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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STANLEY BLACK & DECKER INC. $94 (New York symbol SWK; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 156.7 million; Market cap: $14.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.stanleyblack anddecker.com) earned $249.1 million in the third quarter of 2014, up 12.7% from $221.1 million a year earlier. Earnings per share rose 11.5% to $1.55 from $1.39, on more shares outstanding.
Sales gained 5.2%, to $2.9 billion from $2.8 billion, as Stanley released new tools for consumers and industrial users. It also raised its prices. That offset lower sales of building-security systems, particularly in Europe, and the negative impact of currency exchange rates.
Stanley Black & Decker is a buy.
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Sales gained 5.2%, to $2.9 billion from $2.8 billion, as Stanley released new tools for consumers and industrial users. It also raised its prices. That offset lower sales of building-security systems, particularly in Europe, and the negative impact of currency exchange rates.
Stanley Black & Decker is a buy.
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ABB LTD. ADRs $21 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $48.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.abb.com) makes transformers, transmission systems and circuit breakers for power utilities. The Switzerland-based firm also produces automation systems and robotics that its industrial clients use to improve their productivity.
In the three months ended September 30, 2014, ABB’s revenue fell 6.8%, to $9.8 billion from $10.5 billion a year earlier. That’s mainly due to slowing demand for transmission gear in Europe. Earnings declined 12.1%, to $734 million from $835 million. ABB continues to buy back shares and recently earmarked $4 billion for future repurchases. Due to fewer shares outstanding, earnings per ADR fell 11.1%, to $0.32 from $0.36 (each American depositary receipt represents one ABB common share).
The company aims to improve its profitability by selling non-essential businesses. It’s also turning down riskier, lessprofitable orders. These moves should boost its earnings per ADR from a projected $1.20 in 2014 to $1.41 in 2015. The stock trades at 14.9 times the 2015 forecast. The $0.77 dividend yields 3.7%.
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In the three months ended September 30, 2014, ABB’s revenue fell 6.8%, to $9.8 billion from $10.5 billion a year earlier. That’s mainly due to slowing demand for transmission gear in Europe. Earnings declined 12.1%, to $734 million from $835 million. ABB continues to buy back shares and recently earmarked $4 billion for future repurchases. Due to fewer shares outstanding, earnings per ADR fell 11.1%, to $0.32 from $0.36 (each American depositary receipt represents one ABB common share).
The company aims to improve its profitability by selling non-essential businesses. It’s also turning down riskier, lessprofitable orders. These moves should boost its earnings per ADR from a projected $1.20 in 2014 to $1.41 in 2015. The stock trades at 14.9 times the 2015 forecast. The $0.77 dividend yields 3.7%.
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GENERAL ELECTRIC CO. $24 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $240.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.ge.com) recently agreed to form a major new alliance with France’s Alstom SA, a leading maker of electrical-transmission equipment and parts for power plants.
Under the deal, GE will form three 50/50 joint ventures with Alstom. One will combine the companies’ electrical grid operations, while a second will focus on products for renewable energy projects, like offshore wind farms. The third will hold Alstom’s nuclear-equipment division.
In all, GE will pay $10 billion when the Alstom deal closes in 2015. The new operations it brings should add about $0.07 a share to GE’s annual earnings, starting in 2016.
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Under the deal, GE will form three 50/50 joint ventures with Alstom. One will combine the companies’ electrical grid operations, while a second will focus on products for renewable energy projects, like offshore wind farms. The third will hold Alstom’s nuclear-equipment division.
In all, GE will pay $10 billion when the Alstom deal closes in 2015. The new operations it brings should add about $0.07 a share to GE’s annual earnings, starting in 2016.
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SONY CORP. ADRs $20 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.2 billion; Market cap: $24.0 billion; Price-to-sales ratio: 0.3; Dividend suspended in September 2014; TSINetwork Rating: Average; www.sony.com) recently lost digital copies of its upcoming movies to online intruders. If the thieves post these films on the Internet, it would likely hurt future sales of both cinema tickets and DVDs.
The company also recently announced that it would stop making cheaper mobile phones for emerging markets and focus on higher-priced models for developed nations. Severance costs and other expenses will widen its expected loss to $1.38 per ADR in the year ending March 31, 2015, from $1.21 in 2014.
Sony is still a hold.
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The company also recently announced that it would stop making cheaper mobile phones for emerging markets and focus on higher-priced models for developed nations. Severance costs and other expenses will widen its expected loss to $1.38 per ADR in the year ending March 31, 2015, from $1.21 in 2014.
Sony is still a hold.
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HONDA MOTOR CO. LTD. ADRs $29 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $52.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s secondlargest carmaker and the world’s biggest motorcycle manufacturer.
In the three months ended September 30, 2014, Honda sold 1.07 million cars and trucks, up 2.3% from 1.05 million a year earlier. New models spurred gains in Asia (up 13.3%) and Europe (up 12.5%). However, sales fell 2.9% in the U.S. and 2.2% in Japan. Motorcycle sales rose 8.7%.
Due to unfavourable currency rates, revenue fell 2.0% in the quarter, to $27.6 billion from $28.1 billion. However, lower costs helped increase the company’s earnings per ADR by 10.8%, to $0.72 from $0.65 (each ADR equals one common share).
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In the three months ended September 30, 2014, Honda sold 1.07 million cars and trucks, up 2.3% from 1.05 million a year earlier. New models spurred gains in Asia (up 13.3%) and Europe (up 12.5%). However, sales fell 2.9% in the U.S. and 2.2% in Japan. Motorcycle sales rose 8.7%.
Due to unfavourable currency rates, revenue fell 2.0% in the quarter, to $27.6 billion from $28.1 billion. However, lower costs helped increase the company’s earnings per ADR by 10.8%, to $0.72 from $0.65 (each ADR equals one common share).
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TOYOTA MOTOR CO. ADRs $122 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $207.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s biggest carmaker by sales.
In its fiscal 2015 second quarter, which ended September 30, 2014, Toyota sold 2.24 million vehicles, unchanged from a year ago. North American sales jumped 12.5%, thanks to strong demand for sport utility vehicles. That offset declines in Japan (down 8.9%), other parts of Asia (down 4.2%) and Europe (down 3.3%).
Overall revenue fell 6.5%, to $59.8 billion from $63.9 billion, but revenue improved 4.3% in Japanese yen. A cost-cutting plan helped boost earnings per ADR by 10.3%, to $3.11 from $2.82 (each American depositary receipt equals two Toyota common shares).
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In its fiscal 2015 second quarter, which ended September 30, 2014, Toyota sold 2.24 million vehicles, unchanged from a year ago. North American sales jumped 12.5%, thanks to strong demand for sport utility vehicles. That offset declines in Japan (down 8.9%), other parts of Asia (down 4.2%) and Europe (down 3.3%).
Overall revenue fell 6.5%, to $59.8 billion from $63.9 billion, but revenue improved 4.3% in Japanese yen. A cost-cutting plan helped boost earnings per ADR by 10.3%, to $3.11 from $2.82 (each American depositary receipt equals two Toyota common shares).
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PROCTER & GAMBLE CO. $89 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $240.3 billion; Price-to-sales ratio: 3.1; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.pg.com) aims to sell its Germany-based Wella hair care operation, which makes shampoos, dyes and styling products.
The company would probably receive $7 billion for Wella, roughly what it paid for it in 2003.
This sale is part of Procter’s plan to sell about 100 less-profitable brands. That will leave it with around 80 that together account for 90% of its sales and 95% of its profits. This tighter focus will also cut Procter’s manufacturing and distribution costs...
The company would probably receive $7 billion for Wella, roughly what it paid for it in 2003.
This sale is part of Procter’s plan to sell about 100 less-profitable brands. That will leave it with around 80 that together account for 90% of its sales and 95% of its profits. This tighter focus will also cut Procter’s manufacturing and distribution costs...
VERIZON COMMUNICATIONS INC. $46 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 4.2 billion; Market cap: $193.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.8%; TSINetwork Rating: Average; www.verizon.com) says strong price competition will likely slow its wireless division’s growth, particularly sales of cheaper mobile phones and service plans. Wireless accounts for 70% of Verizon’s revenue.
However, the company is doing a good job of getting customers to upgrade from basic cellphones to more profitable smartphones. In addition, demand for its FiOS high-speed fibre optic Internet and TV services continues to improve.
Verizon is a buy.
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However, the company is doing a good job of getting customers to upgrade from basic cellphones to more profitable smartphones. In addition, demand for its FiOS high-speed fibre optic Internet and TV services continues to improve.
Verizon is a buy.
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QUAKER CHEMICAL CORP. $85 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.3 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.
The company continues to buy smaller firms that add to its expertise.
For example, it recently paid $18.9 million for Binol AB, a Swedish firm that makes lubricants from vegetable fats and oils. Binol, which sells its products to clients in the metalworking, forestry and construction industries, will add $15.3 million to Quaker’s annual sales.
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The company continues to buy smaller firms that add to its expertise.
For example, it recently paid $18.9 million for Binol AB, a Swedish firm that makes lubricants from vegetable fats and oils. Binol, which sells its products to clients in the metalworking, forestry and construction industries, will add $15.3 million to Quaker’s annual sales.
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NEWELL RUBBERMAID INC. $35 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 271.1 million; Market cap: $9.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.9%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and many other household goods.
The company makes most of its products from oilbased resins, so it stands to gain from the recent drop in oil prices.
Newell continues to streamline its manufacturing and distribution operations, which should cut $270 million from its annual costs by mid-2015. The company now feels it can save an additional $200 million a year by the end of 2017.
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The company makes most of its products from oilbased resins, so it stands to gain from the recent drop in oil prices.
Newell continues to streamline its manufacturing and distribution operations, which should cut $270 million from its annual costs by mid-2015. The company now feels it can save an additional $200 million a year by the end of 2017.
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