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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SHERRITT INTERNATIONAL $4.63 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.4 billion; Dividend yield: 0.9%) has fended off activist investor George Armoyan’s attempt to put three of his nominees on its nine-person board of directors.
Meanwhile, Armoyan has put forward a number of proposals for Sherritt to cut costs, reduce its debt and better align what he sees as the interests of shareholders, management and the board directors.
Even though he lost the board vote, Armoyan’s ongoing involvement, and his 5% interest in the company, should keep drawing investor attention to Sherritt’s strong long-term prospects. Sherritt is already putting a number of his proposals in place.
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Meanwhile, Armoyan has put forward a number of proposals for Sherritt to cut costs, reduce its debt and better align what he sees as the interests of shareholders, management and the board directors.
Even though he lost the board vote, Armoyan’s ongoing involvement, and his 5% interest in the company, should keep drawing investor attention to Sherritt’s strong long-term prospects. Sherritt is already putting a number of his proposals in place.
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MAJOR DRILLING $8.48 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866-264-3986; www.majordrilling.com; Shares outstanding: 79.2 million; Market cap: $672.9 million; Dividend yield: 2.4%) is a large contract-drilling firm that mainly serves the mining industry.
In the three months ended January 31, 2014, Major’s revenue fell 41.7%, to $71.8 million from $123.3 million a year earlier. The company’s loss also widened to $12.8 million, or $0.16 a share, from $4.3 million, or $0.05. The latest earnings included a $3.3-million foreign exchange loss.
Many of Major’s large- and medium-sized mining customers, particularly gold companies, slowed their drilling activity in the latest quarter, and orders from junior miners dropped sharply.
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In the three months ended January 31, 2014, Major’s revenue fell 41.7%, to $71.8 million from $123.3 million a year earlier. The company’s loss also widened to $12.8 million, or $0.16 a share, from $4.3 million, or $0.05. The latest earnings included a $3.3-million foreign exchange loss.
Many of Major’s large- and medium-sized mining customers, particularly gold companies, slowed their drilling activity in the latest quarter, and orders from junior miners dropped sharply.
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PASON SYSTEMS $30.37 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.4 million; Market cap: $2.5 billion; Dividend yield: 2.0%) is trading near all-time highs as it continues to gain from the boom in U.S. shale oil and gas drilling.
Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended March 31, 2014, the company’s revenue rose 12.7%, to $123.2 million from $109.3 million a year earlier. Higher sales in the U.S., Australia and Canada offset slower drilling activity in Mexico and a significant devaluation of the Argentine currency.
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Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended March 31, 2014, the company’s revenue rose 12.7%, to $123.2 million from $109.3 million a year earlier. Higher sales in the U.S., Australia and Canada offset slower drilling activity in Mexico and a significant devaluation of the Argentine currency.
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AIMIA INC. $19.13 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 173.4 million; Market cap: $3.2 billion; Dividend yield: 3.8%) is buying 25% of Travel Club, Spain’s largest loyalty program.
Travel Club, which generated 40 million euros of revenue in 2013, has 6 million members and 30 business partners. Aimia plans to use its international experience to expand Travel Club’s member base and attract partners from new areas, including finance, fashion, insurance and the telecom industry.
The company has lots of experience with European loyalty programs. For example, it built Nectar, the U.K.’s leading coalition loyalty program, from a start-up into a multinational business in just 10 years. Today, Nectar has 19 million members, which amounts to more than 50% of U.K. households. Aimia has also built a significant presence in the Italian customer-loyalty market through Nectar Italia.
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Travel Club, which generated 40 million euros of revenue in 2013, has 6 million members and 30 business partners. Aimia plans to use its international experience to expand Travel Club’s member base and attract partners from new areas, including finance, fashion, insurance and the telecom industry.
The company has lots of experience with European loyalty programs. For example, it built Nectar, the U.K.’s leading coalition loyalty program, from a start-up into a multinational business in just 10 years. Today, Nectar has 19 million members, which amounts to more than 50% of U.K. households. Aimia has also built a significant presence in the Italian customer-loyalty market through Nectar Italia.
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DELPHI ENERGY $3.34 (Toronto symbol DEE; TSINetwork Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 154.4 million; Market cap: $529.7 million; No dividends paid) develops, produces and explores for oil and natural gas. About 72% of its output is gas. The remaining 28% is oil.
In the three months ended December 31, 2013, the company’s production rose 24.3%, to 8,988 barrels of oil equivalent a day (including gas) from 7,229 barrels a year earlier.
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In the three months ended December 31, 2013, the company’s production rose 24.3%, to 8,988 barrels of oil equivalent a day (including gas) from 7,229 barrels a year earlier.
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TRILOGY ENERGY CORP. $28.59 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Shares outstanding: 99.5 million; Market cap: $3.6 billion; Dividend yield: 1.5%) owns oil and gas properties in central Alberta’s Kaybob and Grande Prairie areas. About 61% of Trilogy’s production is natural gas. The remaining 39% is oil.
In the three months ended March 31, 2014, Trilogy produced 33,135 barrels of oil equivalent a day (including gas), down 8.2% from 36,119 barrels a year earlier.
Cash flow per share fell 4.5%, to $0.64 from $0.67, as higher oil and gas prices partly offset the production drop.
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In the three months ended March 31, 2014, Trilogy produced 33,135 barrels of oil equivalent a day (including gas), down 8.2% from 36,119 barrels a year earlier.
Cash flow per share fell 4.5%, to $0.64 from $0.67, as higher oil and gas prices partly offset the production drop.
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WYNDHAM WORLDWIDE $72.29 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 127.3 million; Market cap: $9.3 billion; Dividend yield: 1.9%) reported revenue of $1.19 billion in the three months ended March 31, 2014. That was up 5.3% from $1.13 billion a year earlier.
Before one-time items, earnings rose 9.9%, to $0.78 a share from $0.71.
To further boost its revenue, Wyndham has invested heavily in its online booking systems. It is also expanding in fast-growing markets like Asia and Latin America. The company’s outlook is positive, but the stock now trades at a high 19.1 times Wyndham’s latest 12 months of earnings.
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Before one-time items, earnings rose 9.9%, to $0.78 a share from $0.71.
To further boost its revenue, Wyndham has invested heavily in its online booking systems. It is also expanding in fast-growing markets like Asia and Latin America. The company’s outlook is positive, but the stock now trades at a high 19.1 times Wyndham’s latest 12 months of earnings.
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RUBY TUESDAY, INC. $7.72 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 61.4 million; Market cap: $502.6 million; No dividends paid) owns 679 casual dining restaurants in the U.S., with franchisees operating 31 in the U.S. and 45 overseas. The company also runs 20 Lime Fresh restaurants and franchises eight (six domestic and two international).
In the three months ended March 4, 2014, Ruby Tuesday’s sales fell 3.8%, to $295.6 million from $307.4 million a year earlier. Same-restaurant sales declined 1.9%. Continued weak consumer spending was the main reason for the decline. As well, the company closed less-profitable restaurants in the quarter, and competition remains intense in the casual-dining business.
Excluding one-time items, Ruby Tuesday lost $4.5 million, or $0.07 a share, compared to a year-earlier profit of $6.3 million, or $0.10. That beat the consensus estimate of an $0.08-a-share loss.
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In the three months ended March 4, 2014, Ruby Tuesday’s sales fell 3.8%, to $295.6 million from $307.4 million a year earlier. Same-restaurant sales declined 1.9%. Continued weak consumer spending was the main reason for the decline. As well, the company closed less-profitable restaurants in the quarter, and competition remains intense in the casual-dining business.
Excluding one-time items, Ruby Tuesday lost $4.5 million, or $0.07 a share, compared to a year-earlier profit of $6.3 million, or $0.10. That beat the consensus estimate of an $0.08-a-share loss.
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CHIPOTLE MEXICAN GRILL $504.32 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.1 million; Market cap: $15.7 billion; No dividends paid) is a Denver-based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service.
In the three months ended March 31, 2014, Chipotle’s sales rose 24.4%, to $904.2 million from $726.8 million a year earlier. The company’s restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 13.4%. Chipotle also opened 44 new outlets and now has a total of more than 1,600. In all of 2014, it aims to open 180 to 195 locations.
Earnings gained 8.5%, to $83.1 million, or $2.67 a share, from $76.6 million, or $2.47.
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In the three months ended March 31, 2014, Chipotle’s sales rose 24.4%, to $904.2 million from $726.8 million a year earlier. The company’s restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 13.4%. Chipotle also opened 44 new outlets and now has a total of more than 1,600. In all of 2014, it aims to open 180 to 195 locations.
Earnings gained 8.5%, to $83.1 million, or $2.67 a share, from $76.6 million, or $2.47.
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>YAMANA GOLD $8.22 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 753.3 million; Market cap: $5.9 billion; Dividend yield: 2.0%) has succeeded in its joint $3.9-billion bid with Agnico Eagle Mines for Osisko Mining. Rival bidder Goldcorp has withdrawn its offer. Agnico Eagle and Yamana will now each own half of Osisko’s assets, including the Canadian Malartic gold mine in Quebec.
The acquisition also lets Yamana diversify beyond South America and Mexico, where it has seven mines. It should also boost the company’s per-share cash flow.
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The acquisition also lets Yamana diversify beyond South America and Mexico, where it has seven mines. It should also boost the company’s per-share cash flow.
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