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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GANNETT CO., INC. $31 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 226.8 million; Market cap: $7.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.gannett.com) has completed the sale of two TV stations in Phoenix and one in St. Louis for a total of $407.5 million.
The cash will help Gannett pay for its recent deal to buy six Texas TV stations from London Broadcasting Co. The company will pay $215 million when the deal closes in the next few months. To put these figures in context, Gannett earned $108.4 million, or $0.47 a share, in the first quarter of 2014.
Gannett is a buy.
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The cash will help Gannett pay for its recent deal to buy six Texas TV stations from London Broadcasting Co. The company will pay $215 million when the deal closes in the next few months. To put these figures in context, Gannett earned $108.4 million, or $0.47 a share, in the first quarter of 2014.
Gannett is a buy.
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APPLE INC. $90 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.0 billion; Market cap: $540.0 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.1%; TSINetwork Rating: Average; www.apple.com) has agreed to a settle a lawsuit that accused the company and five publishers of working together to illegally increase e-book prices.
The company did not say how much it would pay, but the lawsuit was seeking $840 million in damages. To put this in context, Apple held cash and investments of $150.6 billion, or $24.96 a share, as of March 29, 2014 (all per-share amounts adjusted for a 7-for-1 stock split in June 2014).
Apple is a hold.
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The company did not say how much it would pay, but the lawsuit was seeking $840 million in damages. To put this in context, Apple held cash and investments of $150.6 billion, or $24.96 a share, as of March 29, 2014 (all per-share amounts adjusted for a 7-for-1 stock split in June 2014).
Apple is a hold.
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DIEBOLD INC. $39 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.9%; TSINetwork Rating: Average; www.diebold.com) is a leading maker of automated teller machines. It also makes safes, vaults and building-security systems. The company gets 55% of its revenue from outside North America.
In the three months ended March 31, 2014, Diebold’s revenue rose 8.6% to $688.3 million from $633.5 million a year earlier. If you exclude the negative impact of currency exchange rates, revenue rose 12.2%. That’s mainly because the company completed two large orders for election and lottery machines in Brazil.
Diebold is shifting toward services and software, which give it recurring revenue and cut its reliance on ATM sales. Services and software accounted for 56% of its first quarter revenue.
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In the three months ended March 31, 2014, Diebold’s revenue rose 8.6% to $688.3 million from $633.5 million a year earlier. If you exclude the negative impact of currency exchange rates, revenue rose 12.2%. That’s mainly because the company completed two large orders for election and lottery machines in Brazil.
Diebold is shifting toward services and software, which give it recurring revenue and cut its reliance on ATM sales. Services and software accounted for 56% of its first quarter revenue.
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NCR CORP. $33 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.9 million; Market cap: $5.5 billion; Price-to-sales ratio: 0.9; No dividends paid; TSINetwork Rating: Average; www.ncr.com) gets 52% of its revenue from ATMs. It also makes cash registers and self-serve checkouts (32% of revenue) and kiosks for theatres and arenas (10%). Maintenance services supply the other 6%. Overseas markets account for 60% of NCR’s revenue.
In the quarter ended March 31, 2014, NCR’s revenue rose 7.7%, to $1.5 billion from $1.4 billion a year earlier. That’s partly due to its January 2014 purchase of privately held Digital Insight Corp., whose software helps over 1,000 banks and credit unions manage their online and mobile transactions.
NCR paid $1.65 billion for this firm, which should add $350 million to its yearly revenue. Earnings fell 14.5%, to $53 million from $62 million. Pershare earnings declined 16.2%, to $0.31 from $0.37, on more shares outstanding.
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In the quarter ended March 31, 2014, NCR’s revenue rose 7.7%, to $1.5 billion from $1.4 billion a year earlier. That’s partly due to its January 2014 purchase of privately held Digital Insight Corp., whose software helps over 1,000 banks and credit unions manage their online and mobile transactions.
NCR paid $1.65 billion for this firm, which should add $350 million to its yearly revenue. Earnings fell 14.5%, to $53 million from $62 million. Pershare earnings declined 16.2%, to $0.31 from $0.37, on more shares outstanding.
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PROCTER & GAMBLE CO. $79 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $213.3 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.pg.com) is selling most of its pet food business to privately held Mars Inc. The sale will let Procter focus on its more-profitable household and personal care products.
The company will receive $2.9 billion when the deal closes in the next few months. To put that in context, Procter earned $2.6 billion, or $0.90 a share, in the quarter ended March 31, 2014. The company will likely use the cash to buy back more shares.
Procter & Gamble is a buy.
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The company will receive $2.9 billion when the deal closes in the next few months. To put that in context, Procter earned $2.6 billion, or $0.90 a share, in the quarter ended March 31, 2014. The company will likely use the cash to buy back more shares.
Procter & Gamble is a buy.
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INTERNATIONAL FLAVORS & FRAGRANCES INC. $104 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.3 million; Market cap: $8.5 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 compounds that improve the taste of foods and the smell of consumer products.
In January 2014, the company paid $102.5 million for Aromor Flavors and Fragrances, a private Israeli firm that is also one of IFF’s ingredient suppliers.
This purchase helped increase IFF’s sales by 5.8% in the three months ended March 31, 2014, to $770.2 million from $727.8 million a year earlier. The company gets 75% of its sales from outside the U.S. and nearly 50% from emerging markets. If you exclude currency exchange rates, sales rose 7%.
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In January 2014, the company paid $102.5 million for Aromor Flavors and Fragrances, a private Israeli firm that is also one of IFF’s ingredient suppliers.
This purchase helped increase IFF’s sales by 5.8% in the three months ended March 31, 2014, to $770.2 million from $727.8 million a year earlier. The company gets 75% of its sales from outside the U.S. and nearly 50% from emerging markets. If you exclude currency exchange rates, sales rose 7%.
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MCCORMICK & CO. INC. $71 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 119.0 million; Market cap: $8.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.1%; TSINetwork Rating: Average; www.mccormick.com) makes spices, herbs, seasonings and flavours. It sells these products to consumers and industrial clients. In its fiscal 2014 second quarter, which ended May 31, 2014, McCormick’s sales rose 3.1%, to $1.03 billion from $1.00 billion a year earlier. That’s mainly because McCormick bought a Chinese bouillon maker for $144.8 million in May 2013. This purchase offset lower sales in the Americas.
Earnings gained 7.5%, to $84.5 million, or $0.64 a share, from $78.6 million, or $0.59, a year earlier.
McCormick continues to benefit from its ongoing cost cuts, which should save it $45 million in fiscal 2014. That will help fund the additional $25 million it plans to spend on advertising this year.
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Earnings gained 7.5%, to $84.5 million, or $0.64 a share, from $78.6 million, or $0.59, a year earlier.
McCormick continues to benefit from its ongoing cost cuts, which should save it $45 million in fiscal 2014. That will help fund the additional $25 million it plans to spend on advertising this year.
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ALCOA INC. $15 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.2 billion; Market cap: $18.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.8%; TSINetwork Rating: Average; www.alcoa.com) plans to upgrade its Hampton, Virginia, plant to make lightweight aluminum blades that help cut new jet engines’fuel consumption by 20% over older models.
Alcoa will spend $25 million on this project. To put that in context, it earned $98 million, or $0.09 a share, in the three months ended
March 31, 2014.
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Alcoa will spend $25 million on this project. To put that in context, it earned $98 million, or $0.09 a share, in the three months ended
March 31, 2014.
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INTEL CORP. $31 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $155.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.intel.com) now expects $13.7 billion of revenue in the second quarter of 2014, up from its earlier forecast of $13.0 billion. That’s because businesses are replacing their older computers at a faster-than-expected pace.
The stock has gained 19% since the start of the year and trades at 15.2 times the $2.04 a share that Intel will probably earn in 2014. That’s a particularly attractive p/e ratio for a tech leader that spends a high 22% of its revenue on research.
Intel is a buy.
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The stock has gained 19% since the start of the year and trades at 15.2 times the $2.04 a share that Intel will probably earn in 2014. That’s a particularly attractive p/e ratio for a tech leader that spends a high 22% of its revenue on research.
Intel is a buy.
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FEDEX CORP. $151 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 318.0 million; Market cap: $48.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) delivers packages and documents in the U.S. and over 220 other countries through its fleet of 650 planes and over 108,000 trucks and other surface vehicles.
The company recently changed the way it charges for shipping bulky packages by truck. In the past, it based its fee on weight, but it will now charge according to size. This makes it more expensive to ship lighter items that take up significant space, such as diapers. FedEx has also raised its fuel surcharge, which will help offset its rising fuel costs.
Meanwhile, the company earned $2.10 billion in its 2014 fiscal year, which ended May 31, 2014. That’s up 6.1% from $1.98 billion in fiscal 2013. FedEx spent $4.9 billion on share buybacks in its latest fiscal year. As a result, its earnings per share rose 8.3%, to $6.75 from $6.23. Revenue gained 2.9%, to $45.6 billion from $44.3 billion.
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The company recently changed the way it charges for shipping bulky packages by truck. In the past, it based its fee on weight, but it will now charge according to size. This makes it more expensive to ship lighter items that take up significant space, such as diapers. FedEx has also raised its fuel surcharge, which will help offset its rising fuel costs.
Meanwhile, the company earned $2.10 billion in its 2014 fiscal year, which ended May 31, 2014. That’s up 6.1% from $1.98 billion in fiscal 2013. FedEx spent $4.9 billion on share buybacks in its latest fiscal year. As a result, its earnings per share rose 8.3%, to $6.75 from $6.23. Revenue gained 2.9%, to $45.6 billion from $44.3 billion.
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