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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FIRSTSERVICE CORP. $55.55 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.7 million; Market cap: $2.0 billion; Dividend yield: 0.8%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. The company has more than 24,000 employees worldwide.
In the quarter ended March 31, 2014, FirstService’s revenue rose 15.1%, to $548.4 million from $476.4 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.09, compared to a loss of $0.20. The first quarter is typically a slower time for the company.
Revenue rosRe at all three of FirstService’s divisions: Colliers International (commercial real estate), up 28%; FirstService Residential (residential property management), up 7%; and FirstService Brands (property services), up 11%. FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.
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In the quarter ended March 31, 2014, FirstService’s revenue rose 15.1%, to $548.4 million from $476.4 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.09, compared to a loss of $0.20. The first quarter is typically a slower time for the company.
Revenue rosRe at all three of FirstService’s divisions: Colliers International (commercial real estate), up 28%; FirstService Residential (residential property management), up 7%; and FirstService Brands (property services), up 11%. FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.
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STUART OLSON INC. $10.79 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 24.9 million; Market cap: $270.0 million; Dividend yield: 4.4%) is the new name for The Churchill Corp. (old symbol CUQ).
Stuart Olson provides building construction, commercial and industrial electrical contracting, earth moving and industrial insulation services to government and private sector clients, mainly in Western Canada.
In the three months ended March 31, 2014, the company lost $614,000, or $0.02 a share. That’s an improvement from a loss of $1.2 million, or $0.05 a share, a year earlier. Revenue rose 15.9%, to $274.6 million from $236.8 million, thanks to rising construction activity in Western Canada.
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Stuart Olson provides building construction, commercial and industrial electrical contracting, earth moving and industrial insulation services to government and private sector clients, mainly in Western Canada.
In the three months ended March 31, 2014, the company lost $614,000, or $0.02 a share. That’s an improvement from a loss of $1.2 million, or $0.05 a share, a year earlier. Revenue rose 15.9%, to $274.6 million from $236.8 million, thanks to rising construction activity in Western Canada.
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IAMGOLD $4.39 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.7 million; Market cap: $1.6 billion; No dividends paid) has signed an agreement with Calibre Mining (symbol CXB on Toronto) that gives it the option to invest in a proposed gold-silver mine in Nicaragua.
Under the deal, IAMGold can earn a 51% stake in Calibre’s Easter Borosi project over the next three years if it pays $450,000 and spends $5.0 million to develop the property (all amounts except share price in U.S. dollars).
After that, IAMGold can earn an additional 19% interest if pays Calibre another $450,000 and contributes $5.0 million more to development costs.
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Under the deal, IAMGold can earn a 51% stake in Calibre’s Easter Borosi project over the next three years if it pays $450,000 and spends $5.0 million to develop the property (all amounts except share price in U.S. dollars).
After that, IAMGold can earn an additional 19% interest if pays Calibre another $450,000 and contributes $5.0 million more to development costs.
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CAMECO CORP. $21.57 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.8 million; Market cap: $8.5 billion; Dividend yield 1.9%) has decided to postpone developing its Millennium uranium deposit in central Saskatchewan. Cameco owns 69.9% of this property, and Japan’s JCU Exploration holds the other 31.1%.
Uranium prices have declined from around $42 U.S. a pound in February 2014 to $28 today. That’s because delays in restarting Japan’s nuclear reactors have caused uranium inventories to rise. However, prices should recover once the Japanese reactors begin operating.
Cameco is still a buy.
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Uranium prices have declined from around $42 U.S. a pound in February 2014 to $28 today. That’s because delays in restarting Japan’s nuclear reactors have caused uranium inventories to rise. However, prices should recover once the Japanese reactors begin operating.
Cameco is still a buy.
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ACI WORLDWIDE $55.40 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 37.9 million; Market cap: $2.1 billion; No dividends paid) makes software that processes transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. Its products also help cut fraud.
The company has added another major client for its Postilion retail point-to-point encryption (PSPE) software. This technology encrypts credit card numbers and other sensitive information from the point of entry (card swipe) at the merchant to the other end (issuing bank or other payment processor).
The client is Ecentric Payment Systems, South Africa’s leading payment processor. Ecentric processes nearly 400 million transactions a year for retailers. This number should rise as African markets continue to develop and South African retailers expand into other countries on the continent.
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The company has added another major client for its Postilion retail point-to-point encryption (PSPE) software. This technology encrypts credit card numbers and other sensitive information from the point of entry (card swipe) at the merchant to the other end (issuing bank or other payment processor).
The client is Ecentric Payment Systems, South Africa’s leading payment processor. Ecentric processes nearly 400 million transactions a year for retailers. This number should rise as African markets continue to develop and South African retailers expand into other countries on the continent.
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BIRCHCLIFF ENERGY $14.75 (Toronto symbol BIR; TSINetwork Rating:Speculative) (403-261-6401;www.birchcliffenergy.com; Units outstanding: 145.0million; Market cap: $2.2 billion; No dividends paid) reports that its daily production rose 21.6% in the three months ended March 31, 2014, to 31,749 barrels of oil equivalent from 26,108 a year earlier. Cash flow per share jumped 122.2%, to $0.60 from $0.27, on the increased production and higher oil and gas prices.
The company plans to spend $291 million on exploration and development this year, which should boost its 2014 output to a record 34,000 barrels a day. Birchcliff expects to generate full-year cash flow of $331 million, or $2.30 a share, so it can comfortably afford these outlays.
Birchcliff Energy is still a buy.
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The company plans to spend $291 million on exploration and development this year, which should boost its 2014 output to a record 34,000 barrels a day. Birchcliff expects to generate full-year cash flow of $331 million, or $2.30 a share, so it can comfortably afford these outlays.
Birchcliff Energy is still a buy.
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CALIAN TECHNOLOGIES $18.82 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $135.5 million; Dividend yield: 6.0%) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.
In the three months ended March 31, 2014, the company earned $2.4 million, or $0.32 a share. That’s down 29.5% from $3.4 million, or $0.44 a share, a year ago. Revenue declined 13.1%, to $51.2 million from $58.9 million.
The business and technology services division continues to benefit from recurring orders from Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, cutting the division’s revenue by 9.5%. That hurt Calian’s profit margins, which lowered its earnings.
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In the three months ended March 31, 2014, the company earned $2.4 million, or $0.32 a share. That’s down 29.5% from $3.4 million, or $0.44 a share, a year ago. Revenue declined 13.1%, to $51.2 million from $58.9 million.
The business and technology services division continues to benefit from recurring orders from Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, cutting the division’s revenue by 9.5%. That hurt Calian’s profit margins, which lowered its earnings.
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COMPUTER MODELLING GROUP $14.88 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 78.6 million; Market cap: $1.2 billion; Dividend yield: 2.7%) (all figures split 2-for-1) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells. It has customers in over 50 countries and offices in Calgary, Houston, London, Caracas, Bogota, Kuala Lumpur and Dubai.
In the quarter ended March 31, 2014, Computer Modelling’s revenue rose 3.6%, to $20.0 million from $19.3 million a year earlier. Software licence sales (89% of total revenue) rose slightly, but consulting and professional services (11%) jumped 39.1%, thanks to new projects and a large consulting agreement.
Earnings gained 6.7%, to $7.7 million from $7.25 million. Per-share earnings jumped 18.8%, to $0.095 from $0.08, on fewer shares outstanding.
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In the quarter ended March 31, 2014, Computer Modelling’s revenue rose 3.6%, to $20.0 million from $19.3 million a year earlier. Software licence sales (89% of total revenue) rose slightly, but consulting and professional services (11%) jumped 39.1%, thanks to new projects and a large consulting agreement.
Earnings gained 6.7%, to $7.7 million from $7.25 million. Per-share earnings jumped 18.8%, to $0.095 from $0.08, on fewer shares outstanding.
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AEROPOSTALE $3.55 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding:78.5 million; Market cap: $277.6 million; No dividends paid) reported better-than-expected earnings this week. However, the high teenage unemployment rate is still weighing on its sales.
In the three months ended May 3, 2014, Aeropostale’s sales fell 12.5%, to $395.9 million from $452.3 million a year earlier. Samestore sales declined 13%.
The company is now closing all 125 of its mall-based P.S. from Aeropostale stores. If you exclude closure and other costs, it lost $0.52 a share. That was better than the consensus forecast of a $0.72-a-share loss. A year earlier, Aeropostale lost $0.16 a share.
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In the three months ended May 3, 2014, Aeropostale’s sales fell 12.5%, to $395.9 million from $452.3 million a year earlier. Samestore sales declined 13%.
The company is now closing all 125 of its mall-based P.S. from Aeropostale stores. If you exclude closure and other costs, it lost $0.52 a share. That was better than the consensus forecast of a $0.72-a-share loss. A year earlier, Aeropostale lost $0.16 a share.
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LEON’S FURNITURE LTD. $14.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.9 million; Market cap: $1.0 billion; Dividend yield: 2.8%) has steadily opened new stores, growing from 27 in 2003 to 78 today.
But the company more than quadrupled in size overnight with its March 28, 2013, purchase of its main rival, The Brick, for $700 million. The Brick has 228 outlets across Canada. Leon’s and The Brick will continue to operate as separate chains.
As a result of the acquisition, Leon’s sales jumped to $426.0 million in the three months ended March 31, 2014, from $162.5 million a year earlier. Earnings fell sharply, to $818,000, or $0.01 a share, from $5.4 million, or $0.08.
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But the company more than quadrupled in size overnight with its March 28, 2013, purchase of its main rival, The Brick, for $700 million. The Brick has 228 outlets across Canada. Leon’s and The Brick will continue to operate as separate chains.
As a result of the acquisition, Leon’s sales jumped to $426.0 million in the three months ended March 31, 2014, from $162.5 million a year earlier. Earnings fell sharply, to $818,000, or $0.01 a share, from $5.4 million, or $0.08.
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