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.
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NEWMONT MINING CORP. $23 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 498.8 million; Market cap: $11.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 0.4%; TSINetwork Rating: Average; www.newmont.com) has sold its 44% stake in a joint venture that owns the La Herradura gold mine in northern Mexico.
The company received $450 million for its stake. Including this sale, Newmont has now raised $1.3 billion by selling less important assets in the past year. That frees up cash for more promising projects, such as its Merian gold mine in Suriname, which will cost $1 billion and should open in late 2016. Merian’s reserves should last 11 years.
Newmont is a hold.
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The company received $450 million for its stake. Including this sale, Newmont has now raised $1.3 billion by selling less important assets in the past year. That frees up cash for more promising projects, such as its Merian gold mine in Suriname, which will cost $1 billion and should open in late 2016. Merian’s reserves should last 11 years.
Newmont is a hold.
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CANON INC. ADRs $30 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.1 billion; Market cap: $33.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.canon.com) continues to see weak demand for printers and digital cameras. That’s because consumers are taking more photos with their smartphones. They’re also increasingly storing their pictures online instead of printing them.
As a result, Canon’s sales fell 6.0% in the three months ended June 30, 2014, to $9.2 billion from $9.8 billion a year earlier.
However, thanks to a successful cost-cutting plan, the company’s earnings jumped 19.2%, to $800.5 million from $671.7 million. Earnings per ADR rose 24.1%, to $0.72 from $0.58 (each American Depositary Receipt represents one common share), on fewer shares outstanding.
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As a result, Canon’s sales fell 6.0% in the three months ended June 30, 2014, to $9.2 billion from $9.8 billion a year earlier.
However, thanks to a successful cost-cutting plan, the company’s earnings jumped 19.2%, to $800.5 million from $671.7 million. Earnings per ADR rose 24.1%, to $0.72 from $0.58 (each American Depositary Receipt represents one common share), on fewer shares outstanding.
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HEWLETT-PACKARD CO. $34 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.9 billion; Market cap: $64.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hp.com) plans to break itself into two separate companies.
The first firm, called Hewlett-Packard Enterprise, will sell computing products, like servers and analytics software, to businesses and governments. It will also offer cloud computing services and financing. Hewlett-Packard Enterprise will have annual revenue of $58.4 billion and gross profits of $6 billion.
Meg Whitman, Hewlett’s current chief executive officer, will become this firm’s CEO.
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The first firm, called Hewlett-Packard Enterprise, will sell computing products, like servers and analytics software, to businesses and governments. It will also offer cloud computing services and financing. Hewlett-Packard Enterprise will have annual revenue of $58.4 billion and gross profits of $6 billion.
Meg Whitman, Hewlett’s current chief executive officer, will become this firm’s CEO.
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SNAP-ON INC. $126 (New York symbol SNA; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 58.1 million; Market cap: $7.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.4%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics and sells them through a fleet of franchised vans that visit garages. It also makes specialized tools for mining companies, electrical power plant operators and other industrial customers.
The company plans to spend $75 million to $80 million in 2014 on upgrades to its distribution network, developing new products and expanding in emerging markets (overseas customers supply around a third of its revenue).
Snap-On is also fueling its growth with acquisitions. In May 2013, it bought Challenger Lifts for $38.2 million. This business makes systems that raise cars off the ground. The purchase contributed $39.3 million to Snap-On’s 2013 revenue of $3.1 billion.
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The company plans to spend $75 million to $80 million in 2014 on upgrades to its distribution network, developing new products and expanding in emerging markets (overseas customers supply around a third of its revenue).
Snap-On is also fueling its growth with acquisitions. In May 2013, it bought Challenger Lifts for $38.2 million. This business makes systems that raise cars off the ground. The purchase contributed $39.3 million to Snap-On’s 2013 revenue of $3.1 billion.
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MONSANTO CO. $113 (New York symbol MON, Aggressive Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 524.4 million; Market cap: $59.3 billion; Price-to-sales ratio: 3.9; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.monsanto.com) gets 70% of its revenue from genetically modified seeds for corn, soybeans and other crops. The remaining 30% comes from selling herbicides, mainly under the Roundup brand.
In its 2014 fiscal year, which ended August 31, 2014, Monsanto’s earnings rose 10.4%, to $2.7 billion from $2.5 billion in 2013. Per-share earnings gained 13.5%, to $5.22 from $4.60, on fewer shares outstanding. Without unusual items, such as costs to settle a lawsuit, earnings per share rose 14.7%, to $5.23 from $4.56.
Sales rose 6.7%, to $15.9 billion from $14.9 billion. Seed sales gained 3.9%, as record soybean seed demand offset weaker sales of corn seeds. Sales of other agricultural products rose 13.1%.
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In its 2014 fiscal year, which ended August 31, 2014, Monsanto’s earnings rose 10.4%, to $2.7 billion from $2.5 billion in 2013. Per-share earnings gained 13.5%, to $5.22 from $4.60, on fewer shares outstanding. Without unusual items, such as costs to settle a lawsuit, earnings per share rose 14.7%, to $5.23 from $4.56.
Sales rose 6.7%, to $15.9 billion from $14.9 billion. Seed sales gained 3.9%, as record soybean seed demand offset weaker sales of corn seeds. Sales of other agricultural products rose 13.1%.
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PEPSICO INC. $94 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $141.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.pepsico.com) has launched Pepsi True, a new cola that has 30% less sugar than regular Pepsi.
This new drink uses stevia, an all-natural sweetener without the calories or health drawbacks of sugar. Pepsi True will also contain no artificial sweeteners or high-fructose corn syrup.
The launch follows a nine-year decline in U.S. soft drink sales as a result of increased health concerns spurred by research linking these drinks to obesity and other conditions.
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This new drink uses stevia, an all-natural sweetener without the calories or health drawbacks of sugar. Pepsi True will also contain no artificial sweeteners or high-fructose corn syrup.
The launch follows a nine-year decline in U.S. soft drink sales as a result of increased health concerns spurred by research linking these drinks to obesity and other conditions.
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FAIR ISAAC CORP. $56 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 32.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.7; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. It also makes software that helps credit card issuers control fraud and analyze their cardholders’spending patterns.
In its 2014 third quarter, which ended June 30, Fair Isaac earned $29.2 million, down 0.1% from $29.3 million a year earlier. Earnings per share rose 3.8%, to $0.83 from $0.80, on fewer shares outstanding.
Overall revenue gained 7.5%, to $197.6 million from $183.8 million. Revenue from its applications division (66% of the total) rose 12.9% on increased licensing fees from software that detects bank fraud.
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In its 2014 third quarter, which ended June 30, Fair Isaac earned $29.2 million, down 0.1% from $29.3 million a year earlier. Earnings per share rose 3.8%, to $0.83 from $0.80, on fewer shares outstanding.
Overall revenue gained 7.5%, to $197.6 million from $183.8 million. Revenue from its applications division (66% of the total) rose 12.9% on increased licensing fees from software that detects bank fraud.
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DUN & BRADSTREET CORP. $117 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 36.3 million; Market cap: $4.2 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.5%; TSINetwork Rating: Average; www.dnb.com) provides credit reports on over 230 million companies. Its clients use this information to make lending and buying decisions.
Credit reports supply two thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.
In the quarter ended June 30, 2014, Dun & Bradstreet’s revenue rose 1.8%, to $393.0 million from $386.0 million a year earlier. Stronger demand for its credit reports and other products in North America (72% of total revenue) and Europe (16%) offset weaker sales in Asia (12%).
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Credit reports supply two thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.
In the quarter ended June 30, 2014, Dun & Bradstreet’s revenue rose 1.8%, to $393.0 million from $386.0 million a year earlier. Stronger demand for its credit reports and other products in North America (72% of total revenue) and Europe (16%) offset weaker sales in Asia (12%).
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BROADRIDGE FINANCIAL SERVICES INC. $42 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.5 million; Market cap: $5.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.6%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.
Without one-time items, Broadridge earned $144.6 million in its fiscal 2014 fourth quarter, which ended June 30, 2014. That’s up 1.5% from $142.4 million a year earlier. Earnings per share rose 0.9%, to $1.16 from $1.15, on more shares outstanding.
Overall revenue gained 2.4%, to $885.9 million from $865.1 million. Revenue from contracts that pay recurring fees rose 7% and accounted for two-thirds of the total. The remaining third comes from one-time events, such as notifications of special shareholder meetings and sending out information when mutual funds change managers.
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Without one-time items, Broadridge earned $144.6 million in its fiscal 2014 fourth quarter, which ended June 30, 2014. That’s up 1.5% from $142.4 million a year earlier. Earnings per share rose 0.9%, to $1.16 from $1.15, on more shares outstanding.
Overall revenue gained 2.4%, to $885.9 million from $865.1 million. Revenue from contracts that pay recurring fees rose 7% and accounted for two-thirds of the total. The remaining third comes from one-time events, such as notifications of special shareholder meetings and sending out information when mutual funds change managers.
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STATE STREET CORP. $68 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 423.5 million; Market cap: $28.8 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.8%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to large institutional investors, like mutual funds and pension plans.
The company’s fee income rises and falls with the value of the mutual funds and other securities it administers. Thanks to improving stock markets and new contracts, its assets under custody and administration rose to $28.4 trillion as of June 30, 2014, up 10.3% from a year earlier.
These gains offset the lower interest income the company earned on bank deposits and certain securities. As a result, its overall revenue rose 3.7% in the three months ended June 30, 2014, to $2.7 billion from $2.6 billion a year earlier.
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The company’s fee income rises and falls with the value of the mutual funds and other securities it administers. Thanks to improving stock markets and new contracts, its assets under custody and administration rose to $28.4 trillion as of June 30, 2014, up 10.3% from a year earlier.
These gains offset the lower interest income the company earned on bank deposits and certain securities. As a result, its overall revenue rose 3.7% in the three months ended June 30, 2014, to $2.7 billion from $2.6 billion a year earlier.
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