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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IMPERIAL METALS $14.41 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.9 million; Market cap: $1.1 billion; No dividends paid) is a Vancouver-based firm that produces and explores for base and precious metals.
Imperial’s producing assets include two B.C. mines: 100%-owned Mount Polley (copper and gold) and 50% of Huckleberry (copper and molybdenum). Japan’s Mitsubishi Materials holds 31.1% of Huckleberry, and Furukawa Co., Dowa Holdings and Marubeni Corp. own 6.3% each.
Imperial restarted Mount Polley in 2005 and continues to explore around the deposit to increase the mine’s reserves and lengthen its life. The company expects Mount Polley to produce until mid-2023.
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Imperial’s producing assets include two B.C. mines: 100%-owned Mount Polley (copper and gold) and 50% of Huckleberry (copper and molybdenum). Japan’s Mitsubishi Materials holds 31.1% of Huckleberry, and Furukawa Co., Dowa Holdings and Marubeni Corp. own 6.3% each.
Imperial restarted Mount Polley in 2005 and continues to explore around the deposit to increase the mine’s reserves and lengthen its life. The company expects Mount Polley to produce until mid-2023.
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IAMGOLD $3.71 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.6 million; Market cap: $1.4 billion; No dividends paid) owns 41% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.
In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld.
In the three months ended March 31, 2014, IAMGold’s revenue fell 8.5%, to $279.3 million from $305.3 million a year earlier. Cash flow per share dropped to $0.17 from $0.31. The declines were mostly due to 21.2% lower gold prices and an 8.5% production decrease.
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In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld.
In the three months ended March 31, 2014, IAMGold’s revenue fell 8.5%, to $279.3 million from $305.3 million a year earlier. Cash flow per share dropped to $0.17 from $0.31. The declines were mostly due to 21.2% lower gold prices and an 8.5% production decrease.
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MITEL NETWORKS $12.03 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.9 million; Market cap: $1.2 billion; No dividends paid) is now #1 in business communications products in Europe, and #3 in North American behind Avaya and Cisco, after its January 31, 2014 friendly takeover of Aastra Technologies.
Aastra, a Stock Pickers Digest recommendation, mostly makes business telephone equipment. Mitel operates in the same market as Aastra, but is focused more on software, including call centre and video-conferencing products. It is increasingly moving from selling programs that are installed at its customers’ offices to a cloud model, where it keeps its software on its own servers and sells it by subscription.
In the three months ended March 31, 2014, Mitel’s revenue rose 68.8%, to $241.5 million from $143.1 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
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Aastra, a Stock Pickers Digest recommendation, mostly makes business telephone equipment. Mitel operates in the same market as Aastra, but is focused more on software, including call centre and video-conferencing products. It is increasingly moving from selling programs that are installed at its customers’ offices to a cloud model, where it keeps its software on its own servers and sells it by subscription.
In the three months ended March 31, 2014, Mitel’s revenue rose 68.8%, to $241.5 million from $143.1 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra.
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CHESAPEAKE ENERGY $29.23 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 666.2 million; Market cap: $20.0 billion; Dividend yield: 1.2%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 84% gas and 16% oil.
Chesapeake’s shares have nearly doubled since mid-2012, when activist investor Carl Icahn acquired a stake in the firm. Icahn, who has a history of pushing companies to make changes that raise shareholder value, subsequently replaced four of Chesapeake’s eight board members with his nominees. The company also pushed out controversial co-founder, CEO and chairman Aubrey K. McClendon.
As part of its restructuring, Chesapeake sold $4 billion worth of properties in 2013, which let it pay down debt and focus on areas with strong growth potential. It has also cut its costs and is now aiming for a better balance between oil and gas production.
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Chesapeake’s shares have nearly doubled since mid-2012, when activist investor Carl Icahn acquired a stake in the firm. Icahn, who has a history of pushing companies to make changes that raise shareholder value, subsequently replaced four of Chesapeake’s eight board members with his nominees. The company also pushed out controversial co-founder, CEO and chairman Aubrey K. McClendon.
As part of its restructuring, Chesapeake sold $4 billion worth of properties in 2013, which let it pay down debt and focus on areas with strong growth potential. It has also cut its costs and is now aiming for a better balance between oil and gas production.
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YAMANA GOLD $9.18 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 753.3 million; Market cap: $7.1 billion; Dividend yield: 1.7%) recently teamed up with Osisko Mining (symbol OSK on Toronto) to thwart a hostile takeover of Osisko by Goldcorp (symbol G).
Yamana bid $1.4 billion in cash and shares for 50% of Osisko, which owns the Canadian Malartic mine in Quebec. Canadian Malartic produced 475,277 ounces of gold in 2013.
However, Goldcorp has now raised its bid to $3.6 billion in cash and shares for all of Osisko. Yamana’s offer, combined with contributions from two of Canada’s largest pension funds in the form of a loan and the purchase of a 37,500-ounce-per-year gold stream, valued Osisko at $3.4 billion.
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Yamana bid $1.4 billion in cash and shares for 50% of Osisko, which owns the Canadian Malartic mine in Quebec. Canadian Malartic produced 475,277 ounces of gold in 2013.
However, Goldcorp has now raised its bid to $3.6 billion in cash and shares for all of Osisko. Yamana’s offer, combined with contributions from two of Canada’s largest pension funds in the form of a loan and the purchase of a 37,500-ounce-per-year gold stream, valued Osisko at $3.4 billion.
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SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software. In Symantec’s fiscal 2014 third quarter, which ended December 27, 2013, its earnings per share rose 13.3%, to $0.51 from $0.45 a year earlier. The gains were mainly due to savings from a new restructuring plan that includes laying off 30% to 40% of its managers and simplifying its product lines....
MONSANTO CO. $112 (New York symbol MON, Aggressive Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $58.7 billion; Price-to-sales ratio: 3.9; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.monsanto.com) sells technology-based agricultural products, such as genetically modified seeds, to farmers, grain processors and food producers. The company’s seeds make crops more resistant to pests, diseases and bad weather.
Monsanto gets about 70% of its revenue from genetically modified seeds for corn, soybeans and other crops. The remaining 30% comes from selling herbicides, mainly under the Roundup brand.
Monsanto gets about 70% of its revenue from genetically modified seeds for corn, soybeans and other crops. The remaining 30% comes from selling herbicides, mainly under the Roundup brand.
New businesses cut risk
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INTERNATIONAL BUSINESS MACHINES CORP. $192 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $192.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.ibm.com) continues to benefit from rising demand for cloud-computing services and analytics software, which helps businesses analyze large amounts of data. However, weaker mainframe computer sales are offsetting these gains.
In the three months ended March 31, 2014, IBM earned $2.6 billion, down 21.7% from $3.4 billion a year earlier. The company spent a high $8.2 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 15.3%, to $2.54 from $3.00.
Revenue declined 3.9%, to $22.5 billion from $23.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, revenue declined by 1%.
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In the three months ended March 31, 2014, IBM earned $2.6 billion, down 21.7% from $3.4 billion a year earlier. The company spent a high $8.2 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 15.3%, to $2.54 from $3.00.
Revenue declined 3.9%, to $22.5 billion from $23.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, revenue declined by 1%.
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L BRANDS INC. $54 (New York symbol LB; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 291.0 million; Market cap: $15.7 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.lb.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal care products stores. Smaller chains include La Senza (lingerie) in Canada and Henri Bendel (jewellery and accessories) in the U.S.
The company’s sales rose 3.2% in March 2014, to $923.7 million from $894.8 million in March 2013.
However, that’s mainly due to promotional discounts, as cold weather hurt customer traffic. Overall same-store sales fell 1%. Victoria’s Secret reported that its same-store sales declined 1% during the month, while its online and catalogue sales rose 1%. Bath & Body Works’ same-store sales fell 2%.
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The company’s sales rose 3.2% in March 2014, to $923.7 million from $894.8 million in March 2013.
However, that’s mainly due to promotional discounts, as cold weather hurt customer traffic. Overall same-store sales fell 1%. Victoria’s Secret reported that its same-store sales declined 1% during the month, while its online and catalogue sales rose 1%. Bath & Body Works’ same-store sales fell 2%.
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MCDONALD’S CORP. $99 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 989.0 million; Market cap: $97.9 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.mcdonalds.com) plans to spur its sales in China by adding new menu items that better suit local tastes, such as rice dishes and green tea ice cream. The company is also introducing more value-priced items as China’s economic growth slows.
In addition, the company plans to add 300 new outlets to the 2,000 it currently operates in China this year.
It is also selling more of these locations to local owners. McDonald’s aims to have franchisees operate 20% of its Chinese outlets by 2015, up from 12% last year.
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In addition, the company plans to add 300 new outlets to the 2,000 it currently operates in China this year.
It is also selling more of these locations to local owners. McDonald’s aims to have franchisees operate 20% of its Chinese outlets by 2015, up from 12% last year.
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