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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GOODYEAR TIRE & RUBBER CO. $25.46 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 275.3 million; Market cap: $7.1 billion; Dividend yield: 0.9%) is the world’s largest tire maker, with 52 plants in 22 countries.
In the quarter ended June 30, 2014, Goodyear’s revenue fell 4.9%, to $4.66 billion from $4.89 billion a year earlier. The company sold fewer tires in Latin America, which offset higher tire sales in all other regions, including North America.
Even with the lower revenue, earnings per share rose 8.1%, to $0.80 from $0.74, excluding one-time items. Goodyear’s costs, for rubber and other raw materials, continue to fall. As well, the company now has a favourable new contract with the United Steelworkers.
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In the quarter ended June 30, 2014, Goodyear’s revenue fell 4.9%, to $4.66 billion from $4.89 billion a year earlier. The company sold fewer tires in Latin America, which offset higher tire sales in all other regions, including North America.
Even with the lower revenue, earnings per share rose 8.1%, to $0.80 from $0.74, excluding one-time items. Goodyear’s costs, for rubber and other raw materials, continue to fall. As well, the company now has a favourable new contract with the United Steelworkers.
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BROADRIDGE FINANCIAL SOLUTIONS $42.03 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 120.7 million; Market cap: $4.9 billion; Dividend yield: 2.6%) 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 1.7%, to $1.17 from $1.15, on fewer 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.
Excluding unusual items, Broadridge expects to earn $2.42 to $2.52 a share in fiscal 2015. The stock trades at a reasonable 17.0 times the midpoint of that range. The shares yield 2.6%.
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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.
Excluding unusual items, Broadridge expects to earn $2.42 to $2.52 a share in fiscal 2015. The stock trades at a reasonable 17.0 times the midpoint of that range. The shares yield 2.6%.
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ADOBE SYSTEMS INC. $71.02 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 497.4 million; Market cap: $35.8 billion; No dividends paid) makes a range of software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages.
In its fiscal 2014 second quarter, which ended May 30, 2014, Adobe earned $186.3 million, up 1.9% from $182.9 million a year earlier. Earnings per share rose 2.8%, to $0.37 from $0.36, on fewer shares outstanding. Revenue gained 5.7%, to $1.07 billion from $1.01 billion.
The improved results are mainly because Adobe is signing up more subscribers to its Creative Cloud package of photo editing and desktop publishing programs. The company added 464,000 Creative Cloud customers in the quarter and currently has a total of 2.3 million. It now expects to end fiscal 2014 with 3.3 million users, up from its earlier target of 3.0 million.
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In its fiscal 2014 second quarter, which ended May 30, 2014, Adobe earned $186.3 million, up 1.9% from $182.9 million a year earlier. Earnings per share rose 2.8%, to $0.37 from $0.36, on fewer shares outstanding. Revenue gained 5.7%, to $1.07 billion from $1.01 billion.
The improved results are mainly because Adobe is signing up more subscribers to its Creative Cloud package of photo editing and desktop publishing programs. The company added 464,000 Creative Cloud customers in the quarter and currently has a total of 2.3 million. It now expects to end fiscal 2014 with 3.3 million users, up from its earlier target of 3.0 million.
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SYMANTEC CORP. $24.28 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (408-517-8000; www.symantec.com; Shares outstanding: 692.7 million; Market cap: $16.7 billion; Dividend yield: 2.5%) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software.
In its fiscal 2015 first quarter, which ended July 4, 2014, Symantec’s earnings rose 0.6%, to $313 million from $311 million a year earlier. Per-share earnings gained 2.3%, to $0.45 from $0.44, on fewer shares outstanding. Revenue rose 1.5%, to $1.74 billion from $1.71 billion.
The gains were mostly due to savings from a new restructuring plan that includes job cuts and simplifying product lines. In addition, Symantec separated its sales force into two groups: one focuses on winning new clients, and the other serves existing customers.
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In its fiscal 2015 first quarter, which ended July 4, 2014, Symantec’s earnings rose 0.6%, to $313 million from $311 million a year earlier. Per-share earnings gained 2.3%, to $0.45 from $0.44, on fewer shares outstanding. Revenue rose 1.5%, to $1.74 billion from $1.71 billion.
The gains were mostly due to savings from a new restructuring plan that includes job cuts and simplifying product lines. In addition, Symantec separated its sales force into two groups: one focuses on winning new clients, and the other serves existing customers.
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NISSAN MOTOR (ADR) $19.56 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissan-global.com; Shares outstanding: 2.3 billion; Market cap: $44.2 billion; No dividends paid) is Japan’s second-largest automaker, after Toyota.
In its fiscal 2015 first quarter, which ended June 30, 2014, the company earned 112.1 billion yen ($1.1 billion U.S., or $0.49 per ADR), up 36.7% from 82.0 billion yen ($804.4 million U.S., or $0.36) a year earlier.
Revenue rose 10.8%, to 2.47 trillion yen ($24.1 billion U.S.) from 2.23 trillion yen ($21.8 billion). That’s because Nissan sold 1.24 million vehicles in the latest quarter, up 6.0% from a year earlier.
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DELPHI ENERGY $4.27 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 155.2 million; Market cap: $670.6 million; No dividends paid) develops, produces and explores for oil and natural gas. About 67% of its output is gas. The remaining 33% is oil.
In the three months ended June 30, 2014, the company’s production rose 36.2%, to 10,397 barrels of oil equivalent a day from 7,635 barrels a year earlier.
Cash flow per share jumped to $0.09 from $0.05. The production increase was the main reason for the gain. The company also realized higher prices for its oil and gas in the latest quarter.
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In the three months ended June 30, 2014, the company’s production rose 36.2%, to 10,397 barrels of oil equivalent a day from 7,635 barrels a year earlier.
Cash flow per share jumped to $0.09 from $0.05. The production increase was the main reason for the gain. The company also realized higher prices for its oil and gas in the latest quarter.
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BIRCHCLIFF ENERGY $11.92 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Shares outstanding: 145.9 million; Market cap: $1.7 billion; No dividends paid) develops, produces and explores for oil and gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 83% of its output is gas. The remaining 17% is oil.
In the three months ended June 30, 2014, Birchcliff’s production rose 29.1%, to 31,178 barrels of oil equivalent per day from 24,141 barrels a year earlier. Cash flow per share jumped 79.3%, to $0.52 from $0.29, on the increased output and higher oil and gas prices.
In 2012, Birchcliff completed Phase III of its gas plant expansion in Pouce Coupe, Alberta. This project doubled the facility’s capacity and is letting the company bring the additional gas it is now producing to market.
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In the three months ended June 30, 2014, Birchcliff’s production rose 29.1%, to 31,178 barrels of oil equivalent per day from 24,141 barrels a year earlier. Cash flow per share jumped 79.3%, to $0.52 from $0.29, on the increased output and higher oil and gas prices.
In 2012, Birchcliff completed Phase III of its gas plant expansion in Pouce Coupe, Alberta. This project doubled the facility’s capacity and is letting the company bring the additional gas it is now producing to market.
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MAJOR DRILLING $8.42 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866-264-3986; www.majordrilling.com; Shares outstanding: 79.2 million; Market cap: $666.7 million; Dividend yield: 2.4%) has agreed to buy privately held Taurus Drilling Services for $27.7 million, plus a further $11.5 million tied to performance.
Taurus, which operates in Canada, the U.S. and Mexico, performs underground longhole drilling for mining firms. Longhole drilling is used in operating mines to drill holes for various purposes, including blasting, drainage and providing electrical service and ventilation.
The acquisition looks like a great fit for Major, because it lets the company expand into mine-production drilling. That’s important, because it reduces Major’s focus on exploration drillers, which depend on volatile commodity markets for financing.
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Taurus, which operates in Canada, the U.S. and Mexico, performs underground longhole drilling for mining firms. Longhole drilling is used in operating mines to drill holes for various purposes, including blasting, drainage and providing electrical service and ventilation.
The acquisition looks like a great fit for Major, because it lets the company expand into mine-production drilling. That’s important, because it reduces Major’s focus on exploration drillers, which depend on volatile commodity markets for financing.
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CARFINCO FINANCIAL GROUP $8.38 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $224.2 million; Dividend yield: 5.7%) provides car loans to consumers who don’t meet the criteria of banks and other traditional lenders.
In September 2013, Carfinco expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less-affluent borrowers. The acquisition boosted Carfinco’s loans outstanding by about 22%.
In the three months ended June 30, 2014, the company’s revenue rose 24.5%, to $24.3 million from $19.5 million a year earlier. Carfinco loaned $54.0 million in the quarter, up 26.9% from $42.6 million.
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In September 2013, Carfinco expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less-affluent borrowers. The acquisition boosted Carfinco’s loans outstanding by about 22%.
In the three months ended June 30, 2014, the company’s revenue rose 24.5%, to $24.3 million from $19.5 million a year earlier. Carfinco loaned $54.0 million in the quarter, up 26.9% from $42.6 million.
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INTACT FINANCIAL CORP. $74.47 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $9.7 billion; Dividend yield: 2.6%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended June 30, 2014, Intact’s revenue was virtually unchanged from a year earlier, at $2.17 billion. The company earned $210 million, or $1.60 a share, up sharply from $98 million, or $0.73.
However, the year-earlier results include a pre-tax loss of $143 million, mostly related to storms and flooding in southern Alberta. Similar losses in the 2014 quarter were just $33 million.
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In the three months ended June 30, 2014, Intact’s revenue was virtually unchanged from a year earlier, at $2.17 billion. The company earned $210 million, or $1.60 a share, up sharply from $98 million, or $0.73.
However, the year-earlier results include a pre-tax loss of $143 million, mostly related to storms and flooding in southern Alberta. Similar losses in the 2014 quarter were just $33 million.
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