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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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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YUM! BRANDS INC. $69 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 437.5 million; Market cap: $30.2 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.yum.com) earned $404 million in the three months ended September 6, 2014, up 165.8% from $152 million a year earlier. Per-share earnings rose 169.7%, to $0.89 from $0.33, on fewer shares outstanding.
If you disregard unusual items, including last year’s writedown of Yum’s investment in the Little Sheep restaurant chain in China, earnings rose 2.4%, to $0.87 a share from $0.85.
Sales declined 3.2%, to $3.35 billion from $3.5 billion. That’s mainly because a food-safety scare has cut traffic at Yum’s KFC outlets in China. As a result, the China division’s same-store sales fell 14%. However, same-store sales rose 3% at the company’s other KFC locations and 3% at Taco Bell. Same-store sales also rose 4% at the India division, while Pizza Hut saw a 1% decline.
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If you disregard unusual items, including last year’s writedown of Yum’s investment in the Little Sheep restaurant chain in China, earnings rose 2.4%, to $0.87 a share from $0.85.
Sales declined 3.2%, to $3.35 billion from $3.5 billion. That’s mainly because a food-safety scare has cut traffic at Yum’s KFC outlets in China. As a result, the China division’s same-store sales fell 14%. However, same-store sales rose 3% at the company’s other KFC locations and 3% at Taco Bell. Same-store sales also rose 4% at the India division, while Pizza Hut saw a 1% decline.
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CEDAR FAIR L.P. $47 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.9 million; Market cap: $2.6 billion; Priceto- sales ratio: 2.2; Dividend yield: 6.0%; TSINetwork Rating: Average; www.cedarfair.com) owns 11 amusement parks, three outdoor water parks, one indoor water park and five hotels.
The partnership reported record revenue of $939 million in the first eight months of 2014. Excluding a water park Cedar Fair sold in August 2013, comparable- park revenue improved by $12 million, or 1.3%, in 2014.
Colder-than-normal summer weather in the Great Lakes region cut attendance by 1%. However, visitors spent an average of 3% more in Cedar Fair’s parks.
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The partnership reported record revenue of $939 million in the first eight months of 2014. Excluding a water park Cedar Fair sold in August 2013, comparable- park revenue improved by $12 million, or 1.3%, in 2014.
Colder-than-normal summer weather in the Great Lakes region cut attendance by 1%. However, visitors spent an average of 3% more in Cedar Fair’s parks.
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KRAFT FOODS GROUP INC. $57 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 594.7 million; Market cap: $33.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.
The company has raised its quarterly dividend by 4.8%, to $0.55 a share from $0.525. The new annual rate of $2.20 yields 3.9%. This is the second time Kraft has raised the payout since its spinoff from Mondelez International in October 2012.
Kraft Foods is a buy.
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The company has raised its quarterly dividend by 4.8%, to $0.55 a share from $0.525. The new annual rate of $2.20 yields 3.9%. This is the second time Kraft has raised the payout since its spinoff from Mondelez International in October 2012.
Kraft Foods is a buy.
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