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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PASON SYSTEMS $18.47 (Toronto symbol PSI; TSINetwork Rating: Speculative)(403-301-3400; www.pason.com; Shares outstanding: 83.4 million; Market cap: $1.5 billion; Dividend yield: 3.7%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors in Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended September 30, 2014, the company’s revenue rose 28.9%, to $134.0 million from $104.0 million a year earlier. Pason saw higher sales of its technology in all of its major markets, but especially in the U.S.
The company earned $26.5 million, or $0.32 a share, in the latest quarter, up from $9.1 million, or $0.11. Earnings rose on the higher revenue and an increased contribution from Pason’s U.S. profits because of the stronger U.S. dollar.
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In the three months ended September 30, 2014, the company’s revenue rose 28.9%, to $134.0 million from $104.0 million a year earlier. Pason saw higher sales of its technology in all of its major markets, but especially in the U.S.
The company earned $26.5 million, or $0.32 a share, in the latest quarter, up from $9.1 million, or $0.11. Earnings rose on the higher revenue and an increased contribution from Pason’s U.S. profits because of the stronger U.S. dollar.
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COMPUTER MODELLING GROUP $12.73 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.6 million; Market cap: $1.0 billion; Dividend yield: 3.1%) sells software and consulting services that help conventional oil and gas producers create complex 3D models of reservoirs. That lets them squeeze more out of those reservoirs using advanced recovery techniques such as injecting steam or chemicals. Typically, only 25% to 30% of oil and gas is recovered during primary production.
Unconventional producers, using hydraulic fracturing, or fracking, of oil and gas-bearing shale, can also use Computer Modelling’s software to determine optimal drilling locations and depths.
In the three months ended December 31, 2014, Computer Modelling’s revenue rose 31.1%, to $25.2 million from $19.2 million a year earlier. Software licensing revenue (92% of the total) rose 34.8%, and consulting and professional services revenue (8%) was virtually unchanged.
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Unconventional producers, using hydraulic fracturing, or fracking, of oil and gas-bearing shale, can also use Computer Modelling’s software to determine optimal drilling locations and depths.
In the three months ended December 31, 2014, Computer Modelling’s revenue rose 31.1%, to $25.2 million from $19.2 million a year earlier. Software licensing revenue (92% of the total) rose 34.8%, and consulting and professional services revenue (8%) was virtually unchanged.
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FAIR ISAAC CORP. $81.96 (New York symbol FICO; TSINetwork Rating: Average)(415-472-2211; www.fairisaac.com; Shares outstanding: 31.4 million; Market cap: $2.6 billion; Dividend yield: 0.1%) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. Fair Isaac also sells software that helps credit card issuers control 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.
Earnings per share fell 6.8%, to $0.68 from $0.73. Fair Isaac spent more on research and marketing, and that hurt profits.
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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.
Earnings per share fell 6.8%, to $0.68 from $0.73. Fair Isaac spent more on research and marketing, and that hurt profits.
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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.
Most of the company’s silver output comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. Hecla’s Casa Berardi mine in Quebec supplies the majority of its gold production.
In the three months ended December 31, 2014, Hecla produced 3.2 million ounces of silver, up 29.1% from 2.5 million ounces a year earlier. Gold output rose 16.1%, to 54,674 ounces from 47,108. Cash flow per share climbed 18.2%, to $0.13 from $0.11.
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Most of the company’s silver output comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. Hecla’s Casa Berardi mine in Quebec supplies the majority of its gold production.
In the three months ended December 31, 2014, Hecla produced 3.2 million ounces of silver, up 29.1% from 2.5 million ounces a year earlier. Gold output rose 16.1%, to 54,674 ounces from 47,108. Cash flow per share climbed 18.2%, to $0.13 from $0.11.
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CAMECO CORP. $19.80 (Toronto symbol CCO; TSINetwork Rating: Extra Risk)(306-956-6200; www.cameco.com; Shares outstanding: 395.8 million; Market cap: $7.9 billion; Dividend yield 2.0%) is the world’s largest uranium producer. It supplies 16% of global mine production and has large, high-grade reserves, low-cost operations, significant market share and many mines.
Cameco is also one of the western world’s largest converters of enriched uranium for use in nuclear reactors. In addition, it owns NUKEM, a nuclear-fuel trader and broker.
In the three months ended December 31, 2014, Cameco’s revenue fell 9.0%, to $889 million from $977 million a year earlier. It sold more uranium at higher prices in the latest quarter. However, the yearago quarter included revenue from the company’s 31.6% stake in Ontario’s Bruce Power partnership, which it sold in early 2014.
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Cameco is also one of the western world’s largest converters of enriched uranium for use in nuclear reactors. In addition, it owns NUKEM, a nuclear-fuel trader and broker.
In the three months ended December 31, 2014, Cameco’s revenue fell 9.0%, to $889 million from $977 million a year earlier. It sold more uranium at higher prices in the latest quarter. However, the yearago quarter included revenue from the company’s 31.6% stake in Ontario’s Bruce Power partnership, which it sold in early 2014.
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p>FIRSTSERVICE CORP. $72.00 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960- 9500; www.firstservice.com; Shares outstanding: 34.5 million; Market cap: $2.6 billion; Div. yield: 0.7%) plans to spin off its Colliers International business into a new firm called Colliers International Group. FirstService will hand out Colliers shares to its own investors. Colliers is one of the world’s top three commercial real estate firms, offering a range of services around the globe. In 2014, it had revenue of $1.7 billion U.S.
After the spinoff, FirstService will carry on with residential property management and improvement, which had $1.1 billion U.S. of revenue in 2014. FirstService shareholders won’t pay income taxes on the transaction until they sell shares of the new FirstService or Colliers International.
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After the spinoff, FirstService will carry on with residential property management and improvement, which had $1.1 billion U.S. of revenue in 2014. FirstService shareholders won’t pay income taxes on the transaction until they sell shares of the new FirstService or Colliers International.
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MENTOR GRAPHICS CORP. $24.74 (Nasdaq symbol MENT; TSINetwork Rating: Extra Risk) (503-685-7000; www.mentor.com; Shares outstanding: 115.1 million; Market cap: $2.8 billion; Dividend yield: 0.8%) makes hardware and software for improving the design of electronic products and speeding up their development.
For example, Mentor’s software lets automakers use less wiring in a car, identify potential safety issues, and minimize electromagnetic effects on sensitive components.
The company sells its products and services worldwide, mainly to large firms in the communications, technology, military and transportation industries.
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For example, Mentor’s software lets automakers use less wiring in a car, identify potential safety issues, and minimize electromagnetic effects on sensitive components.
The company sells its products and services worldwide, mainly to large firms in the communications, technology, military and transportation industries.
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TOROMONT INDUSTRIES LTD. $27.71 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.1 million; Market cap: $2.1 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.
The company completed the spinoff of Enerflex Ltd. (see right) in 2011. Shareholders received shares of both the new Toromont Industries and Enerflex.
In the three months ended September 30, 2014, Toromont’s revenue fell 6.2%, to $467.4 million from $498.3 million a year earlier.
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STANTEC INC. $30.05 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 93.8 million; Market cap: $2.8 billion; Dividend yield: 1.2%) (all figures adjusted for a 2-for-1 share split in November 2014) sells a range of consulting, project-delivery, design and technology services. The company’s clients operate in a variety of industries, including oil and gas, transportation and construction.
In the quarter ended September 30, 2014, Stantec’s revenue rose 12.2%, to $544.2 million from $484.8 million a year earlier. Earnings gained 5.7%, to $48.6 million, or $1.04 a share, from $46.0 million, or $0.99.
Stantec continues to grow by acquisition. It has now completed its purchase of Montreal-based Dessau, a distressed firm that’s one of a number of companies caught up in a Quebec government inquiry into corruption in the construction industry. Under the deal, Stantec won’t be responsible for any of the millions of dollars in fines or penalties Dessau may have to pay.
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In the quarter ended September 30, 2014, Stantec’s revenue rose 12.2%, to $544.2 million from $484.8 million a year earlier. Earnings gained 5.7%, to $48.6 million, or $1.04 a share, from $46.0 million, or $0.99.
Stantec continues to grow by acquisition. It has now completed its purchase of Montreal-based Dessau, a distressed firm that’s one of a number of companies caught up in a Quebec government inquiry into corruption in the construction industry. Under the deal, Stantec won’t be responsible for any of the millions of dollars in fines or penalties Dessau may have to pay.
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DEVON ENERGY CORP. $61.60 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 409.1 million; Market cap: $24.4 billion; Dividend yield: 1.6%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 46% gas and 54% oil.
The company narrowed its focus with its July 2014 sale of some of its properties to Linn Energy for $2.3 billion. The deal included Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid- Continent region (which includes Oklahoma, Kansas and Texas).
The sale lets Devon focus on what it views as lowrisk/ high-reward properties, especially the oilproducing assets it bought in Texas’s Eagle Ford shale formation for $6 billion in 2013.
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The company narrowed its focus with its July 2014 sale of some of its properties to Linn Energy for $2.3 billion. The deal included Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid- Continent region (which includes Oklahoma, Kansas and Texas).
The sale lets Devon focus on what it views as lowrisk/ high-reward properties, especially the oilproducing assets it bought in Texas’s Eagle Ford shale formation for $6 billion in 2013.
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