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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SYMANTEC CORP. $25.19 (Nasdaq symbol SYMC; TSINetwork Rating: Average)(408-517-8000; www.symantec.com; Shares outstanding: 690.1 million; Market cap: $17.4 billion; Dividend yield: 2.4%) sells computersecurity technology, including antivirus and emailfiltering software, to businesses and consumers.
In its fiscal 2015 second quarter, which ended October 3, 2014, Symantec’s earnings fell 7.5%, to $332 million from $359 million a year earlier. Per-share earnings declined 5.9%, to $0.48 from $0.51, on fewer shares outstanding. Revenue slipped 1.2%, to $1.62 billion from $1.64 billion.
The declines are mainly because consumers bought less security software and Symantec spent a high 17% of its revenue on research. But the company continues to restructure, including cutting jobs and simplifying product lines. That should lift its profits.
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In its fiscal 2015 second quarter, which ended October 3, 2014, Symantec’s earnings fell 7.5%, to $332 million from $359 million a year earlier. Per-share earnings declined 5.9%, to $0.48 from $0.51, on fewer shares outstanding. Revenue slipped 1.2%, to $1.62 billion from $1.64 billion.
The declines are mainly because consumers bought less security software and Symantec spent a high 17% of its revenue on research. But the company continues to restructure, including cutting jobs and simplifying product lines. That should lift its profits.
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DELPHI ENERGY $1.40 (Toronto symbol DEE; TSINetwork Rating: Speculative)(403-265-6171; www.delphienergy.ca; Shares outstanding: 155.4 million; Market cap: $217.6 million; No dividends paid) develops, produces and explores for oil and natural gas. About 67% of its output is gas. The remaining 33% is oil.
In the three months ended September 30, 2014, Delphi’s production rose 7.5%, to 9,461 barrels of oil equivalent a day from 8,797 a year earlier. Production was down 9.0% from 10,397 barrels a day in the quarter ended June 30, 2014, but that was due to processing delays caused by outside companies.
Those issues, which were resolved at the end of August, cut Delphi’s production by about 1,700 barrels a day in the latest quarter. Its output averaged 11,500 barrels a day in September and October.
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In the three months ended September 30, 2014, Delphi’s production rose 7.5%, to 9,461 barrels of oil equivalent a day from 8,797 a year earlier. Production was down 9.0% from 10,397 barrels a day in the quarter ended June 30, 2014, but that was due to processing delays caused by outside companies.
Those issues, which were resolved at the end of August, cut Delphi’s production by about 1,700 barrels a day in the latest quarter. Its output averaged 11,500 barrels a day in September and October.
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BIRCHCLIFF ENERGY $9.05 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Shares outstanding: 152.2 million; Market cap: $1.4 billion; No dividends paid) develops, produces and explores for oil and gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 84% of its output is gas. The remaining 16% is oil.
In the three months ended September 30, 2014, Birchcliff’s production rose 38.8%, to 34,235 barrels of oil equivalent a day from 24,662 a year earlier. Cash flow per share jumped 66.7%, to $0.50 from $0.30, on the increased output and higher gas prices.
Birchcliff recently completed Phase 4 of its gasplant expansion in Pouce Coupe, Alberta. That raised the facility’s capacity by 20% and will let Birchcliff bring the additional gas it is now producing to market.
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In the three months ended September 30, 2014, Birchcliff’s production rose 38.8%, to 34,235 barrels of oil equivalent a day from 24,662 a year earlier. Cash flow per share jumped 66.7%, to $0.50 from $0.30, on the increased output and higher gas prices.
Birchcliff recently completed Phase 4 of its gasplant expansion in Pouce Coupe, Alberta. That raised the facility’s capacity by 20% and will let Birchcliff bring the additional gas it is now producing to market.
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MAJOR DRILLING $5.57 (Toronto symbol MDI; TSINetwork Rating: Speculative)(1-866- 264-3986; www.majordrilling.com; Shares outstanding: 80.1 million; Market cap: $446.4 million; Dividend yield: 3.7%) is a large contract-drilling firm that mainly serves the mining industry.
In the three months ended October 31, 2014, Major’s revenue fell 5.5%, to $87.2 million from $92.3 million a year earlier. However, its revenue was up 29.0% from $67.6 million in the previous quarter. The company also reported a loss of $0.13 a share, less than its year-ago loss of $0.24.
Despite the significant mining industry downturn, the company continues to report positive cash flow. That should let it maintain its semi-annual dividend of $0.10 a share, which gives the stock a 3.6% yield.
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In the three months ended October 31, 2014, Major’s revenue fell 5.5%, to $87.2 million from $92.3 million a year earlier. However, its revenue was up 29.0% from $67.6 million in the previous quarter. The company also reported a loss of $0.13 a share, less than its year-ago loss of $0.24.
Despite the significant mining industry downturn, the company continues to report positive cash flow. That should let it maintain its semi-annual dividend of $0.10 a share, which gives the stock a 3.6% yield.
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BMTC GROUP $16.30 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk)(514-648-5757; No website; Shares outstanding: 45.1 million; Market cap: $733.3 million; Dividend yield: 1.5%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 36 outlets. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.
In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that it had operated as Brault & Martineau liquidation centres.
In 2013, BMTC opened four more EconoMax stores. It added another, in Joliette, in March 2014, and an additional one, in LaSalle, on October 24, 2014. BMTC is now considering purchasing land in Drummondville for a new store that would open in late 2015.
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In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that it had operated as Brault & Martineau liquidation centres.
In 2013, BMTC opened four more EconoMax stores. It added another, in Joliette, in March 2014, and an additional one, in LaSalle, on October 24, 2014. BMTC is now considering purchasing land in Drummondville for a new store that would open in late 2015.
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REITMANS (CANADA) LTD. $6.43 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $410.2 million; Dividend yield: 3.1%) owns 843 women’s clothing stores across Canada.
The chain consists of 343 Reitmans, 141 Penningtons, 107 Smart Set, 105 Addition Elle, 79 RW & Co. and 68 Thyme Maternity stores. It also has 21 Thyme Maternity boutiques in some Canadian Babies “R” Us locations.
In the three months ended November 1, 2014, Reitmans’ sales fell 4.5%, to $238.3 million from $249.4 million a year earlier. Same-store sales increased 0.2%. Sales fell because the company closed 52 underperforming stores.
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The chain consists of 343 Reitmans, 141 Penningtons, 107 Smart Set, 105 Addition Elle, 79 RW & Co. and 68 Thyme Maternity stores. It also has 21 Thyme Maternity boutiques in some Canadian Babies “R” Us locations.
In the three months ended November 1, 2014, Reitmans’ sales fell 4.5%, to $238.3 million from $249.4 million a year earlier. Same-store sales increased 0.2%. Sales fell because the company closed 52 underperforming stores.
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WESTJET AIRLINES $32.32 (Toronto symbol WJA; TSINetwork Rating: Extra Risk)(1-877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $4.2 billion; Div. yield: 1.5%) has jumped to new all-time highs over the past month as fuel prices continue to drop along with oil prices. Fuel makes up around a third of an airline’s operating costs.
Meanwhile, the company’s load factor rose to 80.5% from 79.7% in November 2013. Load factor is the percentage of available seats occupied by paying passengers.
The increase was even more positive considering that the company increased its capacity by 6.9% to meet higher demand. Demand for WestJet’s flights remains high, and the launch of its new Canadian regional airline, WestJet Encore, has also gone well.
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Meanwhile, the company’s load factor rose to 80.5% from 79.7% in November 2013. Load factor is the percentage of available seats occupied by paying passengers.
The increase was even more positive considering that the company increased its capacity by 6.9% to meet higher demand. Demand for WestJet’s flights remains high, and the launch of its new Canadian regional airline, WestJet Encore, has also gone well.
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RUSSEL METALS $27.18 (Toronto symbol RUS; TSINetwork Rating: Speculative)(905-819-7777; www.russelmetals.com; Shares outstanding: 61.6 million; Market cap: $1.7 billion; Dividend yield: 5.6%) is one of North America’s largest metal distributors. It serves 39,000 clients at 53 locations in Canada and 12 in the U.S.
In the quarter ended September 30, 2014, Russel’s revenue rose 30.4%, to $1.04 billion from $796.8 million a year earlier. The company’s metal-services business raised its prices in response to higher demand, increasing its revenue by 14%. The energy products division, which supplies pipes for oil and gas drillers, saw its revenue jump 41%.
Earnings gained 74.6%, to $33.0 million, or $0.54 a share. A year earlier, the company earned $18.9 million, or $0.31. Russel has invested in new plants and processing equipment in the past three years, which has cut its costs and improved its efficiency. That’s paying off with higher profit margins.
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In the quarter ended September 30, 2014, Russel’s revenue rose 30.4%, to $1.04 billion from $796.8 million a year earlier. The company’s metal-services business raised its prices in response to higher demand, increasing its revenue by 14%. The energy products division, which supplies pipes for oil and gas drillers, saw its revenue jump 41%.
Earnings gained 74.6%, to $33.0 million, or $0.54 a share. A year earlier, the company earned $18.9 million, or $0.31. Russel has invested in new plants and processing equipment in the past three years, which has cut its costs and improved its efficiency. That’s paying off with higher profit margins.
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GOODYEAR TIRE & RUBBER CO. $27.23 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 274.6 million; Market cap: $7.5 billion; Dividend yield: 0.9%) dipped as low as $18.87 in October but has since rebounded. It’s now up 11.5% since we made it our #1 pick for 2014 in our February issue at $24.42. In U.S. dollar terms, the shares have gained 16.9%.
In the quarter ended September 30, 2014, Goodyear’s sales fell 6.9%, to $4.7 billion from $5.0 billion a year earlier. The company sold 2% fewer tires worldwide, including a 4% drop in North America as car dealers stocked up on cheaper Chinese-made tires ahead of an expected U.S. tariff.
But even with the lower revenue, earnings jumped 39.9%, to $242.0 million, or $0.87 a share. A year earlier, it earned $190.0 million, or $0.68 a share.
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In the quarter ended September 30, 2014, Goodyear’s sales fell 6.9%, to $4.7 billion from $5.0 billion a year earlier. The company sold 2% fewer tires worldwide, including a 4% drop in North America as car dealers stocked up on cheaper Chinese-made tires ahead of an expected U.S. tariff.
But even with the lower revenue, earnings jumped 39.9%, to $242.0 million, or $0.87 a share. A year earlier, it earned $190.0 million, or $0.68 a share.
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INTACT FINANCIAL CORP. $81.73 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $10.8 billion; Dividend yield: 2.4%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended September 30, 2014, Intact’s revenue was virtually unchanged from a year earlier, at $1.91 billion. The company earned $204 million, or $1.55 a share, up sharply from $51 million, or $0.39. However, the year-earlier results include a pre-tax loss of $270 million, mostly related to weather. Similar losses in the 2014 quarter were $125 million.
Thanks to the lower catastrophe losses, Intact reported an improved combined ratio, or claims paid out divided by premiums taken in (the lower, the better) of 93.2% in the latest quarter, down from 102.8%.
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In the three months ended September 30, 2014, Intact’s revenue was virtually unchanged from a year earlier, at $1.91 billion. The company earned $204 million, or $1.55 a share, up sharply from $51 million, or $0.39. However, the year-earlier results include a pre-tax loss of $270 million, mostly related to weather. Similar losses in the 2014 quarter were $125 million.
Thanks to the lower catastrophe losses, Intact reported an improved combined ratio, or claims paid out divided by premiums taken in (the lower, the better) of 93.2% in the latest quarter, down from 102.8%.
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