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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NEW GOLD $4.71 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 504.0 million; Market cap: $2.4 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.
New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.
In the three months ended September 30, 2014, New Gold’s cash flow per share rose 60.0%, to $0.16 from $0.10 a year earlier. Gold production fell slightly, to 93,367 ounces from 94,038. But an 8.2% rise in copper output from New Afton and lower overall costs increased New Gold’s cash flow.
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New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.
In the three months ended September 30, 2014, New Gold’s cash flow per share rose 60.0%, to $0.16 from $0.10 a year earlier. Gold production fell slightly, to 93,367 ounces from 94,038. But an 8.2% rise in copper output from New Afton and lower overall costs increased New Gold’s cash flow.
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LEON’S FURNITURE $15.20 (Toronto symbol LNF; TSINetwork Rating: Average) (416- 243-7880; www.leons.ca; Shares outstanding: 71.0 million; Market cap: $1.1 billion; Dividend yield: 2.6%) reported sales of $629.2 million in the three months ended September 30, 2014, up slightly from $628.6 million a year earlier.
Earnings gained 25.4%, to $27.3 million, or $0.38 a share. A year earlier, Leon’s earned $21.8 million, or $0.31 a share.
Growth by acquisition can be risky, especially with a deal as big as The Brick purchase. However, Leon’s is doing a good job of integrating The Brick. It’s also finding savings by combining both companies’ distribution networks and computer systems.
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Earnings gained 25.4%, to $27.3 million, or $0.38 a share. A year earlier, Leon’s earned $21.8 million, or $0.31 a share.
Growth by acquisition can be risky, especially with a deal as big as The Brick purchase. However, Leon’s is doing a good job of integrating The Brick. It’s also finding savings by combining both companies’ distribution networks and computer systems.
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ACI WORLDWIDE $19.49 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 114.9 million; Market cap: $2.2 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud.
In the quarter ended September 30, 2014, ACI’s revenue rose 16.7%, to $249.6 million from $213.9 million a year earlier, mainly due to contributions from acquisitions. Earnings per share rose 5.9%, to $0.18 from $0.17.
The company has purchased a number of other firms recently. In November 2013, it paid $109 million for Official Payments Holdings, which processes about 20 million payments totalling over $9 billion annually. ACI also bought Retail Decisions (ReD) in August 2014 for $205 million. ReD is an e-commerce and fraud-prevention firm whose software serves the payments industry.
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In the quarter ended September 30, 2014, ACI’s revenue rose 16.7%, to $249.6 million from $213.9 million a year earlier, mainly due to contributions from acquisitions. Earnings per share rose 5.9%, to $0.18 from $0.17.
The company has purchased a number of other firms recently. In November 2013, it paid $109 million for Official Payments Holdings, which processes about 20 million payments totalling over $9 billion annually. ACI also bought Retail Decisions (ReD) in August 2014 for $205 million. ReD is an e-commerce and fraud-prevention firm whose software serves the payments industry.
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MITEL NETWORKS $11.35 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.9 million; Market cap: $1.1 billion; No dividends paid) has reported its third quarter of results that include Aastra Technologies, a Stock Pickers Digest recommendation that Mitel acquired in a friendly takeover on January 31, 2014.
In the latest quarter, Mitel’s revenue jumped 101.2%, to $272.4 million from $135.0 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
Without one-time items, earnings gained 134.6%, to $19.0 million from $8.1 million. However, earnings per share rose just 28.6%, to $0.18 from $0.14, as the company issued new shares to pay for Aastra.
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In the latest quarter, Mitel’s revenue jumped 101.2%, to $272.4 million from $135.0 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
Without one-time items, earnings gained 134.6%, to $19.0 million from $8.1 million. However, earnings per share rose just 28.6%, to $0.18 from $0.14, as the company issued new shares to pay for Aastra.
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WESTJET AIRLINES $31.05 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1- 877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $3.9 billion; Dividend yield: 1.6%) has just reached a tentative labour agreement with its 1,200 pilots.
This deal follows a tentative agreement with a group representing its 2,600 flight attendants.
The company has a great hidden asset in its workforce, which continues to refrain from unionizing in favour of cooperating directly with management. Many flyers find that WestJet provides friendlier service than they get from unionized airlines. WestJet also benefits from the fact that most of its employees are also shareholders.
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This deal follows a tentative agreement with a group representing its 2,600 flight attendants.
The company has a great hidden asset in its workforce, which continues to refrain from unionizing in favour of cooperating directly with management. Many flyers find that WestJet provides friendlier service than they get from unionized airlines. WestJet also benefits from the fact that most of its employees are also shareholders.
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HECLA MINING COMPANY $2.40 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 349.5 million; Market cap: $881.7 million) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of its silver output comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. The company’s Casa Berardi mine in Quebec, which it bought for $796 million in June 2013, supplies the majority of its gold production.
In the three months ended September 30, 2014, Hecla produced 2.9 million ounces of silver, up 26.1% from 2.3 million ounces a year earlier. Gold output rose 15.0%, to 42,501 ounces from 36,966. Cash flow per share climbed to $0.09 from $0.06.
Hecla expects its two silver mines to produce 9.5 million to 10 million ounces in 2014, while Greens Creek will add 55,000 ounces of gold. Casa Berardi should produce 125,000 ounces of gold this year.
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In the three months ended September 30, 2014, Hecla produced 2.9 million ounces of silver, up 26.1% from 2.3 million ounces a year earlier. Gold output rose 15.0%, to 42,501 ounces from 36,966. Cash flow per share climbed to $0.09 from $0.06.
Hecla expects its two silver mines to produce 9.5 million to 10 million ounces in 2014, while Greens Creek will add 55,000 ounces of gold. Casa Berardi should produce 125,000 ounces of gold this year.
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SHERRITT INTERNATIONAL $2.62 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.5 million; Market cap: $779.5 million; Dividend yield: 1.5%) sold off all of its coal interests for $793 million in cash in April 2014.
The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12.
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The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12.
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NISSAN MOTOR (ADR) $18.30 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310- 771-3111; www.nissan-global.com; Shares outstanding: 2.3 billion; Market cap: $41.2 billion; No dividends paid) has risen over 9% since mid-October, after the Japanese government and the country’s central bank said they would make huge investments in Japanese stocks. They will also expand the money supply by making major government bond purchases.
These moves have pushed the yen down to a seven-year low. This makes exports—like Nissan’s vehicles—much more attractive to foreign buyers.
Just-released figures show the Japanese economy shrank by 1.6% in the latest quarter, erasing any doubt that the stimulus is needed.
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These moves have pushed the yen down to a seven-year low. This makes exports—like Nissan’s vehicles—much more attractive to foreign buyers.
Just-released figures show the Japanese economy shrank by 1.6% in the latest quarter, erasing any doubt that the stimulus is needed.
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DREAM OFFICE REIT $26.65 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 108.1 million; Market cap: $2.9 billion; Dividend yield: 8.4%) (formerly Dundee REIT) owns and manages 24.2 million square feet of office and retail space in major cities across Canada. In Western Canada, the REIT has 17% of its total square footage in Calgary and 21% elsewhere. In Eastern Canada, it holds 30% of its square footage in downtown Toronto, 14% in suburban Toronto and 18% elsewhere. Its occupancy rate is 93.0%.
In the quarter ended September 30, 2014, Dream’s revenue fell 1.3%, to $201.7 million from $204.3 million a year earlier. The trust sold five non-essential properties for $44.9 million in the latest quarter. That offset the expiring leases that it renewed at higher rates.
Cash flow per unit was unchanged at $0.63. Dream pays a monthly distribution of $0.1866 a unit, for an 8.4% yield.
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In the quarter ended September 30, 2014, Dream’s revenue fell 1.3%, to $201.7 million from $204.3 million a year earlier. The trust sold five non-essential properties for $44.9 million in the latest quarter. That offset the expiring leases that it renewed at higher rates.
Cash flow per unit was unchanged at $0.63. Dream pays a monthly distribution of $0.1866 a unit, for an 8.4% yield.
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3M COMPANY $139 (New York symbol MMM; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 648.0 million; Market cap: $90.1 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.3m.com) started up in 1902, when it was called the Minnesota Mining & Manufacturing Company.
It now makes over 55,000 different products, including pressure-sensitive masking and packaging tape, air purifiers, medical device components and reflective highway signs. Top brands include Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.
3M’s wide variety of products cuts its reliance on a single industry or customer. Sales from outside the U.S. account for two-thirds of its total.
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It now makes over 55,000 different products, including pressure-sensitive masking and packaging tape, air purifiers, medical device components and reflective highway signs. Top brands include Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.
3M’s wide variety of products cuts its reliance on a single industry or customer. Sales from outside the U.S. account for two-thirds of its total.
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