streaming from Amazon Instant Video, streaming from Prime Music and cloud photo storage with Prime Photos.
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AGT FOOD & INGREDIENTS $28.73 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231- 1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $669.37 million; Dividend yield: 2.1%) earned $0.42 a share in the quarter ended March 31, 2015, up 162.5% from $0.16 a year earlier. Revenue gained 23.7%, to $385.2 million from $311.3 million. The increases came from recent acquisitions and higher processing activity.
The company recently agreed to pay a total of $26.7 million for the assets of two firms: West Central Road & Rail Ltd. and Prairie Processing (1989) Ltd. These properties, which include five loading sites and a processing facility in Saskatchewan, should let AGT ship more crops and boost its efficiency. The company expects to complete these purchases in June 2015.
AGT Food & Ingredients is a buy.
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The company recently agreed to pay a total of $26.7 million for the assets of two firms: West Central Road & Rail Ltd. and Prairie Processing (1989) Ltd. These properties, which include five loading sites and a processing facility in Saskatchewan, should let AGT ship more crops and boost its efficiency. The company expects to complete these purchases in June 2015.
AGT Food & Ingredients is a buy.
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BMTC GROUP $16.25 (Toronto symbol GBT; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 43.1 million; Market cap: $799.9 million; Dividend yield: 1.5%) recently received shareholder approval for its plan to simplify its capital structure by moving from two share classes to one. As a result, it has converted all of its class A (one vote per share) and B shares (20 votes per share) into a single class of common shares (one vote per share).
The common shares trade on the Toronto exchange under the new GBT symbol.
Meanwhile, BMTC earned $59,000, or nil per share, in the quarter ended March 31, 2015, compared to a loss of $1.5 million, or $0.03 a share, a year earlier. Sales rose 2.9%, to $149.3 million from $145.1 million. Same-store sales gained 1.6%.
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The common shares trade on the Toronto exchange under the new GBT symbol.
Meanwhile, BMTC earned $59,000, or nil per share, in the quarter ended March 31, 2015, compared to a loss of $1.5 million, or $0.03 a share, a year earlier. Sales rose 2.9%, to $149.3 million from $145.1 million. Same-store sales gained 1.6%.
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WESTJET AIRLINES $26.90 (Toronto symbol WJA; TSINetwork Rating: Extra Risk)(1- 877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $3.5 billion; Dividend yield: 1.8%) continues to benefit as lower oil prices cut its fuel costs. Fuel typically accounts for a third of the airline’s operating expenses.
In the three months ended March 31, 2015, WestJet’s earnings per share gained 58.0%, to $1.09 from $0.69. Revenue rose 4.0%, to $1.08 billion from $1.04 billion.
The company’s load factor fell to 81.6% from 83.1% (load factor is the percentage of available seats occupied by paying passengers). However, revenue from other sources jumped 63.9% after WestJet began charging a $25 fee for each checked bag on its domestic and U.S.-bound routes in the fourth quarter of 2014. It also added new planes to its fleet, increasing its capacity by 4.7%.
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In the three months ended March 31, 2015, WestJet’s earnings per share gained 58.0%, to $1.09 from $0.69. Revenue rose 4.0%, to $1.08 billion from $1.04 billion.
The company’s load factor fell to 81.6% from 83.1% (load factor is the percentage of available seats occupied by paying passengers). However, revenue from other sources jumped 63.9% after WestJet began charging a $25 fee for each checked bag on its domestic and U.S.-bound routes in the fourth quarter of 2014. It also added new planes to its fleet, increasing its capacity by 4.7%.
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TEMPUR SEALY $60.78 (New York symbol TPX; TSINetwork Rating: Speculative)(800-878-8889; www.tempursealy.com; Shares outstanding: 61.0 million; Market cap: $3.8 billion; No dividends paid) completed its $1.3- billion purchase of rival Sealy in 2013. This was a major acquisition for Tempur Sealy (formerly Tempur- Pedic), but it has let the company diversify into traditional spring-coil beds.
In the three months ended March 31, 2015, Tempur Sealy’s earnings rose 4.6%, to $34.1 million from $32.6 million a year earlier. Per-share earnings gained 3.8%, to $0.55 from $0.53, on more shares outstanding. Excluding the effect of a higher U.S. dollar, earnings per share jumped 20%.
Sales gained 5.4%, to $739.5 million from $701.9 million. North American sales (80% of the total) rose 7.5%, but international sales (20% of total revenue) fell 2.6%.
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In the three months ended March 31, 2015, Tempur Sealy’s earnings rose 4.6%, to $34.1 million from $32.6 million a year earlier. Per-share earnings gained 3.8%, to $0.55 from $0.53, on more shares outstanding. Excluding the effect of a higher U.S. dollar, earnings per share jumped 20%.
Sales gained 5.4%, to $739.5 million from $701.9 million. North American sales (80% of the total) rose 7.5%, but international sales (20% of total revenue) fell 2.6%.
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WYNDHAM WORLDWIDE $86.49 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 120.0 million; Market cap: $10.4 billion; Dividend yield: 1.9%) is one of the world’s largest hospitality companies, with 7,670 franchised hotels worldwide.
Wyndham also manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 109,000 vacation-rental properties in 100 countries.
In the three months ended March 31, 2015, Wyndham’s revenue rose 5.8%, to $1.26 billion from $1.19 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped increase its occupancy rate by 0.6%.
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Wyndham also manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 109,000 vacation-rental properties in 100 countries.
In the three months ended March 31, 2015, Wyndham’s revenue rose 5.8%, to $1.26 billion from $1.19 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped increase its occupancy rate by 0.6%.
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