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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AMAZON.COM $334.38 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 460.2 million; Market cap: $150.8 billion; No dividends paid) has launched Prime Music, a music streaming service that’s now bundled with a $99-a-year Amazon Prime subscription.
This is the fourth part of the Amazon Prime service. The other three are unlimited shipping, a Kindle e-book library and Prime Instant Video (streaming movies and TV shows). Prime customers spend three to four times more than regular Amazon shoppers.
The company’s music service will start off with just over a million songs, with no ads and no limit on how much users can listen. It will also offer playlists curated by music experts Amazon will hire.
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This is the fourth part of the Amazon Prime service. The other three are unlimited shipping, a Kindle e-book library and Prime Instant Video (streaming movies and TV shows). Prime customers spend three to four times more than regular Amazon shoppers.
The company’s music service will start off with just over a million songs, with no ads and no limit on how much users can listen. It will also offer playlists curated by music experts Amazon will hire.
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BROADRIDGE FINANCIAL SOLUTIONS $40.95 (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: 2.1%) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada.
Without one-time items, Broadridge earned $55.1 million in its fiscal 2014 third quarter, which ended March 31, 2014. That’s up 11.3% from $49.5 million a year earlier. Earnings per share rose 12.8%, to $0.44 from $0.39, on fewer shares outstanding.
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Without one-time items, Broadridge earned $55.1 million in its fiscal 2014 third quarter, which ended March 31, 2014. That’s up 11.3% from $49.5 million a year earlier. Earnings per share rose 12.8%, to $0.44 from $0.39, on fewer shares outstanding.
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FAIR ISAAC CORP. $60.30 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 34.3 million; Market cap: $2.1 billion; Dividend yield: 0.1%) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze cardholders’ spending patterns.
In its fiscal 2014 second quarter, which ended March 31, 2014, Fair Isaac’s earnings per share rose 15.7% from a year ago, to $0.59 from $0.51.
Revenue gained 3.4%, to $185.5 million from $179.3 million. The company saw stronger sales of its credit-scoring software and customized programs for analyzing large amounts of a business’s data. However, sales at its main Applications division (62% of the total) fell 1.4% on weaker licensing revenue from software that detects bank fraud.
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In its fiscal 2014 second quarter, which ended March 31, 2014, Fair Isaac’s earnings per share rose 15.7% from a year ago, to $0.59 from $0.51.
Revenue gained 3.4%, to $185.5 million from $179.3 million. The company saw stronger sales of its credit-scoring software and customized programs for analyzing large amounts of a business’s data. However, sales at its main Applications division (62% of the total) fell 1.4% on weaker licensing revenue from software that detects bank fraud.
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SASOL LTD. (ADR) $59.52 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082- 883-9697; www.sasol.com; ADRs outstanding: 650.3 million; Market cap: $40.0 billion; Dividend yield: 2.5%) has just signed a deal with Italy-based multinational oil giant Eni SpA. No financial terms were disclosed, but it could be significant.
Under the agreement, Eni will take a 40% partnership interest in an exploration permit that Sasol holds. The permit gives the company the right to explore an 82,000-square mile area in the Durban and Zululand basins off South Africa’s east coast.
This area is near where Eni and Anadarko Petroleum recently discovered a field containing more than 100 trillion cubic feet of natural gas. The deal also gives Sasol access to Eni’s offshore deep-drilling exploration expertise.
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Under the agreement, Eni will take a 40% partnership interest in an exploration permit that Sasol holds. The permit gives the company the right to explore an 82,000-square mile area in the Durban and Zululand basins off South Africa’s east coast.
This area is near where Eni and Anadarko Petroleum recently discovered a field containing more than 100 trillion cubic feet of natural gas. The deal also gives Sasol access to Eni’s offshore deep-drilling exploration expertise.
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CHEMTRADE LOGISTICS INCOME FUND $21.19 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics.com; Units outstanding: 60.1 million; Market cap: $1.2 billion; Dividend yield: 5.7%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors.
These companies’ activities create sulphur, acid and other by-products that Chemtrade converts into useful chemicals, like sulphuric acid. The trust also offers a range of environmental services through its Marsulex subsidiary, such as improving air quality and handling and treating industrial waste.
Chemtrade’s revenue rose 30.4% in the three months ended March 31, 2014, to $273.9 million from $210.0 million a year earlier.
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These companies’ activities create sulphur, acid and other by-products that Chemtrade converts into useful chemicals, like sulphuric acid. The trust also offers a range of environmental services through its Marsulex subsidiary, such as improving air quality and handling and treating industrial waste.
Chemtrade’s revenue rose 30.4% in the three months ended March 31, 2014, to $273.9 million from $210.0 million a year earlier.
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DREAM OFFICE REIT $29.14 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dundeereit.com; Units outstanding: 103.4 million; Market cap: $3.1 billion; Dividend yield: 7.7%) is the new name for Dundee REIT. The trading symbol is unchanged.
Dream owns and manages 24.6 million square feet of office and retail space in major cities across Canada. Its occupancy rate is 94.2%.
In the quarter ended March 31, 2014, Dream’s revenue rose 9.0%, to $206.7 million from $189.6 million a year earlier. The trust continues to renew expiring leases at higher rates. It has also added 1.2 million square feet of space over the past year.
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Dream owns and manages 24.6 million square feet of office and retail space in major cities across Canada. Its occupancy rate is 94.2%.
In the quarter ended March 31, 2014, Dream’s revenue rose 9.0%, to $206.7 million from $189.6 million a year earlier. The trust continues to renew expiring leases at higher rates. It has also added 1.2 million square feet of space over the past year.
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ENERFLEX LTD. $19.74 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387- 6377; www.enerflex.com; Shares outstanding: 78.3 million; Market cap: $1.3 billion; Dividend yield: 1.8%) rents and sells equipment and services for natural gas production.
The stock has jumped over 20% since Enerflex announced on June 1 that it will acquire two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary, and a division that provides aftermarket services. Enerflex will pay $430 million U.S. in cash.
The agreement includes operations in Mexico, South America, Southeast Asia and the Middle East, but not Axip’s U.S. business. The assets include a 448- unit compression fleet totalling about 285,000 horsepower.
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The stock has jumped over 20% since Enerflex announced on June 1 that it will acquire two businesses owned by privately held Axip Energy Services LP: an international contract compression and processing subsidiary, and a division that provides aftermarket services. Enerflex will pay $430 million U.S. in cash.
The agreement includes operations in Mexico, South America, Southeast Asia and the Middle East, but not Axip’s U.S. business. The assets include a 448- unit compression fleet totalling about 285,000 horsepower.
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GOODYEAR TIRE & RUBBER CO. $27.20 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 248.5 million; Market cap: $6.8 billion; Dividend yield: 0.7%) has risen almost 11% since we made it our #1 pick for 2014 in our February issue. We think it will go higher.
In the quarter ended March 31, 2014, Goodyear’s sales fell 7.9%, to $4.5 billion from $4.9 billion a year earlier. Harsh winter weather hurt North American car and truck sales, cutting demand for new tires. The weather also slowed sales of replacement tires. As well, the Brazilian, Venezuelan and Australian currencies fell against the U.S. dollar, cutting the value of sales in these markets.
Earnings per share fell 17.6%, to $0.56 from $0.68. The lower sales and stronger price competition were the main reasons for the decline.
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In the quarter ended March 31, 2014, Goodyear’s sales fell 7.9%, to $4.5 billion from $4.9 billion a year earlier. Harsh winter weather hurt North American car and truck sales, cutting demand for new tires. The weather also slowed sales of replacement tires. As well, the Brazilian, Venezuelan and Australian currencies fell against the U.S. dollar, cutting the value of sales in these markets.
Earnings per share fell 17.6%, to $0.56 from $0.68. The lower sales and stronger price competition were the main reasons for the decline.
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PFIZER INC. $30 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.4 billion; Market cap: $192.0 billion; Price-to-sales ratio: 3.9; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest maker of prescription drugs. Its main brands include Lyrica (epilepsy), Celebrex (arthritis), Viagra (erectile dysfunction) and Prevnar (a pneumonia vaccine).
Pfizer also makes popular over the-counter drugs, including Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).
Pfizer also makes popular over the-counter drugs, including Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).
These acquisitions tend to cut risk
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SONY CORP. ADRs $16 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $16.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.3%; TSINetwork Rating: Average; www.sony.com) has brought in a new restructuring plan that involves selling its money-losing Vaio personal computer business and cutting 3% of its workforce. The company also plans to set up its struggling TV operations as a separate firm, which would make it easier to sell a minority stake in this business.
However, slow sales have forced Sony to write down its remaining computer inventories. Weaker DVD demand has also prompted it to write down the value of its disc-manufacturing operations.
As a result, Sony lost $1.25 billion, or $1.21 per ADR, in the fiscal year ended March 31, 2014 (each American Depositary Receipt represents one common share). In 2013, it earned $458 million, or $0.43 per ADR. Revenue rose 4.2%, to $75.4 billion from $72.3 billion, on stronger smartphone sales and the launch of its PlayStation 4 video game console. However, without the benefit of currency exchange rates, revenue in Japanese yen fell 2%.
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However, slow sales have forced Sony to write down its remaining computer inventories. Weaker DVD demand has also prompted it to write down the value of its disc-manufacturing operations.
As a result, Sony lost $1.25 billion, or $1.21 per ADR, in the fiscal year ended March 31, 2014 (each American Depositary Receipt represents one common share). In 2013, it earned $458 million, or $0.43 per ADR. Revenue rose 4.2%, to $75.4 billion from $72.3 billion, on stronger smartphone sales and the launch of its PlayStation 4 video game console. However, without the benefit of currency exchange rates, revenue in Japanese yen fell 2%.
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