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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L BRANDS INC. $85 (New York symbol LB; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 292.7 million; Market cap: $24.9 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.6%; TSINetwork Rating: Average; www.lb.com) has opened its first Victoria’s Secret store in China. The company plans to open five more outlets in that country in the next few weeks.
China restricts clothing imports, so unlike Victoria’s Secret stores in other countries, which mainly sell lingerie, these locations will focus on handbags, cosmetics and fragrances.
L Brands is a hold.
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China restricts clothing imports, so unlike Victoria’s Secret stores in other countries, which mainly sell lingerie, these locations will focus on handbags, cosmetics and fragrances.
L Brands is a hold.
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FORD MOTOR CO. $14 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $53.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 4.3%; TSINetwork Rating: Extra Risk; www.ford.com) sold 2.5 million vehicles in the U.S. in 2014, down 0.5% from 2013.
Truck sales (38% of the 2014 total) fell 0.7% as Ford slowed production of its popular F-150 as it prepared to launch a new version that uses lightweight aluminum body panels. Car sales (32%) declined 3.8%, but SUV sales (30%) gained 3.5%.
The company also raised its dividend by 20.0%. The new annual rate of $0.60 a share yields 4.3%.
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Truck sales (38% of the 2014 total) fell 0.7% as Ford slowed production of its popular F-150 as it prepared to launch a new version that uses lightweight aluminum body panels. Car sales (32%) declined 3.8%, but SUV sales (30%) gained 3.5%.
The company also raised its dividend by 20.0%. The new annual rate of $0.60 a share yields 4.3%.
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NEWMONT MINING CORP. $24 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 498.8 million; Market cap: $11.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.newmont.com) has started work on its 75%-owned Merian gold project in Suriname; the Suriname government owns the remaining 25%.
The company will spend $600 million to $700 million on Merian. The new mine will supply 7% to 10% of Newmont’s total gold production when it starts up in 2017.
The stock has jumped 36% from its December 2014 low of $17.60. That’s mainly because gold prices have strengthened in response to fears of deflation in Europe. However, the higher U.S. dollar will continue to weigh on gold.
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The company will spend $600 million to $700 million on Merian. The new mine will supply 7% to 10% of Newmont’s total gold production when it starts up in 2017.
The stock has jumped 36% from its December 2014 low of $17.60. That’s mainly because gold prices have strengthened in response to fears of deflation in Europe. However, the higher U.S. dollar will continue to weigh on gold.
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ALLIANT ENERGY CORP. $69 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $7.7 billion; Price-to-sales ratio: 2.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million customers in Wisconsin, Iowa and Minnesota.
The company has earmarked $5.2 billion for plant upgrades and replacing older transmission lines and pipelines between 2014 and 2018. These funds include $750 million for a gas-fired plant that should replace some of its older coal facilities (coal accounts for about half of Alliant’s electricity production).
Partly due to these extra costs, Alliant’s earnings fell 2.3%, to $155.2 million, or $1.40 a share, in the third quarter of 2014. A year earlier, it earned $158.9 million, or $1.43. Cooler-than-normal weather also cut its earnings by $0.06 a share in the latest quarter. Revenue fell 2.7%, to $843.1 million from $866.6 million.
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The company has earmarked $5.2 billion for plant upgrades and replacing older transmission lines and pipelines between 2014 and 2018. These funds include $750 million for a gas-fired plant that should replace some of its older coal facilities (coal accounts for about half of Alliant’s electricity production).
Partly due to these extra costs, Alliant’s earnings fell 2.3%, to $155.2 million, or $1.40 a share, in the third quarter of 2014. A year earlier, it earned $158.9 million, or $1.43. Cooler-than-normal weather also cut its earnings by $0.06 a share in the latest quarter. Revenue fell 2.7%, to $843.1 million from $866.6 million.
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AMEREN CORP. $46 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $11.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.6%; TSINetwork Rating: Average; www.ameren.com) provides power and natural gas to 3.3 million customers in Illinois and Missouri.
A cool summer meant customers used less power for air conditioning in the quarter ended September 30, 2014. That cut Ameren’s earnings by 3.6%, to $294 million, or $1.20 a share. A year earlier, it earned $305 million, or $1.25. However, higher power rates increased revenue by 2.0%, to $1.7 billion from $1.6 billion.
Ameren generates 70% of its power by burning coal, so it’s vulnerable to tougher environmental regulations. As a result, the company expects to spend a total of $8.3 billion to modernize its operations between 2014 and 2018.
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A cool summer meant customers used less power for air conditioning in the quarter ended September 30, 2014. That cut Ameren’s earnings by 3.6%, to $294 million, or $1.20 a share. A year earlier, it earned $305 million, or $1.25. However, higher power rates increased revenue by 2.0%, to $1.7 billion from $1.6 billion.
Ameren generates 70% of its power by burning coal, so it’s vulnerable to tougher environmental regulations. As a result, the company expects to spend a total of $8.3 billion to modernize its operations between 2014 and 2018.
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WAL-MART STORES INC. $87 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $278.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.walmart .com) plans to open 11 new supercentres, which sell groceries as well as merchandise, in Canada. That will give the company 394 Canadian stores, including 280 supercentres.
Rival retailer Target recently announced that it would close all 133 of its Canadian outlets, and many people who shopped at these stores will likely switch to Wal-Mart. In addition, the company will probably pick up some of Target’s locations at a discount.
Wal-Mart is a buy.
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Rival retailer Target recently announced that it would close all 133 of its Canadian outlets, and many people who shopped at these stores will likely switch to Wal-Mart. In addition, the company will probably pick up some of Target’s locations at a discount.
Wal-Mart is a buy.
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MICROSOFT CORP. $41 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.2 billion; Market cap: $336.2 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www. microsoft.com) plans to release Windows 10, the latest version of its popular operating system, later this year.
Unlike previous editions, Microsoft will let users of older versions update for free. Sales to computer makers provide most of the revenue Microsoft gets from Windows, so giving it away to existing users will have little impact on its earnings. This will also help prevent users from switching to competing operating systems.
Microsoft aims to make up the lost sales by selling related services, such as online versions of its Office business programs.
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Unlike previous editions, Microsoft will let users of older versions update for free. Sales to computer makers provide most of the revenue Microsoft gets from Windows, so giving it away to existing users will have little impact on its earnings. This will also help prevent users from switching to competing operating systems.
Microsoft aims to make up the lost sales by selling related services, such as online versions of its Office business programs.
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TEXAS INSTRUMENTS INC. $54 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.05 billion; Market cap: $56.7 billion; Priceto- sales ratio: 4.7; Dividend yield: 2.5%; TSINetwork Rating: Average; www.ti.com) specializes in analog chips, which convert inputs like touch, sound and pressure into electronic signals computers can understand.
Manufacturers use these chips in a variety of products, including cars, cameras, medical devices and appliances.
The company’s earnings jumped 30.5% in 2014, to $2.8 billion from $2.2 billion in 2013. Texas Instruments spent $2.8 billion on share buybacks during the year. As a result, earnings per share gained 34.6%, to $2.57 from $1.91.
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Manufacturers use these chips in a variety of products, including cars, cameras, medical devices and appliances.
The company’s earnings jumped 30.5% in 2014, to $2.8 billion from $2.2 billion in 2013. Texas Instruments spent $2.8 billion on share buybacks during the year. As a result, earnings per share gained 34.6%, to $2.57 from $1.91.
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CISCO SYSTEMS INC. $27 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.1 billion; Market cap: $137.7 billion; Price-to-sales ratio: 3.0; Dividend yield 2.8%; TSINetwork Rating: Average; www.cisco.com) is a leading maker of hardware and software that links and manages computer networks. Its hardware includes routers, local area network (LAN) and asynchronous transfer mode (ATM) switches, and dial-up access servers.
In its fiscal 2015 first quarter, which ended October 31, 2014, Cisco’s revenue rose 1.3%, to $12.2 billion from $12.1 billion a year earlier.
Without unusual items, it earned $2.8 billion, down 2.3% from $2.9 billion. Cisco spent $1.0 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 1.9%, to $0.54 from $0.53.
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In its fiscal 2015 first quarter, which ended October 31, 2014, Cisco’s revenue rose 1.3%, to $12.2 billion from $12.1 billion a year earlier.
Without unusual items, it earned $2.8 billion, down 2.3% from $2.9 billion. Cisco spent $1.0 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 1.9%, to $0.54 from $0.53.
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INTEL CORP. $34 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.9 billion; Market cap: $166.6 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading computer chip maker. Its products power 80% of all personal computers.
The company continues to benefit as businesses upgrade their computers after Microsoft (see box) stopped supporting its old Windows XP operating system. Strong demand for Internet services has also spurred sales of server computers.
As a result, Intel’s 2014 sales rose 6.0%, to $55.9 billion from $52.7 billion in 2013. Earnings jumped 21.7%, to $11.7 billion, or $2.31 a share, from $9.6 billion, or $1.89.
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The company continues to benefit as businesses upgrade their computers after Microsoft (see box) stopped supporting its old Windows XP operating system. Strong demand for Internet services has also spurred sales of server computers.
As a result, Intel’s 2014 sales rose 6.0%, to $55.9 billion from $52.7 billion in 2013. Earnings jumped 21.7%, to $11.7 billion, or $2.31 a share, from $9.6 billion, or $1.89.
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