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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GENUINE PARTS CO. $102 (www.genpt.com) earned $1.24 a share in the quarter ended September 30, 2014, up 10.7% from $1.12 a year earlier. Sales rose 8.2%, to a record $4.0 billion from $3.7 billion. Sales at its auto parts business (52% of the total) rose 4.1%....
VISA INC. $257 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 620.0 million; Market cap: $159.3 billion; Price-to-sales ratio: 12.8; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions. Visa gets most of its revenue from fees it charges the card issuers and merchants that use its network. It bases these fees on transaction volumes and other factors. The banks that issue the cards are responsible for evaluating customer creditworthiness and collecting payments, not Visa.
Thanks to the continued growth of online shopping, which has encouraged more credit and debit card use, Visa’s revenue rose 57.5%, from $8.1 billion in fiscal 2010 to $12.7 billion in 2014 (fiscal years end September 30).
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Thanks to the continued growth of online shopping, which has encouraged more credit and debit card use, Visa’s revenue rose 57.5%, from $8.1 billion in fiscal 2010 to $12.7 billion in 2014 (fiscal years end September 30).
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BAXTER INTERNATIONAL INC. $72 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 542.0 million; Market cap: $39.0 billion; Priceto- sales ratio: 2.4; Dividend yield: 2.9%; TSINetwork Rating: Average; www.baxter.com) earned $1.35 a share in the three months ended September 30, 2014, up 8.9% from $1.24 a year earlier. Sales rose 13.1%, to $4.2 billion from $3.7 billion.
Baxter’s medical products business (60% of total revenue) reported 17.2% higher sales, thanks to Gambro, a dialysisequipment maker the company bought for $3.9 billion in September 2013. Without Gambro, medical product sales rose 5%.
Sales at the BioScience division (40% of the total) gained 7.5%, mainly due to stronger demand for its Advate hemophilia drug.
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Baxter’s medical products business (60% of total revenue) reported 17.2% higher sales, thanks to Gambro, a dialysisequipment maker the company bought for $3.9 billion in September 2013. Without Gambro, medical product sales rose 5%.
Sales at the BioScience division (40% of the total) gained 7.5%, mainly due to stronger demand for its Advate hemophilia drug.
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IDEXX LABORATORIES INC. $149 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 47.7 million; Market cap: $7.1 billion; Price-to-sales ratio: 5.2; No dividends paid; TSINetwork Rating: Average; www.idexx.com) earned $1.05 a share in the quarter ended September 30, 2014, up 25.0% from $0.84 a year earlier. Sales rose 13.4%, to $383.5 million from $338.3 million.
These gains are mainly because veterinarians are buying more of Idexx’s equipment for detecting diseases in pets. That’s also spurring more demand for consumable products that vets must continuously replenish.
However, the stock has jumped 40% since the start of 2014 and now trades at a high 38.4 times the $3.88 a share that Idexx will likely earn over the full year.
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These gains are mainly because veterinarians are buying more of Idexx’s equipment for detecting diseases in pets. That’s also spurring more demand for consumable products that vets must continuously replenish.
However, the stock has jumped 40% since the start of 2014 and now trades at a high 38.4 times the $3.88 a share that Idexx will likely earn over the full year.
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APACHE CORP. $72 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 376.8 million; Market cap: $27.1 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.apachecorp.com) is selling some of its less important oil and gas properties in Texas and Oklahoma.
It will receive $1.4 billion when it completes the sale by the end of 2014. To put that in context, Apache earned $528 million, or $1.38 a share, in the three months ended September 30, 2014.
The company will probably invest the cash in its more promising shale oil properties in the U.S. Apache is a hold.
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It will receive $1.4 billion when it completes the sale by the end of 2014. To put that in context, Apache earned $528 million, or $1.38 a share, in the three months ended September 30, 2014.
The company will probably invest the cash in its more promising shale oil properties in the U.S. Apache is a hold.
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DIEBOLD INC. $36 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.6 million; Market cap: $2.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.2%; TSINetwork Rating: Average; www. diebold.com) aims to save a total of $150 million by the end of 2015, mainly through layoffs and plant closures.
In the third quarter of 2014, the company earned $33.0 million, or $0.51 a share, up from a year-earlier loss of $21.7 million, or $0.34. Without unusual items, earnings per share fell 3.6%, to $0.54 from $0.56.
Sales gained 8.9%, to $768.0 million from $705.4 million. Stronger demand for automated teller machines in Europe and Asia offset slower sales in North America and Latin America. Diebold also sold more security systems.
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In the third quarter of 2014, the company earned $33.0 million, or $0.51 a share, up from a year-earlier loss of $21.7 million, or $0.34. Without unusual items, earnings per share fell 3.6%, to $0.54 from $0.56.
Sales gained 8.9%, to $768.0 million from $705.4 million. Stronger demand for automated teller machines in Europe and Asia offset slower sales in North America and Latin America. Diebold also sold more security systems.
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FRONTIER COMMUNICATIONS CORP. $7.06 (Nasdaq symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 1.0 billion; Market cap: $7.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.7%; TSINetwork Rating: Average; www.frontier.com) recently paid $2.0 billion for AT&T’s traditional phone business in Connecticut. The company now has 3.0 million residential and business customers in 28 states.
Excluding acquisition-related costs, Frontier earned $47.7 million, or $0.05 a share, in the third quarter of 2014. That’s down 15.6% from $56.5 million, or $0.06 a share, a year earlier. Even with the AT&T operations, revenue fell 3.7%, to $1.14 billion from $1.19 billion, as lower telephone revenue offset higher sales of Internet services.
The company borrowed most of the cash it needed for this purchase, which increased its long-term debt to $9.2 billion, or 1.3 times its market cap.
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Excluding acquisition-related costs, Frontier earned $47.7 million, or $0.05 a share, in the third quarter of 2014. That’s down 15.6% from $56.5 million, or $0.06 a share, a year earlier. Even with the AT&T operations, revenue fell 3.7%, to $1.14 billion from $1.19 billion, as lower telephone revenue offset higher sales of Internet services.
The company borrowed most of the cash it needed for this purchase, which increased its long-term debt to $9.2 billion, or 1.3 times its market cap.
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WINDSTREAM HOLDINGS INC. $10 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 602.8 million; Market cap: $6.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 10.0%; TSINetwork Rating: Average; www.windstream.com) gets 73% of its revenue by selling high-speed Internet and other communication services to 357,700 businesses.
The other 27% comes from selling phone, Internet and video services to 3.2 million residential customers, mainly in the rural U.S.
In July 2014, the company announced that it would transfer its fibre optic and copper networks, some land and buildings to a new real estate investment trust (REIT). Windstream will then lease these assets from the REIT for at least the next 15 years at $650.0 million annually.
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The other 27% comes from selling phone, Internet and video services to 3.2 million residential customers, mainly in the rural U.S.
In July 2014, the company announced that it would transfer its fibre optic and copper networks, some land and buildings to a new real estate investment trust (REIT). Windstream will then lease these assets from the REIT for at least the next 15 years at $650.0 million annually.
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TUPPERWARE BRANDS CORP. $66 (New York symbol TUP; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 50.4 million; Market cap: $3.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) makes household goods, mainly plastic food and beverage containers, as well as cosmetics and fragrances.
The stock is down 32% from its peak of $97 in December 2013. That’s mainly because the company gets 75% of its sales from outside North America, and the recent rise in the U.S. dollar has hurt the contribution of its overseas operations.
In the quarter ended September 27, 2014, Tupperware’s sales fell 2.4%, to $588.7 million from $603.2 million a year earlier. But if you exclude the negative impact of currency rates, sales rose 4%. Gains in emerging nations like Indonesia and Brazil offset declines in established markets, particularly Germany.
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The stock is down 32% from its peak of $97 in December 2013. That’s mainly because the company gets 75% of its sales from outside North America, and the recent rise in the U.S. dollar has hurt the contribution of its overseas operations.
In the quarter ended September 27, 2014, Tupperware’s sales fell 2.4%, to $588.7 million from $603.2 million a year earlier. But if you exclude the negative impact of currency rates, sales rose 4%. Gains in emerging nations like Indonesia and Brazil offset declines in established markets, particularly Germany.
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INTERNATIONAL FLAVORS & FRAGRANCES INC. $100 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.0 million; Market cap: $8.1 billion; Priceto- sales ratio: 2.7; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 compounds that improve the taste of food and the smell of consumer products.
In the third quarter of 2014, IFF’s sales rose 4.3%, to $773.8 million from $742.3 million a year earlier. That’s partly due to Israel-based Aromor Flavors and Fragrances, which IFF bought for $102.5 million in January 2014. Stronger demand in developing countries also contributed to the gain.
Earnings improved 8.4%, to $107.4 million from $99.0 million. Per-share earnings rose 9.2%, to $1.31 from $1.20, on fewer shares outstanding. Excluding unusual items, such as costs to integrate Aromor, earnings per share gained 8.2%, to $1.32 from $1.22. IFF spends over 8% of its sales on research, so it’s more profitable than it appears.
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In the third quarter of 2014, IFF’s sales rose 4.3%, to $773.8 million from $742.3 million a year earlier. That’s partly due to Israel-based Aromor Flavors and Fragrances, which IFF bought for $102.5 million in January 2014. Stronger demand in developing countries also contributed to the gain.
Earnings improved 8.4%, to $107.4 million from $99.0 million. Per-share earnings rose 9.2%, to $1.31 from $1.20, on fewer shares outstanding. Excluding unusual items, such as costs to integrate Aromor, earnings per share gained 8.2%, to $1.32 from $1.22. IFF spends over 8% of its sales on research, so it’s more profitable than it appears.
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