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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DREAM OFFICE REIT $25.82 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.9 million; Market cap: $2.8 billion; Dividend yield: 8.7%) (formerly Dundee REIT) owns and manages 24.3 million square feet of office and retail space in major cities across Canada.
In Western Canada, the real estate investment trust has 16% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 17% in suburban Toronto and 24% elsewhere. Its occupancy rate is 93.0%.
In the three months ended December 31, 2014, Dream Office’s revenue fell 1.6%, to $205.2 million from $208.4 million a year earlier. The trust sold four properties to Dream Industrial REIT (symbol DIR.UN on Toronto) for $33.0 million in September 2014. Dream Office owns 24.2% of Dream Industrial.
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In Western Canada, the real estate investment trust has 16% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 17% in suburban Toronto and 24% elsewhere. Its occupancy rate is 93.0%.
In the three months ended December 31, 2014, Dream Office’s revenue fell 1.6%, to $205.2 million from $208.4 million a year earlier. The trust sold four properties to Dream Industrial REIT (symbol DIR.UN on Toronto) for $33.0 million in September 2014. Dream Office owns 24.2% of Dream Industrial.
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CHEMTRADE LOGISTICS INCOME FUND $21.38 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics .com; Units outstanding: 68.5 million; Market cap: $1.5 billion; Dividend yield: 5.6%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products. Chemtrade converts these substances into useful chemicals, like sulphuric acid.
The company’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier.
That’s largely due to General Chemical, which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.
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The company’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier.
That’s largely due to General Chemical, which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.
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MAJOR DRILLING $7.07 (Toronto symbol MDI; TSINetwork Rating: Speculative)(1-866- 264-3986; www.majordrilling.com; Shares outstanding: 80.1 million; Market cap: $566.6 million; Dividend yield: 0.6%) reports that its revenue fell 2.8% in the three months ended January 31, 2015, to $69.8 million from $71.8 million a year earlier. The company lost $0.24 a share, compared to a year-ago loss of $0.16 a share.
In the latest quarter, Major’s profit margins fell sharply because it performed less highpriced specialized exploration drilling and more production-related drilling.
To conserve cash until commodity prices start to rebound and its customers increase their drilling, Major is cutting its semi-annual dividend to $0.02 a share from $0.10. That gives the stock a 0.6% yield.
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In the latest quarter, Major’s profit margins fell sharply because it performed less highpriced specialized exploration drilling and more production-related drilling.
To conserve cash until commodity prices start to rebound and its customers increase their drilling, Major is cutting its semi-annual dividend to $0.02 a share from $0.10. That gives the stock a 0.6% yield.
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MITEL NETWORKS $12.87 (Toronto symbol MNW; TSINetwork Rating: Extra Risk)(613-592-2122; www.mitel.ca; Shares outstanding: 100.1 million; Market cap: $1.3 billion; No dividends paid) develops and markets products centred on business telephone systems. This includes products that integrate land lines and mobile phones. The company also offers call centre and video conferencing products.
In the three months ended December 31, 2014, Mitel’s revenue jumped 108.1%, to $301.4 million from $144.8 million a year ago (all figures except share price and market cap in U.S. dollars). Most of the increase came from Aastra Technologies, which Mitel acquired in January 2014. Earnings per share rose 89.5%, to $0.36 from $0.19.
Mitel recently agreed to buy Mavenir Systems (symbol MVNR on New York) for $560 million U.S.
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In the three months ended December 31, 2014, Mitel’s revenue jumped 108.1%, to $301.4 million from $144.8 million a year ago (all figures except share price and market cap in U.S. dollars). Most of the increase came from Aastra Technologies, which Mitel acquired in January 2014. Earnings per share rose 89.5%, to $0.36 from $0.19.
Mitel recently agreed to buy Mavenir Systems (symbol MVNR on New York) for $560 million U.S.
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ACI WORLDWIDE $21.09 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative)(402-334-5101; www.tsainc.com; Shares outstanding: 114.9 million; Market cap: $2.4 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud. Clients include leading global retailers, plus two-thirds of the world’s 100 largest banks.
ACI’s industry-leading products continue to attract prominent clients. For example, the company provides the technology behind Apple Inc.’s new mobile payment system, called Apple Pay.
ACI’s revenue rose 17.5% in 2014 to $1.02 billion from $864.9 million in 2013. That was mainly due to contributions from acquisitions, including the purchase in August 2014 of Retail Decisions (ReD) for $205 million.
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ACI’s industry-leading products continue to attract prominent clients. For example, the company provides the technology behind Apple Inc.’s new mobile payment system, called Apple Pay.
ACI’s revenue rose 17.5% in 2014 to $1.02 billion from $864.9 million in 2013. That was mainly due to contributions from acquisitions, including the purchase in August 2014 of Retail Decisions (ReD) for $205 million.
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CIMAREX ENERGY $110.58 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.6 million; Market cap: $9.7 billion; Yield: 0.6%) plans to spend $900 million to $1.1 billion on exploration and development in 2015, down sharply from $1.9 billion in 2014.
The company has cut back its spending plans in response to lower oil and gas prices. It aims to fund its 2015 spending from cash flow and the $406 million of cash it holds. That way it can avoid taking on debt, even though its long-term debt of $1.5 billion is a low 15.5% of its market cap.
Even with the lower spending, Cimarex expects its production to rise between 3% and 8% over 2014 levels this year. If oil and gas prices rise later in 2015, it has the flexibility to increase its spending, which would also boost its production and cash flow.
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The company has cut back its spending plans in response to lower oil and gas prices. It aims to fund its 2015 spending from cash flow and the $406 million of cash it holds. That way it can avoid taking on debt, even though its long-term debt of $1.5 billion is a low 15.5% of its market cap.
Even with the lower spending, Cimarex expects its production to rise between 3% and 8% over 2014 levels this year. If oil and gas prices rise later in 2015, it has the flexibility to increase its spending, which would also boost its production and cash flow.
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AURICO GOLD $3.67 (Toronto symbol AUQ; TSINetwork Rating: Speculative)(604-681-2802; www.auricogold.com; Shares outstanding: 249.6 million; Market cap: $917.4 million; Dividend yield: 2.5%) operates the El Chanate gold mine in Mexico and the Young- Davidson gold project in northern Ontario. Young- Davidson started up in 2013, and will reach full production in 2016.
In the three months ended December 31, 2014, AuRico’s production jumped 23.0%, to 56,583 ounces from 46,017 ounces a year earlier. That increased its revenue by 40.2%, to $71.2 million from $50.8 million.
Cash flow per share was unchanged at $0.07 (all figures except share price and market cap in U.S. dollars). The company’s costs rose as it moved from open pit to underground mining at Young-Davidson. However, those costs should fall as it completes the mine’s new infrastructure.
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In the three months ended December 31, 2014, AuRico’s production jumped 23.0%, to 56,583 ounces from 46,017 ounces a year earlier. That increased its revenue by 40.2%, to $71.2 million from $50.8 million.
Cash flow per share was unchanged at $0.07 (all figures except share price and market cap in U.S. dollars). The company’s costs rose as it moved from open pit to underground mining at Young-Davidson. However, those costs should fall as it completes the mine’s new infrastructure.
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AMERIGO RESOURCES $0.34 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 173.7 million; Market cap: $59.0 million; No dividends paid) processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest underground copper mine. This rock comes from the mine’s current production and tailings from the nearby Colihues deposit. This contract runs at least through 2037.
Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
In the three months ended December 31, 2014, Amerigo’s copper production fell 7.4%, to 11.35 million pounds from 12.25 million a year earlier. Molybdenum output declined 11.8%, to 160,107 pounds from 181,464.
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Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
In the three months ended December 31, 2014, Amerigo’s copper production fell 7.4%, to 11.35 million pounds from 12.25 million a year earlier. Molybdenum output declined 11.8%, to 160,107 pounds from 181,464.
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SIERRA WIRELESS $43.46 (Toronto symbol SW; TSINetwork Rating: Extra Risk)(604-231-1100; www.sierrawireless.com; Shares outstanding: 31.9 million; Market cap: $1.4 billion; No dividends paid) makes modules that connect products to the Internet. This is known as machine-to-machine (M2M), or more generally as the Internet of Things.
Web-connected products can be remotely monitored—and potentially fixed—before they cause a breakdown. For example, makers of smart electricity meters, such as Itron, use the company’s modules to connect their products to the web. Sierra’s technology can also warn carmakers of possible defects developing in vehicles.
The company has grown quickly over the last five years, with revenue rising 53.2%, from $358.0 million in 2010 to $548.5 million in 2014 (all figures except share price and market cap in U.S. dollars). It made $0.63 a share in 2014, up sharply from $0.23 in 2013.
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Web-connected products can be remotely monitored—and potentially fixed—before they cause a breakdown. For example, makers of smart electricity meters, such as Itron, use the company’s modules to connect their products to the web. Sierra’s technology can also warn carmakers of possible defects developing in vehicles.
The company has grown quickly over the last five years, with revenue rising 53.2%, from $358.0 million in 2010 to $548.5 million in 2014 (all figures except share price and market cap in U.S. dollars). It made $0.63 a share in 2014, up sharply from $0.23 in 2013.
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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. This week’s U.S. pick comes from our advisory for more aggressive investors, Stock Pickers Digest.
Over 30 billion devices—including things like home thermostats and appliances—will be connected to the Internet by 2020.
That means you’ll be able to control them with a smartphone, set them up to adapt to factors like outside temperatures and have them notify you if, for example, there is smoke or carbon monoxide in your home.
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Over 30 billion devices—including things like home thermostats and appliances—will be connected to the Internet by 2020.
That means you’ll be able to control them with a smartphone, set them up to adapt to factors like outside temperatures and have them notify you if, for example, there is smoke or carbon monoxide in your home.
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