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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SYMANTEC CORP. $24 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 690.3 million; Market cap: $16.6 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.symantec.com) sells antivirus software and other computer security services.
Home Depot (New York symbol HD) recently hired Symantec and another firm to help investigate a major data breach. Online intruders secretly installed software on Home Depot’s systems that let them steal about 56 million credit card numbers and related data, but not personal identification numbers for debit cards.
Symantec has been trying to expand in the fast-growing cyber-security software/services market, and this contract will give it a lot of industry credibility.
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Home Depot (New York symbol HD) recently hired Symantec and another firm to help investigate a major data breach. Online intruders secretly installed software on Home Depot’s systems that let them steal about 56 million credit card numbers and related data, but not personal identification numbers for debit cards.
Symantec has been trying to expand in the fast-growing cyber-security software/services market, and this contract will give it a lot of industry credibility.
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TIM HORTONS INC. $80 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 132.8 million; Market cap: $10.6 billion; Price-to-sales ratio: 3.7; Dividend yield: 1.5%; TSINetwork Rating: Average; www.timhortons.com) still plans to go ahead with its deal to merge with Miami-based Burger King Worldwide (New York symbol BKW), even though the U.S. government is now clamping down on “tax inversion” deals like this.
The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in U.S.
Under the new rules, it is now more difficult for the foreign parent firm to shift funds between subsidiaries.
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The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in U.S.
Under the new rules, it is now more difficult for the foreign parent firm to shift funds between subsidiaries.
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GOOGLE INC. (Nasdaq symbols GOOG $588 (class C: nonvoting) and GOOGL $598 (class A: one vote per share); Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 676.4 million; Market cap: $397.7 billion; Price-to-sales ratio: 6.1; No dividends paid; TSINetwork Rating: Above Average; www.google.com) operates the world’s leading Internet search service. The company has about 70% of this market, mainly because its innovative technology helps users quickly find the information they’re seeking. The U.S. supplies 45% of Google’s revenue.
The company gets about 95% of its revenue by selling advertising on its websites. It mainly does this with its AdWords program.
Using AdWords, advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads.
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The company gets about 95% of its revenue by selling advertising on its websites. It mainly does this with its AdWords program.
Using AdWords, advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads.
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PAYPAL HOLDINGS INC. $34 (Nasdaq symbol PYPL; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $40.8 billion; Price-to-sales ratio: 4.7; No dividends paid; TSINetwork Rating: Above Average; www. paypal.com) stopped processing transactions on U.S. online gambling websites following its 2002 acquisition by eBay.
But now that it’s an independent company again, PayPal is testing its online payment system with four U.S. gaming firms, including Caesar’s Entertainment. Online gambling could become a big source of revenue for PayPal, particularly if more states approve it. Right now, Internet gambling is only legal in Nevada, New Jersey and Delaware.
PayPal is a hold.
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But now that it’s an independent company again, PayPal is testing its online payment system with four U.S. gaming firms, including Caesar’s Entertainment. Online gambling could become a big source of revenue for PayPal, particularly if more states approve it. Right now, Internet gambling is only legal in Nevada, New Jersey and Delaware.
PayPal is a hold.
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ENERFLEX LTD. $19.28 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 78.5 million; Market cap: $1.5 billion; Dividend yield: 1.6%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators. On June 30, 2014, the company completed the $430 million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP, an international contract compression and processing subsidiary, and a division that provides aftermarket services.
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Earnings gained 5.8%, to $28.9 million from $27.3 million. Per-share earnings increased 2.8%, to $0.37 from $0.36, on more shares outstanding.
Dividend on the rise The company’s financial position is strong: its $130.5 million of long-term debt—down from $169.4 million a year ago—represents just 6.2% of its market cap.
Toromont raised its quarterly dividend by 15.4% with the April 2014
TOROMONT INDUSTRIES LTD. $26.75 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.1 million; Market cap: $2.1 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.
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Toromont raised its quarterly dividend by 15.4% with the April 2014
TOROMONT INDUSTRIES LTD. $26.75 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.1 million; Market cap: $2.1 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.
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BELLATRIX EXPLORATION $7.43 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 191.1 million; Market cap: $1.4 billion; No dividends paid) is now 7.4% owned by activist investor Orange Capital LLC. That’s up from the initial 5.3% interest that Orange Capital announced on September 4, 2014.
Orange wants Bellatrix to discuss changing the size and composition of its 10-person board of directors. It also wants the company to hire a financial advisor to explore strategic alternatives, including selling its midstream assets (natural gas processing plants and pipeline gathering systems) or an outright sale of the entire firm.
Bellatrix has been rapidly expanding over the past year. However, Alberta’s rising gas production has overwhelmed the pipelines that pump it to various processing facilities. This has hurt Bellatrix’s production and cash flow, as well as its share price. But when the bottlenecks are resolved, the company’s cash flow should jump.
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Orange wants Bellatrix to discuss changing the size and composition of its 10-person board of directors. It also wants the company to hire a financial advisor to explore strategic alternatives, including selling its midstream assets (natural gas processing plants and pipeline gathering systems) or an outright sale of the entire firm.
Bellatrix has been rapidly expanding over the past year. However, Alberta’s rising gas production has overwhelmed the pipelines that pump it to various processing facilities. This has hurt Bellatrix’s production and cash flow, as well as its share price. But when the bottlenecks are resolved, the company’s cash flow should jump.
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SYMANTEC CORP. $24.50 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (408-517-8000; www.symantec.com; Shares outstanding: 690.5 million; Market cap: $16.9 billion; Dividend yield: 2.5%) is one of two companies that Home Depot (New York symbol HD) has hired to help investigate its recently discovered data breach.
Stolen Home Depot credit card numbers have turned up for sale on a website called Rescator.cc, which has been linked to a Ukrainian dealer in stolen credit cards.
It’s not yet clear how many customers were affected, but the total could exceed 60 million in Canada and the U.S. Customers at Home Depot’s Mexico stores were not affected, nor were online shoppers at HomeDepot.com. Personal identification numbers (PINs) for debit cards were not taken.
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Stolen Home Depot credit card numbers have turned up for sale on a website called Rescator.cc, which has been linked to a Ukrainian dealer in stolen credit cards.
It’s not yet clear how many customers were affected, but the total could exceed 60 million in Canada and the U.S. Customers at Home Depot’s Mexico stores were not affected, nor were online shoppers at HomeDepot.com. Personal identification numbers (PINs) for debit cards were not taken.
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DOMINO’S PIZZA $76.57 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 55.1 million; Market cap: $4.2 billion; Dividend yield: 1.3%) has opened its first store in Norway, in the city of Oslo. It plans to open three more outlets in the city by the end of this year.
The master franchisee for the Norwegian stores is Domino’s Pizza Norway. Its chairman is Birgir Bieltvedt, who is also chairman of Domino’s Pizza Iceland. He previously helped launch Domino’s in Denmark and Germany.
The company now operates in over 70 markets worldwide, and its international stores supply almost half of its sales and a third of its earnings. However, Domino’s still has considerable room to grow overseas.
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The master franchisee for the Norwegian stores is Domino’s Pizza Norway. Its chairman is Birgir Bieltvedt, who is also chairman of Domino’s Pizza Iceland. He previously helped launch Domino’s in Denmark and Germany.
The company now operates in over 70 markets worldwide, and its international stores supply almost half of its sales and a third of its earnings. However, Domino’s still has considerable room to grow overseas.
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STANTEC INC. $72.86 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.8 million; Market cap: $3.4 billion; Dividend yield: 1.0%) plans to split its shares on a 2-for-1 basis, effective November 14, 2014.
When a company’s share price goes up, it has an incentive to split the stock to make it seem cheaper to investors, who may then buy more. This can make the stock more liquid than if the firm refrained from splits and let its share price go to uncommonly high levels.
Shares of Stantec are up 1,982% since we first recommended the company (then called Stanley Technology Group) at $3.50 in one of our first issues of Stock Pickers Digest in 1998.
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When a company’s share price goes up, it has an incentive to split the stock to make it seem cheaper to investors, who may then buy more. This can make the stock more liquid than if the firm refrained from splits and let its share price go to uncommonly high levels.
Shares of Stantec are up 1,982% since we first recommended the company (then called Stanley Technology Group) at $3.50 in one of our first issues of Stock Pickers Digest in 1998.
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