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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Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.
Gogo Inc. (symbol GOGO on Nasdaq; www.gogoair.com), offers a service that lets passengers with Wi-Fi-enabled devices get online on Gogo-equipped aircraft.
The company offers Internet access on more than 10 major airlines and 2,000 individual airliners. Over 6,000 business jets also use its systems. Gogo charges $59.95 a month or $16 for an all-day pass.
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Gogo Inc. (symbol GOGO on Nasdaq; www.gogoair.com), offers a service that lets passengers with Wi-Fi-enabled devices get online on Gogo-equipped aircraft.
The company offers Internet access on more than 10 major airlines and 2,000 individual airliners. Over 6,000 business jets also use its systems. Gogo charges $59.95 a month or $16 for an all-day pass.
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MACY’S INC. $65 (www.macysinc.com) is changing some procedures at its Macy’s and Bloomingdale’s department stores. Previously, the physical stores and online operations bought and marketed their merchandise separately. Now the company is creating a unified purchasing organization that will cut costs, minimize product shortages and speed up online order fulfillment....
STATE STREET CORP. $71 (www.statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans. The company’s fee income rises and falls with the value of the securities it manages....
CINTAS CORP. $78 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 117.3 million; Market cap: $9.1 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.1%; TSINetwork Rating: Average; www.cintas.com) provides a range of products and services to over one million businesses, mainly in North America.
The company gets 71% of its revenue by renting uniforms that it makes and cleans. This business also rents a variety of related products, such as mats, towels, mops and cleaning supplies. Cintas gets a further 10% of its revenue by selling uniforms.
In addition, the company sells first aid kits, fire extinguishers, sprinklers and emergency-exit lights (11%). It also shreds corporate documents (8%). In April 2014, it merged its shredding operations with Shred-it International. In exchange, Cintas received 42% of the combined company, which uses the Shred-it brand, plus $180 million in cash.
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The company gets 71% of its revenue by renting uniforms that it makes and cleans. This business also rents a variety of related products, such as mats, towels, mops and cleaning supplies. Cintas gets a further 10% of its revenue by selling uniforms.
In addition, the company sells first aid kits, fire extinguishers, sprinklers and emergency-exit lights (11%). It also shreds corporate documents (8%). In April 2014, it merged its shredding operations with Shred-it International. In exchange, Cintas received 42% of the combined company, which uses the Shred-it brand, plus $180 million in cash.
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AMERICAN EXPRESS $82 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $82.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.americanexpress.com) earned $1.4 billion in the three months ended December 31, 2014, up 10.6% from $1.3 billion a year earlier. Per-share earnings rose 14.9%, to $1.39 from $1.21, on fewer shares outstanding. Revenue gained 6.6%, to $9.1 billion from $8.5 billion, as cardholder spending rose 6% and credit card balances grew by 7%.
The company is now cutting 6% of its workforce as part of a plan to improve its overall efficiency. Severance costs cut its earnings by $206 million in the latest quarter. However, the savings will help Amex invest in new growth initiatives, including adapting its networks to process purchases made from smartphones.
American Express is a buy.
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The company is now cutting 6% of its workforce as part of a plan to improve its overall efficiency. Severance costs cut its earnings by $206 million in the latest quarter. However, the savings will help Amex invest in new growth initiatives, including adapting its networks to process purchases made from smartphones.
American Express is a buy.
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FAIR ISAAC CORP. $79 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 31.7 million; Market cap: $2.5 billion; Price-to-sales ratio: 3.5; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) has paid an undisclosed amount for Tonbeller, a German firm whose software helps banks and insurance companies detect and prevent money laundering and fraud.
The company plans to integrate Tonbeller’s antifraud products with its own software, which can quickly analyze a large number of transactions. That should give Fair Isaac an advantage, as users usually have to buy these programs separately.
Fair Isaac is a hold.
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The company plans to integrate Tonbeller’s antifraud products with its own software, which can quickly analyze a large number of transactions. That should give Fair Isaac an advantage, as users usually have to buy these programs separately.
Fair Isaac is a hold.
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CHEVRON CORP. $104 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $197.6 billion; Price-to-sales ratio: 0.9; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.chevron .com) has signed a five-year deal to supply liquefied natural gas (LNG) from its 47.3%-owned Gorgon project in Australia to South Korea’s SK Group. Gorgon should start up later this year.
With this deal, Chevron now has contracts covering 75% of Gorgon’s LNG production from 2017 to 2022. That helps cut this project’s risk .
Chevron is a buy.
With this deal, Chevron now has contracts covering 75% of Gorgon’s LNG production from 2017 to 2022. That helps cut this project’s risk .
Chevron is a buy.
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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