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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MOLSON COORS BREWING CO. $76 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 193.0 million; Market cap: $14.7 billion; Price-to-sales ratio: 3.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.molsoncoors.com) reported that its worldwide beer volumes fell 1.3% in 2014. Its revenue also declined 1.4%, to $4.1 billion from $4.2 billion in 2013. If you disregard unfavourable currency exchange rates, revenue gained 0.3%.
The company continues to improve its efficiency. As a result, its earnings rose 5.7%, to $768.5 million from $727.1 million. Per-share earnings gained 4.6%, to $4.13 from $3.95, on more shares outstanding.
Molson Coors’ improving earnings let it cut its long-term debt to $2.3 billion (or 15% of its market cap) from $3.2 billion at the end of 2013. The company has also raised its dividend by 10.8%. The new annual rate of $1.64 yields 2.2%.
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The company continues to improve its efficiency. As a result, its earnings rose 5.7%, to $768.5 million from $727.1 million. Per-share earnings gained 4.6%, to $4.13 from $3.95, on more shares outstanding.
Molson Coors’ improving earnings let it cut its long-term debt to $2.3 billion (or 15% of its market cap) from $3.2 billion at the end of 2013. The company has also raised its dividend by 10.8%. The new annual rate of $1.64 yields 2.2%.
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DIAGEO PLC ADRs $118 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.8 million; Market cap: $74.1 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker whisky and Captain Morgan rum.
The company recently agreed to acquire the 50% of Don Julio tequila that it doesn’t already own from Casa Cuervo in exchange for its Bushmills Irish whisky business. Diageo will also get $408 million when it completes the deal later this year.
Gaining full control over Don Julio is part of Diageo’s plan to use premium brands to expand in emerging markets. It will use the cash to pay down its debt, which totalled 8.5 billion British pounds (1 pound = $1.93 Canadian) on December 31, 2014.
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The company recently agreed to acquire the 50% of Don Julio tequila that it doesn’t already own from Casa Cuervo in exchange for its Bushmills Irish whisky business. Diageo will also get $408 million when it completes the deal later this year.
Gaining full control over Don Julio is part of Diageo’s plan to use premium brands to expand in emerging markets. It will use the cash to pay down its debt, which totalled 8.5 billion British pounds (1 pound = $1.93 Canadian) on December 31, 2014.
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T. ROWE PRICE GROUP INC. $84 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 260.7 million; Market cap: $21.9 billion; Price-to-sales ratio: 5.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.troweprice .com) sells mutual funds and wealth management services.
In 2014, the company earned $1.23 billion, or $4.55 a share. That’s up 17.4% from $1.05 billion, or $3.90 a share, in 2013. Revenue gained 14.3%, to $4.0 billion from $3.5 billion.
On December 31, 2014, the company had a record $746.8 billion of assets under management, up 7.9% from $692.4 billion at the end of 2013. About 93% of that increase came from higher stock prices. The company’s fee income varies with the value of the assets it manages, so it gains from rising stock markets. Higher mutual fund sales (net of redemptions) supplied the remaining 7%.
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In 2014, the company earned $1.23 billion, or $4.55 a share. That’s up 17.4% from $1.05 billion, or $3.90 a share, in 2013. Revenue gained 14.3%, to $4.0 billion from $3.5 billion.
On December 31, 2014, the company had a record $746.8 billion of assets under management, up 7.9% from $692.4 billion at the end of 2013. About 93% of that increase came from higher stock prices. The company’s fee income varies with the value of the assets it manages, so it gains from rising stock markets. Higher mutual fund sales (net of redemptions) supplied the remaining 7%.
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VISA INC. $273 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 616.0 million; Market cap: $168.2 billion; Price-to-sales ratio: 13.2; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions.
In its fiscal 2015 first quarter, which ended December 31, 2014, Visa’s earnings rose 11.5%, to $1.6 billion from $1.4 billion a year earlier. Per-share earnings gained 15.0%, to $2.53 from $2.20, on fewer shares outstanding.
Revenue rose 7.2%, to $3.4 billion from $3.2 billion. The company gets half of its revenue from outside the U.S. Without the negative impact of currency exchange rates, revenue gained 9%. Visa processed 17.6 billion transactions in the quarter, up 10.1% from a year earlier.
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In its fiscal 2015 first quarter, which ended December 31, 2014, Visa’s earnings rose 11.5%, to $1.6 billion from $1.4 billion a year earlier. Per-share earnings gained 15.0%, to $2.53 from $2.20, on fewer shares outstanding.
Revenue rose 7.2%, to $3.4 billion from $3.2 billion. The company gets half of its revenue from outside the U.S. Without the negative impact of currency exchange rates, revenue gained 9%. Visa processed 17.6 billion transactions in the quarter, up 10.1% from a year earlier.
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FAIR ISAAC CORP. $84 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 31.4 million; Market cap: $2.6 billion; Price-to-sales ratio: 3.3; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. FICO Scores dominates this niche market. Fair Isaac also sells software that helps credit card issuers cut fraud and analyze cardholders’ spending patterns.
In its fiscal 2015 first quarter, which ended December 31, 2014, Fair Isaac’s revenue rose 2.8%, to $189.6 million from $184.3 million a year earlier.
The company saw higher sales at its applications division (66% of revenue) on increased licensing revenue from software that detects bank fraud. Sales of credit-scoring software and programs for analyzing large amounts of a business’s data were lower, mostly due to a big order in the year-ago quarter.
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In its fiscal 2015 first quarter, which ended December 31, 2014, Fair Isaac’s revenue rose 2.8%, to $189.6 million from $184.3 million a year earlier.
The company saw higher sales at its applications division (66% of revenue) on increased licensing revenue from software that detects bank fraud. Sales of credit-scoring software and programs for analyzing large amounts of a business’s data were lower, mostly due to a big order in the year-ago quarter.
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DUN & BRADSTREET CORP. $135 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 35.9 million; Market cap: $4.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.dnb.com) provides credit reports on over 240 million companies. Its clients use this information to make lending and buying decisions.
Credit reports supply 63% of Dun & Bradstreet’s revenue. The remaining 27% comes from other information products, such as software that helps businesses manage websites and customer data.
In 2014, revenue rose 1.7%, to $1.68 billion from $1.65 billion in 2013. All regions saw gains: North America (74% of revenue), up 1.2%; Europe (15%), up 4.1%; and Asia (11%), up 1.9%.
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Credit reports supply 63% of Dun & Bradstreet’s revenue. The remaining 27% comes from other information products, such as software that helps businesses manage websites and customer data.
In 2014, revenue rose 1.7%, to $1.68 billion from $1.65 billion in 2013. All regions saw gains: North America (74% of revenue), up 1.2%; Europe (15%), up 4.1%; and Asia (11%), up 1.9%.
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BROADRIDGE FINANCIAL SERVICES INC. $54 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 120.9 million; Market cap: $6.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada.
Without one-time items, Broadridge earned $39.9 million, or $0.32 a share, in its fiscal 2015 second quarter, which ended December 31, 2014. That’s up 27.9% from $31.2 million, or $0.25 a share, a year earlier. The company continues to add new clients and is doing a good job of holding on to existing ones. Revenue gained 10.4%, to $574.6 million from $520.6 million.
Broadridge typically makes half of its profits in its fourth quarter, which ends June 30. This is the busiest time for processing proxies and annual reports.
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Without one-time items, Broadridge earned $39.9 million, or $0.32 a share, in its fiscal 2015 second quarter, which ended December 31, 2014. That’s up 27.9% from $31.2 million, or $0.25 a share, a year earlier. The company continues to add new clients and is doing a good job of holding on to existing ones. Revenue gained 10.4%, to $574.6 million from $520.6 million.
Broadridge typically makes half of its profits in its fourth quarter, which ends June 30. This is the busiest time for processing proxies and annual reports.
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RESTAURANT BRANDS INTERNATIONAL INC. $43 (New York symbol QSR; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.1 million; Market cap: $20.1 billion; Price-to-sales ratio: 14.2; Dividend yield: 0.8%.; TSINetwork Rating: Average; www.rbi.com) took its current form on December 12, 2014, as a result of Burger King Worldwide’s (old symbol BKW) takeover of Tim Hortons Inc. (old symbol THI).
Restaurant Brands now has 14,372 Burger King restaurants and 4,671 Tim Hortons outlets in over 100 countries.
In the three months ended December 31, 2014, the company lost $514.2 million, or $2.52 a share, compared to a profit of $66.8 million, or $0.19, a year earlier. Without merger-related costs and other unusual items, gross earnings before depreciation, interest and taxes gained 23.1%.
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Restaurant Brands now has 14,372 Burger King restaurants and 4,671 Tim Hortons outlets in over 100 countries.
In the three months ended December 31, 2014, the company lost $514.2 million, or $2.52 a share, compared to a profit of $66.8 million, or $0.19, a year earlier. Without merger-related costs and other unusual items, gross earnings before depreciation, interest and taxes gained 23.1%.
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WAL-MART STORES INC. $84 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $268.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.walmart.com) gets about 60% of its sales from its 4,516 stores in the U.S., including 3,407 supercentres, which sell both groceries and general merchandise. Groceries now supply 56% of Wal-Mart’s U.S. sales.
In 1991, the company opened its first store outside of the U.S. through a joint venture with a Mexican retailer. Its international division (29% of total sales) now operates 6,290 stores in 26 countries.
The remaining 11% of Wal-Mart’s sales comes from its Sam’s Club warehouse stores. The company charges customers a $45 annual membership fee to shop at these stores, which sell a variety of goods at wholesale prices. There are currently 647 Sam’s Club stores in the U.S. and other countries.
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In 1991, the company opened its first store outside of the U.S. through a joint venture with a Mexican retailer. Its international division (29% of total sales) now operates 6,290 stores in 26 countries.
The remaining 11% of Wal-Mart’s sales comes from its Sam’s Club warehouse stores. The company charges customers a $45 annual membership fee to shop at these stores, which sell a variety of goods at wholesale prices. There are currently 647 Sam’s Club stores in the U.S. and other countries.
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Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster. Over 30 billion devices—including things like home thermostats and appliances—will be connected to the Internet by 2020....
