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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SNAP-ON INC. $117 (New York symbol SNA; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www.snapon.com) earned $95.9 million, or $1.62 a share, in the quarter ended March 29, 2014. That’s up 15.8% from $82.8 million, or $1.40 a share, a year earlier. Sales rose 6.2%, to $787.5 million from $741.7 million.
These improvements are partly due to Challenger Lifts, which Snap-On bought in May 2013. Challenger, a maker of systems that raise cars off the ground, added $15.2 million to Snap-On’s sales in the latest quarter.
Snap-On is a hold.
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These improvements are partly due to Challenger Lifts, which Snap-On bought in May 2013. Challenger, a maker of systems that raise cars off the ground, added $15.2 million to Snap-On’s sales in the latest quarter.
Snap-On is a hold.
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DUN & BRADSTREET CORP. $107 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 37.6 million; Market cap: $4.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) has paid an undisclosed sum for the social media operations of Fliptop, whose software helps businesses analyze customer data.
This technology tracks mentions of businesses by users of social media websites like Facebook. It will add to Dun & Bradstreet’s credit reports, which mainly focus on traditional information, such as a company’s financial condition and market share. Dun & Bradstreet now has over 230 million businesses in its databases.
Dun & Bradstreet is a buy.
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This technology tracks mentions of businesses by users of social media websites like Facebook. It will add to Dun & Bradstreet’s credit reports, which mainly focus on traditional information, such as a company’s financial condition and market share. Dun & Bradstreet now has over 230 million businesses in its databases.
Dun & Bradstreet is a buy.
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J.P. MORGAN CHASE & CO.
$56 (New York symbol JPM;
Income Portfolio, Finance sector;
Shares outstanding: 3.8 billion;
Market cap: $212.8 billion; Price-to-sales ratio: 2.2;
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$56 (New York symbol JPM;
Income Portfolio, Finance sector;
Shares outstanding: 3.8 billion;
Market cap: $212.8 billion; Price-to-sales ratio: 2.2;
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WELLS FARGO & CO. $50 (New York symbol
WFC; Conservative Growth and Income Portfolios,
Finance sector; Shares outstanding: 5.3 billion;
Market cap: $265.0 billion; Price-to-sales ratio: 3.2;
Dividend yield: 2.8%; TSINetwork Rating: Average;
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WFC; Conservative Growth and Income Portfolios,
Finance sector; Shares outstanding: 5.3 billion;
Market cap: $265.0 billion; Price-to-sales ratio: 3.2;
Dividend yield: 2.8%; TSINetwork Rating: Average;
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SHERWIN-WILLIAMS CO. $202 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 100.3 million; Market cap: $20.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.1%; TSINetwork Rating: Above Average; www.sherwin-williams.com) has dropped its $2.3-billion offer to buy Mexican paint maker Comex, as regulators seemed unlikely to approve the deal. Sherwin did purchase Comex’s U.S. and Canadian operations and stores for $165 million in September 2013.
The new operations increased Sherwin’s revenue by 9.2% in the first quarter of 2014, to $2.4 billion from $2.2 billion a year earlier. However, costs to integrate the new stores cut its earnings by 0.6%, to $115.5 million from $116.2 million. Due to fewer shares outstanding, earnings per share rose 2.7%, to $1.14 from $1.11.
The company will likely earn $8.72 a share in 2014, up 20.1% from 2013, but the stock trades at a high 22.7 times that forecast.
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The new operations increased Sherwin’s revenue by 9.2% in the first quarter of 2014, to $2.4 billion from $2.2 billion a year earlier. However, costs to integrate the new stores cut its earnings by 0.6%, to $115.5 million from $116.2 million. Due to fewer shares outstanding, earnings per share rose 2.7%, to $1.14 from $1.11.
The company will likely earn $8.72 a share in 2014, up 20.1% from 2013, but the stock trades at a high 22.7 times that forecast.
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ALLIANT ENERGY CORP. $58 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.5%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million residential and business customers in Wisconsin, Iowa and southern Minnesota.
In September 2013, the company agreed to sell its Minnesota electric and natural gas distribution businesses in two separate deals. These operations represent less than 4% of its customer base. Alliant will hang on to its power plants in Minnesota.
In all, the company will receive $128 million when these deals close later this year. The cash will help it upgrade its plants to comply with tougher environmental regulations. Right now, coal accounts for 47% of Alliant’s fuel needs, followed by natural gas (39%), wind (8%), oil (5%) and hydroelectric (1%). The company also buys power from nuclear plants and other suppliers.
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In September 2013, the company agreed to sell its Minnesota electric and natural gas distribution businesses in two separate deals. These operations represent less than 4% of its customer base. Alliant will hang on to its power plants in Minnesota.
In all, the company will receive $128 million when these deals close later this year. The cash will help it upgrade its plants to comply with tougher environmental regulations. Right now, coal accounts for 47% of Alliant’s fuel needs, followed by natural gas (39%), wind (8%), oil (5%) and hydroelectric (1%). The company also buys power from nuclear plants and other suppliers.
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WAL-MART STORES INC. $78 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $249.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) continues to expand into financial services. The retailer currently offers its shoppers cheque cashing, bill payment and tax-preparation services, as well as money orders and prepaid debit cards.
The company has now teamed up with Ria Money Transfer, a subsidiary of Euronet Worldwide, to let shoppers transfer money. Using this service, called “Walmart-2-Walmart,” clients can move funds to and from over 4,000 of the company’s U.S. stores.
Many of Wal-Mart’s clients do not have bank accounts, so this new service should help bring more of these customers into its stores.
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The company has now teamed up with Ria Money Transfer, a subsidiary of Euronet Worldwide, to let shoppers transfer money. Using this service, called “Walmart-2-Walmart,” clients can move funds to and from over 4,000 of the company’s U.S. stores.
Many of Wal-Mart’s clients do not have bank accounts, so this new service should help bring more of these customers into its stores.
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HILLSHIRE BRANDS CO. $36 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.4 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats.
In June 2012, the old Sara Lee Corp. spun off its international coffee and tea business, D.E. Master Blenders, as a separate company. The remaining operations became Hillshire Brands.
Hillshire gets 74% of its sales from supermarkets and other mass retailers; Wal-Mart is its largest single customer, accounting for 25% of its total sales. Restaurants supply the other 26%.
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In June 2012, the old Sara Lee Corp. spun off its international coffee and tea business, D.E. Master Blenders, as a separate company. The remaining operations became Hillshire Brands.
Hillshire gets 74% of its sales from supermarkets and other mass retailers; Wal-Mart is its largest single customer, accounting for 25% of its total sales. Restaurants supply the other 26%.
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KRAFT FOODS GROUP INC. $57 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 596.3 million; Market cap: $34.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.
Unlike Mondelez, Kraft prefers to focus on North America: Wal-Mart accounts for 26% of its sales. That hurts its growth prospects, but it also cuts its currency risk.
Kraft continues to reduce its costs following the breakup with Mondelez, mainly by consolidating facilities, laying off employees and eliminating less-profitable products. These moves are helping Kraft offset rising ingredient costs.
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Unlike Mondelez, Kraft prefers to focus on North America: Wal-Mart accounts for 26% of its sales. That hurts its growth prospects, but it also cuts its currency risk.
Kraft continues to reduce its costs following the breakup with Mondelez, mainly by consolidating facilities, laying off employees and eliminating less-profitable products. These moves are helping Kraft offset rising ingredient costs.
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MONDELEZ INTERNATIONAL INC. $35 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $59.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.mondelezinternational.com) took its current form on October 1, 2012, when the old Kraft Foods Inc. broke itself into two publicly traded companies: Mondelez International and Kraft Foods Group.
Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets and Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for overseas markets. The company gets 40% of its sales from developing countries, 40% from Europe and 20% from North America.
Mondelez has now completed its plan to cut its annual costs by $800 million following its 2010 purchase of U.K.-based chocolate maker Cadbury.
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Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets and Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for overseas markets. The company gets 40% of its sales from developing countries, 40% from Europe and 20% from North America.
Mondelez has now completed its plan to cut its annual costs by $800 million following its 2010 purchase of U.K.-based chocolate maker Cadbury.
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