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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TEMPUR SEALY $55.01 (New York symbol TPX; TSINetwork Rating: Speculative)(800-878-8889; www.tempursealy.com; Shares outstanding: 60.9 million; Market cap: $3.4 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.
The purchase is also helping Tempur Sealy offset rising competition in its current business; the company makes and distributes mattresses and neck pillows made of its Tempur material, which conforms to the body to provide support and alleviate pressure points.
The purchase is also helping Tempur Sealy offset rising competition in its current business; the company makes and distributes mattresses and neck pillows made of its Tempur material, which conforms to the body to provide support and alleviate pressure points.
Competition remains high
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WYNDHAM WORLDWIDE $91.39 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 123.3 million; Market cap: $10.9 billion; Dividend yield: 1.5%) is one of the world’s largest hospitality companies, with 7,650 franchised hotels and over 661,000 rooms worldwide.
Wyndham also manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 107,000 vacation-rental properties in 100 countries.
In the three months ended December 31, 2014, Wyndham’s revenue rose 3.0%, to $1.23 billion from $1.20 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 push up its occupancy rate by 3.1%.
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Wyndham also manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 107,000 vacation-rental properties in 100 countries.
In the three months ended December 31, 2014, Wyndham’s revenue rose 3.0%, to $1.23 billion from $1.20 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 push up its occupancy rate by 3.1%.
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BROADRIDGE FINANCIAL SOLUTIONS $52.97 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 120.0 million; Market cap: $6.4 billion; Dividend yield: 2.0%)continues to hit new all-time highs after reporting strong quarterly results.
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.
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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.
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YAMANA GOLD $5.01 (Toronto symbol YRI; TSINetwork Rating: Speculative)(416-815-0220; www.yamana.com; Shares outstanding: 880.8 million; Market cap: $4.6 billion; Dividend yield: 1.5%) has decided to go ahead with building a $398.0-million mine at its Cerro Moro gold and silver property in Argentina. Production could begin as soon as late 2017.
The mine will produce an average of 102,000 ounces of gold and 5.0 million ounces of silver over its eight-year life—and its lifespan could be extended with further exploration drilling.
Yamana Gold is still a buy.
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The mine will produce an average of 102,000 ounces of gold and 5.0 million ounces of silver over its eight-year life—and its lifespan could be extended with further exploration drilling.
Yamana Gold is still a buy.
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CARFINCO FINANCIAL $10.96 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $281.1 million; Dividend yield: 2.7%) has rebounded closer to its takeover price of $11.25 a share after falling as low as $8.30 in January 2015.
In November 2014, Carfinco’s shareholders voted to accept a friendly $11.25-a-share takeover bid from Spain’s Banco Santander SA (ADR symbol SAN on New York).
Carfinco is confident the deal will go through, and the last two conditions were recently met: Spanish regulators granted their approval and Carfinco entered into an agreement to sell Persian Acceptance Corp., its U.S. subsidiary.
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In November 2014, Carfinco’s shareholders voted to accept a friendly $11.25-a-share takeover bid from Spain’s Banco Santander SA (ADR symbol SAN on New York).
Carfinco is confident the deal will go through, and the last two conditions were recently met: Spanish regulators granted their approval and Carfinco entered into an agreement to sell Persian Acceptance Corp., its U.S. subsidiary.
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INTACT FINANCIAL CORP. $90.64 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $11.9 billion; Dividend yield: 2.3%) is expanding in Western Canada by purchasing Canadian Direct Insurance from Canadian Western Bank (symbol CWB on Toronto) for $197 million. Canadian Direct offers home, auto and travel insurance, mainly in Alberta and B.C.
The acquisition also lets Intact expand its higherprofit- margin direct-to-consumer distribution channel. Direct distribution lets consumers get initial online quotes at any time and then use extended call centre hours to speak with—and purchase policies from— licensed insurance representatives.
In conjunction with this purchase, Intact plans to merge its Grey Power brand into its belairdirect brand to reduce the number of banners it offers. However, it will continue to offer Grey Power’s discount rates to drivers over the age of 50.
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The acquisition also lets Intact expand its higherprofit- margin direct-to-consumer distribution channel. Direct distribution lets consumers get initial online quotes at any time and then use extended call centre hours to speak with—and purchase policies from— licensed insurance representatives.
In conjunction with this purchase, Intact plans to merge its Grey Power brand into its belairdirect brand to reduce the number of banners it offers. However, it will continue to offer Grey Power’s discount rates to drivers over the age of 50.
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WESTJET AIRLINES $30.63 (Toronto symbol WJA; TSINetwork Rating: Extra Risk)(1- 877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $4.0 billion; Dividend yield: 1.8%) reports that its earnings per share jumped 34.6% in the three months ended December 31, 2014, to $0.70 from $0.52 a year earlier. Revenue rose 7.3%, to $994.4 million from $926.4 million.
Fuel makes up around a third of an airline’s operating expenses, and WestJet continues to benefit as its fuel costs drop along with oil prices.
The company is returning some of its higher profits to shareholders: it has just raised its quarterly dividend by 16.7% with the March 2015 payment, to $0.14 from $0.12. The stock now yields 1.8%.
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Fuel makes up around a third of an airline’s operating expenses, and WestJet continues to benefit as its fuel costs drop along with oil prices.
The company is returning some of its higher profits to shareholders: it has just raised its quarterly dividend by 16.7% with the March 2015 payment, to $0.14 from $0.12. The stock now yields 1.8%.
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CHIPOTLE MEXICAN GRILL $674.57 (New York symbol CMG; TSINetwork Rating: Speculative) (303- 595-4000; www.chipotle.com; Shares outstanding: 31.0 million; Market cap: $20.8 billion; No dividends paid) is a Denverbased Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service.
In the three months ended December 31, 2014, Chipotle’s sales jumped 26.7%, to $1.07 billion from $844.1 million a year earlier. Its restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 16.1%.
Chipotle opened 60 new outlets and now has a total of 1,783. It plans to add 190 to 205 more in 2015.
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In the three months ended December 31, 2014, Chipotle’s sales jumped 26.7%, to $1.07 billion from $844.1 million a year earlier. Its restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 16.1%.
Chipotle opened 60 new outlets and now has a total of 1,783. It plans to add 190 to 205 more in 2015.
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AMAZON.COM $373.37 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk)(206-266-1000; www.amazon.com; Shares outstanding: 464.4 million; Market cap: $174.3 billion; No dividends paid) is a major online retailer. The company gets about 25% of its sales from books, music and videos. Other products, including electronics, computer games and toys, make up the other 75%. Amazon Marketplace lets other companies sell their products through Amazon’s websites.
In the three months ended December 31, 2014, Amazon earned $0.45 a share. That was down 11.8% from $0.51 a share a year earlier, but it was much better than the consensus estimate of $0.24. Sales rose 14.6%, to $29.3 billion from $25.6 billion.
In early 2014, the company raised the price of its Amazon Prime free-shipping service to $99 a year from $79. This was the first increase since Amazon launched Prime in 2005.
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In the three months ended December 31, 2014, Amazon earned $0.45 a share. That was down 11.8% from $0.51 a share a year earlier, but it was much better than the consensus estimate of $0.24. Sales rose 14.6%, to $29.3 billion from $25.6 billion.
In early 2014, the company raised the price of its Amazon Prime free-shipping service to $99 a year from $79. This was the first increase since Amazon launched Prime in 2005.
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IAMGOLD $2.90 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.9 million; Market cap: $1.0 billion; No dividends paid) now holds over $800 million U.S. of cash and gold bullion after the sale of its Niobec niobium mine in Quebec’s Saguenay-Lac-Saint-Jean region.
IAMGold received $500 million U.S. for the sale of Niobec. It will get another $30 million U.S. when an adjacent deposit of rare earth elements goes into production.
The company’s big cash and gold holding puts it in a strong position to pay down its long-term debt of $641 million U.S. It could also expand its existing gold projects, pay dividends, buy back shares or make timely acquisitions from distressed sellers at low prices.
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IAMGold received $500 million U.S. for the sale of Niobec. It will get another $30 million U.S. when an adjacent deposit of rare earth elements goes into production.
The company’s big cash and gold holding puts it in a strong position to pay down its long-term debt of $641 million U.S. It could also expand its existing gold projects, pay dividends, buy back shares or make timely acquisitions from distressed sellers at low prices.
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