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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ATLANTIC TELE-NETWORK $67.08 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.9 million; Market cap: $1.1 billion; Dividend yield: 1.7%) closed the sale of its Alltel wireless business to AT&T (symbol T on New York) late last year. As a result, it now holds cash of $423.7 million, or $26.65 a share, and has paid off its $271.1 million of debt.
Atlantic now has wireless and wireline telecom operations in the U.S. Southwest, New England, New York State, Guyana, Bermuda and parts of the Caribbean islands.
The company continues to upgrade its wireless capacity, cellular coverage and technology. That’s paying off as customers use more mobile data for profitable services like music downloads, mobile gaming and e-books.
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Atlantic now has wireless and wireline telecom operations in the U.S. Southwest, New England, New York State, Guyana, Bermuda and parts of the Caribbean islands.
The company continues to upgrade its wireless capacity, cellular coverage and technology. That’s paying off as customers use more mobile data for profitable services like music downloads, mobile gaming and e-books.
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RESTAURANT BRANDS INTERNATIONAL $42.73 (Toronto symbol QSR; TSINetwork Rating: Average) (212-333-3810; www.rbi.com; Shares outstanding: 483.3 million; Market cap: $20.7 billion; Dividend yield: n/a) is the new company formed by the merger of Tim Hortons (old symbol THI) and Burger King Worldwide (old symbol BKW).
Restaurant Brands is the world’s thirdlargest fast-food chain, after McDonald’s and Yum Brands, with 14,000 Burger King restaurants and 4,590 Tim Hortons outlets in 100 countries. In all, these locations have annual sales of over $23 billion.
Roughly 72% of Tim Hortons shareholders opted to receive 3.0879 shares of the new company for each Tim Hortons share they held. A further 26% chose the default option of $65.50 (Canadian) in cash plus 0.8025 of a Restaurant Brands share, while 2% picked the all-cash option of $88.50 (Canadian) a share.
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Restaurant Brands is the world’s thirdlargest fast-food chain, after McDonald’s and Yum Brands, with 14,000 Burger King restaurants and 4,590 Tim Hortons outlets in 100 countries. In all, these locations have annual sales of over $23 billion.
Roughly 72% of Tim Hortons shareholders opted to receive 3.0879 shares of the new company for each Tim Hortons share they held. A further 26% chose the default option of $65.50 (Canadian) in cash plus 0.8025 of a Restaurant Brands share, while 2% picked the all-cash option of $88.50 (Canadian) a share.
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ALIMENTATION COUCHE-TARD $42.54 (Toronto symbol ATD.B; TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 565.8 million; Market cap: $24.4 billion; Dividend yield: 0.4%) has successfully rolled out its Simply Great Coffee program in Europe.
The company says the program’s launch at 20% of its Statoil Fuel & Retail locations last spring boosted those stores’ coffee sales by more than 10%.
Couche-Tard now plans to test the concept in more Canadian markets. It began selling its own brand of coffee in Sherbrooke, Quebec, this summer and will add about 20 locations in two different Canadian test markets in the coming months.
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The company says the program’s launch at 20% of its Statoil Fuel & Retail locations last spring boosted those stores’ coffee sales by more than 10%.
Couche-Tard now plans to test the concept in more Canadian markets. It began selling its own brand of coffee in Sherbrooke, Quebec, this summer and will add about 20 locations in two different Canadian test markets in the coming months.
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STUART OLSON INC. $7.65 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 25.0 million; Market cap: $191.3 million; Dividend yield: 6.3%) has agreed to buy Red Deer, Alberta-based Studon Electric & Controls for $76.2 million. The price could increase by up to $25.8 million over the next three years if Studon meets certain profitability targets.
Studon, which employs 500 to 1,000 electricians and instrumentation tradespeople at any given time, offers construction and maintenance services to the Western Canadian oil and gas, pipeline and petrochemical industries.
This business’s management team will keep leading its day-to-day operations, while Studon will report its results as part of Stuart Olson’s Industrial Group.
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Studon, which employs 500 to 1,000 electricians and instrumentation tradespeople at any given time, offers construction and maintenance services to the Western Canadian oil and gas, pipeline and petrochemical industries.
This business’s management team will keep leading its day-to-day operations, while Studon will report its results as part of Stuart Olson’s Industrial Group.
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YAMANA GOLD $4.38 (Toronto symbol YRI; TSINetwork Rating: Speculative)(416-815-0220; www.- yamana.com; Shares outstanding: 880.8 million; Market cap: $3.9 billion; Dividend yield: 1.6%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development.
Yamana now plans to form a subsidiary to hold some of its Brazilian assets. This will let the company focus on its main projects, including the Canadian Malartic gold mine in Quebec, in which it owns a 50% stake.
The new subsidiary, to be named Brio Gold Inc., will hold Yamana’s Fazenda Brasileiro and Pilar gold mines, as well as its C1 Santa Luz development project. Yamana will retain its Chapada and Jacobina mines in Brazil.
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Yamana now plans to form a subsidiary to hold some of its Brazilian assets. This will let the company focus on its main projects, including the Canadian Malartic gold mine in Quebec, in which it owns a 50% stake.
The new subsidiary, to be named Brio Gold Inc., will hold Yamana’s Fazenda Brasileiro and Pilar gold mines, as well as its C1 Santa Luz development project. Yamana will retain its Chapada and Jacobina mines in Brazil.
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FAIR ISAAC CORP. $68.40 (New York symbol FICO; TSINetwork Rating: Average)(415-472-2211; www.fairisaac.com; Shares outstanding: 32.1 million; Market cap: $2.2 billion; Dividend yield: 0.1%) earned $1.10 a share in its fiscal 2014 fourth quarter, which ended September 30, 2014. That was up 39.2% from $0.79 a year earlier.
Sales rose 16.4%, to $221.6 million from $190.3 million. The company saw stronger sales at its applications division (66% of total revenue) on increased licensing revenue from software that detects bank fraud.
The company expects to earn $2.78 to $2.88 a share for all of fiscal 2015, and it trades at a high 24.2 times the midpoint of that range. As well, the banking industry supplies 75% of Fair Isaac’s revenue, and slowing mortgage demand could hurt sales of its credit-scoring software.
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Sales rose 16.4%, to $221.6 million from $190.3 million. The company saw stronger sales at its applications division (66% of total revenue) on increased licensing revenue from software that detects bank fraud.
The company expects to earn $2.78 to $2.88 a share for all of fiscal 2015, and it trades at a high 24.2 times the midpoint of that range. As well, the banking industry supplies 75% of Fair Isaac’s revenue, and slowing mortgage demand could hurt sales of its credit-scoring software.
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ADOBE SYSTEMS INC. $74.00 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 498.7 million; Market cap: $36.9 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. Graphic designers also use its programs to create print publications and web pages.
In its fiscal 2014 fourth quarter, which ended November 28, 2014, Adobe earned $180.3 million, up 9.5% from $164.6 million a year earlier. Per-share earnings improved 12.5%, to $0.36 from $0.32, on fewer shares outstanding. Revenue rose 3.0%, to $1.07 billion from $1.04 billion.
Adobe continues to shift to a subscription-based model for selling software. It now gets 66% of its sales from recurring subscriptions, up from 44% a year ago.
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In its fiscal 2014 fourth quarter, which ended November 28, 2014, Adobe earned $180.3 million, up 9.5% from $164.6 million a year earlier. Per-share earnings improved 12.5%, to $0.36 from $0.32, on fewer shares outstanding. Revenue rose 3.0%, to $1.07 billion from $1.04 billion.
Adobe continues to shift to a subscription-based model for selling software. It now gets 66% of its sales from recurring subscriptions, up from 44% a year ago.
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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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