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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ALIMENTATION COUCHE-TARD $49.82 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 418.1 million; Market cap: $29.0 billion; Dividend yield: 0.4%) (All amounts except share price and market cap in U.S. dollars) operates 6,314 convenience stores throughout North America. Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand.
In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia.
In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations.
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In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia.
In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations.
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AURICO GOLD $4.15 (Toronto symbol AUQ; TSINetwork Rating: Speculative)(604-681-2802; www.auricogold.com; Shares outstanding: 250.0 million; Market cap: $1.0 billion; Dividend yield: 2.8%) has agreed to merge with Alamos Gold (symbol AGI on Toronto).
AuRico owns the Young- Davidson mine in northern Ontario, which holds as much as 5.6 million ounces of gold. The mine started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open pit to underground mining, which will sharply increase its costs.
Alamos owns the Mulatos mine in Mexico, but its main asset is its $358.0 million cash holding. The combined entity, called Alamos Gold, will use that cash to fund Young-Davidson, and boost the company’s gold output from 400,000 ounces this year to 700,000 in 2018.
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AuRico owns the Young- Davidson mine in northern Ontario, which holds as much as 5.6 million ounces of gold. The mine started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open pit to underground mining, which will sharply increase its costs.
Alamos owns the Mulatos mine in Mexico, but its main asset is its $358.0 million cash holding. The combined entity, called Alamos Gold, will use that cash to fund Young-Davidson, and boost the company’s gold output from 400,000 ounces this year to 700,000 in 2018.
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AGT FOOD & INGREDIENTS $28.09 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231-1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $656.1 million; Dividend yield: 2.1%) buys and processes a range of pulses—which include peas, beans, lentils and chickpeas—as well as other specialty crops.
Saskatchewan-based AGT owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa.
AGT has grown quickly in the past five years, with revenue rising 111.8%, from $642.1 million in 2010 to $1.36 billion in 2014. Before one-time items, it made $1.76 a share in 2014, up sharply from $1.09 in 2013.
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Saskatchewan-based AGT owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa.
AGT has grown quickly in the past five years, with revenue rising 111.8%, from $642.1 million in 2010 to $1.36 billion in 2014. Before one-time items, it made $1.76 a share in 2014, up sharply from $1.09 in 2013.
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ENCANA CORP. $15.20 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $11.6 billion; TSINetwork Rating: Average; Dividend yield: 2.3%; www.encana.com) produced 416,700 barrels a day (74% gas, 26% oil) in the three months ended December 31, 2014. That’s down 20.4% from 523,400 barrels a year earlier.
As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91.
Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion.
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As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91.
Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion.
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SONY CORP. ADRs $27 (www.sony.com) has started selling its new PlayStation 4 video-game console in China. The company has sold 20.2 million units since it launched the new version in November 2013. However, Chinese gamers tend to prefer playing on personal computers or mobile devices, so it is unclear if they will buy the PlayStation....
SHERWIN-WILLIAMS CO. $281 (www.sherwin-williams.com) earned $9.31 a share in 2014, up 24.6% from $7.47 in 2013. Sales rose 9.3%, to $11.1 billion from $10.2 billion. These gains are partly due to Mexican paint maker Comex’s U.S. and Canadian operations (including 314 stores), which Sherwin bought for $165 million in September 2013....
QUAKER CHEMICAL CORP. $83 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.3 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) began operating in 1918 and currently operates 34 plants in 21 countries. These facilities make lubricants and chemicals that keep mechanical parts from rusting.
This small-cap stock is riskier than many of our other recommendations, but Quaker has a long history of increasing its earnings— and dividends.
The company’s revenue rose 40.8%, from $544.1 million in 2010 to $765.9 million in 2014. That’s partly because it bought smaller firms that expanded its product lines and geographic reach.
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This small-cap stock is riskier than many of our other recommendations, but Quaker has a long history of increasing its earnings— and dividends.
The company’s revenue rose 40.8%, from $544.1 million in 2010 to $765.9 million in 2014. That’s partly because it bought smaller firms that expanded its product lines and geographic reach.
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KRAFT FOODS GROUP INC. $83 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 588.0 million; Market cap: $48.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) is merging with H.J. Heinz.
The new firm— The Kraft Heinz Company— will be the 5th largest food company in the world, with annual revenue of $28 billion.
Under the terms of the deal, Kraft shareholders will receive one share of the new firm for each share they currently hold. They will also receive a special dividend of $16.50 a share.
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The new firm— The Kraft Heinz Company— will be the 5th largest food company in the world, with annual revenue of $28 billion.
Under the terms of the deal, Kraft shareholders will receive one share of the new firm for each share they currently hold. They will also receive a special dividend of $16.50 a share.
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IDEXX LABORATORIES INC. $150 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 47.1 million; Market cap: $7.1 billion; Price-to-sales ratio: 4.8; No dividends paid; TSINetwork Rating: Average; www.idexx.com) earned $3.99 a share in 2014, up 14.7% from $3.48 in 2013. Sales rose 7.9%, to $1.5 billion from $1.4 billion.
These gains are mainly because veterinarians are buying more of Idexx’s equipment for detecting diseases in pets. That’s also spurring more demand for products vets must continuously replenish.
The company now sells its products in the U.S. directs to veterinarians instead of through distributors. That hurts its short-term growth, but should expand its future profit margins. However, the stock is expensive at 34.2 times the $4.38 a share that Idexx will probably earn in 2015.
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These gains are mainly because veterinarians are buying more of Idexx’s equipment for detecting diseases in pets. That’s also spurring more demand for products vets must continuously replenish.
The company now sells its products in the U.S. directs to veterinarians instead of through distributors. That hurts its short-term growth, but should expand its future profit margins. However, the stock is expensive at 34.2 times the $4.38 a share that Idexx will probably earn in 2015.
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HEWLETT-PACKARD CO. $32 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.8 billion; Market cap: $57.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Average; www.hp.com) is buying Aruba Networks (Nasdaq symbol ARUN), a maker of hardware and software that help businesses make their high-speed wireless networks faster and more secure.
Hewlett will pay $3.0 billion when it completes the purchase later this year. If you include the cash Aruba holds, the purchase price falls to $2.7 billion.
Hewlett-Packard is a hold.
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Hewlett will pay $3.0 billion when it completes the purchase later this year. If you include the cash Aruba holds, the purchase price falls to $2.7 billion.
Hewlett-Packard is a hold.
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