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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CONAGRA FOODS INC. $37 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 431.0 million; Market cap: $15.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.conagrafoods.com) bought Ralcorp Holdings, the largest private-label food maker in the U.S., for $4.75 billion in January 2013.
The company has had trouble integrating this business. Ralcorp also faces strong price competition that has hurt its sales and earnings. In response, ConAgra has adjusted the prices of its private-label products. That should help improve Ralcorp’s market share. Efforts to streamline Ralcorp should also help it adjust to rising ingredient costs and improve its profitability by 2016.
ConAgra is a buy.
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The company has had trouble integrating this business. Ralcorp also faces strong price competition that has hurt its sales and earnings. In response, ConAgra has adjusted the prices of its private-label products. That should help improve Ralcorp’s market share. Efforts to streamline Ralcorp should also help it adjust to rising ingredient costs and improve its profitability by 2016.
ConAgra is a buy.
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FEDEX CORP. $171 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 283.3 million; Market cap: $48.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) continues to profit from the rise of online shopping, which has boosted demand for its delivery services.
The company stands to gain from lower oil prices and new fuel-efficient planes. It has also undertaken an aggressive cost-cutting plan, the benefits of which should begin to appear in 2015.
In addition, FedEx’s largely non-unionized workforce helps keep its labour costs down, and the company should see higher revenue now that it’s basing its shipping fees on a parcel’s size rather than its weight.
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The company stands to gain from lower oil prices and new fuel-efficient planes. It has also undertaken an aggressive cost-cutting plan, the benefits of which should begin to appear in 2015.
In addition, FedEx’s largely non-unionized workforce helps keep its labour costs down, and the company should see higher revenue now that it’s basing its shipping fees on a parcel’s size rather than its weight.
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VISA INC. $246 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 618.3 million; Market cap: $152.1 billion; Price-to-sales ratio: 12.5; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) gets most of its revenue from fees it charges card issuers and merchants for using its network. It bases its fees on payment volume and transactions processed, among other factors. The banks that issue the cards are responsible for evaluating customer creditworthiness and collecting payments, not Visa.
The company continues to profit as more people shop online, and debit cards are quickly replacing cash for smaller transactions.
Meanwhile, the U.S. Supreme Court recently refused to hear an appeal of a class-action lawsuit by retailers seeking to lower the fees credit card companies charge. That cuts Visa’s risk.
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The company continues to profit as more people shop online, and debit cards are quickly replacing cash for smaller transactions.
Meanwhile, the U.S. Supreme Court recently refused to hear an appeal of a class-action lawsuit by retailers seeking to lower the fees credit card companies charge. That cuts Visa’s risk.
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NEWELL RUBBERMAID INC. $37 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 271.1 million; Market cap: $10.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.8%; TSINetwork Rating: Average; www.newellrubbermaid.com) has gained 23% since we made it our Stock of the Year for 2014.
The company makes plastic storage bins, tools, window blinds, pens and many other household goods.
In the past few years, Newell has aggressively cut its costs, including closing plants. That has freed up cash that it can use to acquire businesses with strong long-term prospects.
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The company makes plastic storage bins, tools, window blinds, pens and many other household goods.
In the past few years, Newell has aggressively cut its costs, including closing plants. That has freed up cash that it can use to acquire businesses with strong long-term prospects.
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SYMANTEC CORP. $25 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 690.2 million; Market cap: $17.3 billion; Price-to-sales ratio: 2.7; Dividend yield: 2.4%; TSINetwork Rating: Average; www.symantec.com) began operating in 1982. It’s now the world’s largest maker of security software.
Symantec is best known for its Norton anti-virus software, which helps protect computers from viruses and online attacks. It mainly sells Norton to consumers, but it also has agreements to pre-install it on new computers.
In addition to virus protection, Symantec has developed a range of other security programs under the Norton name, including software that guards against identity theft.
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Symantec is best known for its Norton anti-virus software, which helps protect computers from viruses and online attacks. It mainly sells Norton to consumers, but it also has agreements to pre-install it on new computers.
In addition to virus protection, Symantec has developed a range of other security programs under the Norton name, including software that guards against identity theft.
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ENERFLEX LTD. $15.48 (Toronto symbol EFX; TSINetwork Rating: Extra Risk)(403-387-6377; www.enerflex.com; Shares outstanding: 78.6 million; Market cap: $1.2 billion; Dividend yield: 2.2%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators.
On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the quarter ended September 30, 2014, Enerflex’s revenue rose 22.6%, to $479.0 million from $390.7 million a year earlier. Earnings per share jumped 37.5%, to $0.33 from $0.24.
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On June 30, 2014, Enerflex completed its $431- million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary and a division that provides aftermarket services.
In the quarter ended September 30, 2014, Enerflex’s revenue rose 22.6%, to $479.0 million from $390.7 million a year earlier. Earnings per share jumped 37.5%, to $0.33 from $0.24.
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CHIPOTLE MEXICAN GRILL $703.89 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.0 million; Market cap: $21.8 billion; No dividends paid) halted sales of pork items at one-third of its nearly 1,800 U.S. restaurants in mid-January 2015. That’s because it learned that a key supplier had failed to meet Chipotle’s humane pig-housing standards.
The company uses pork in around 7% of the burritos, tacos, bowls and salads it sells.
Chipotle believes most customers will simply substitute pork with other meats on the menu, but some may go elsewhere.
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The company uses pork in around 7% of the burritos, tacos, bowls and salads it sells.
Chipotle believes most customers will simply substitute pork with other meats on the menu, but some may go elsewhere.
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SYMANTEC CORP. $25.62 (Nasdaq symbol SYMC; TSINetwork Rating: Average)(408-517-8000; www.symantec.com; Shares outstanding: 690.2 million; Market cap: $17.7 billion; Dividend yield: 2.3%) is hiring engineers and licensing certain technology from Narus, a computer-security firm owned by Boeing Co. (symbol BA on New York). Narus has developed algorithms and software that can analyze large amounts of Internet traffic and filter out certain data. Its clients include the U.S. National Security Agency.
Symantec will use Narus’s technology to develop security software for corporations. Demand for these products should be strong, particularly after highprofile cyber attacks on Sony, Home Depot and Target.
Symantec is a buy.
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Symantec will use Narus’s technology to develop security software for corporations. Demand for these products should be strong, particularly after highprofile cyber attacks on Sony, Home Depot and Target.
Symantec is a buy.
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HECLA MINING COMPANY $3.35 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 367.4 million; Market cap: $1.2 billion) explores for, mines and processes silver and gold in the U.S. and Mexico.
In the three months ended December 31, 2014, Hecla produced 3.2 million ounces of silver, up 29.1% from 2.5 million a year earlier. Gold output rose 16.1%, to 54,671 ounces from 47,108.
All of Hecla’s mines have potential for higher output, although it’s cutting back on capital spending for now while it waits for higher gold and silver prices.
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In the three months ended December 31, 2014, Hecla produced 3.2 million ounces of silver, up 29.1% from 2.5 million a year earlier. Gold output rose 16.1%, to 54,671 ounces from 47,108.
All of Hecla’s mines have potential for higher output, although it’s cutting back on capital spending for now while it waits for higher gold and silver prices.
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CARFINCO FINANCIAL $8.80 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $232.9 million; Dividend yield: 3.4%) is down sharply since mid-January from $11.25 to today’s price. The company provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.
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). The company’s directors and executive officers, who collectively own a 12.9% stake, also agreed to support the sale.
But neither Carfinco nor Santander have announced anything about the $268-million deal, which was expected to close by the end of 2014 or early this year. Santander has been in the news lately with the appointment of a new executive chairman, a share issue to raise 7.5 billion euros ($10.4 billion Canadian) to shore up its capital base and a dividend cut.
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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). The company’s directors and executive officers, who collectively own a 12.9% stake, also agreed to support the sale.
But neither Carfinco nor Santander have announced anything about the $268-million deal, which was expected to close by the end of 2014 or early this year. Santander has been in the news lately with the appointment of a new executive chairman, a share issue to raise 7.5 billion euros ($10.4 billion Canadian) to shore up its capital base and a dividend cut.
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