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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STATE STREET CORP. $73 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 415.2 million; Market cap: $30.3 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.9%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to large investors, like mutual funds and pension plans.
State Street has raised its quarterly dividend by 13.3%, to $0.34 a share from $0.30. The new annual rate of $1.36 yields 1.9%. State Street also plans to repurchase $1.8 billion worth of its shares by June 30, 2016. It spent $1.65 billion on buybacks in 2014.
The company’s fee income rises and falls with the value of the mutual funds and other securities it manages. Thanks to improving stock markets and new contracts, it will likely earn $5.16 a share in 2015, up from $5.09 in 2014. The stock trades at 14.1 times that forecast.
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State Street has raised its quarterly dividend by 13.3%, to $0.34 a share from $0.30. The new annual rate of $1.36 yields 1.9%. State Street also plans to repurchase $1.8 billion worth of its shares by June 30, 2016. It spent $1.65 billion on buybacks in 2014.
The company’s fee income rises and falls with the value of the mutual funds and other securities it manages. Thanks to improving stock markets and new contracts, it will likely earn $5.16 a share in 2015, up from $5.09 in 2014. The stock trades at 14.1 times that forecast.
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MCCOY CORP. $5.83 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 27.4 million; Market cap: $161.1 million; Dividend yield: 3.4%) operates through two divisions: Mobile Solutions and Energy Products and Services.
Energy Products and Services sells or rents gear for oil and gas drilling and pipe handling. It also provides repair and maintenance services for drilling equipment.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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Energy Products and Services sells or rents gear for oil and gas drilling and pipe handling. It also provides repair and maintenance services for drilling equipment.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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WAJAX CORP. $37.46 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $627.2 million; Dividend yield: 6.4%) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).
The company’s customers are in the natural resource, construction, manufacturing and transportation industries.
In the three months ended December 31, 2013, Wajax’s revenue rose 7.3%, to $391.7 million from $364.9 million a year earlier. The gain mostly came from stronger sales of equipment for forestry, construction and power generation.
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The company’s customers are in the natural resource, construction, manufacturing and transportation industries.
In the three months ended December 31, 2013, Wajax’s revenue rose 7.3%, to $391.7 million from $364.9 million a year earlier. The gain mostly came from stronger sales of equipment for forestry, construction and power generation.
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SASOL LTD. (ADR) $52.96 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082- 883-9697; www.sasol.com; ADRs outstanding: 649.9 million; Market cap: $36.6 billion; Dividend yield: 2.8%) is the world’s largest producer of fuel from coal at its facility in Secunda, South Africa. It also makes synthetic fuels from natural gas at plants in Qatar and Nigeria.
In addition, Sasol has substantial chemical production interests and produces oil and gas in Africa. It’s also South Africa’s thirdlargest coal producer.
In Sasol’s 2014 fiscal first half, which ended December 31, 2013, its revenue rose 23.1%, to 98.3 billion South African rand (1 rand = $0.10 U.S.) from 79.9 billion rand in the first half of fiscal 2013.
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In addition, Sasol has substantial chemical production interests and produces oil and gas in Africa. It’s also South Africa’s thirdlargest coal producer.
In Sasol’s 2014 fiscal first half, which ended December 31, 2013, its revenue rose 23.1%, to 98.3 billion South African rand (1 rand = $0.10 U.S.) from 79.9 billion rand in the first half of fiscal 2013.
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BROADRIDGE FINANCIAL SOLUTIONS $37.15 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.4 million; Market cap: $4.4 billion; Dividend yield: 2.3%) has bought Emerald Connect, a private firm that helps financial advisors promote their services. Emerald helps its clients set up websites, publish newsletters, conduct seminars and manage direct mail and online marketing campaigns.
Broadridge plans to merge Emerald with its Forefield subsidiary, which sells online courses and related services to financial professionals.
The company paid $60 million for Emerald, which is equal to 1.9 times the $31.2 million, or $0.25 a share, it earned in the latest quarter.
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Broadridge plans to merge Emerald with its Forefield subsidiary, which sells online courses and related services to financial professionals.
The company paid $60 million for Emerald, which is equal to 1.9 times the $31.2 million, or $0.25 a share, it earned in the latest quarter.
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CAMECO CORP. $26.90 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.6 million; Market cap: $10.6 billion; Dividend yield 1.5%) has finally started production at its Cigar Lake mine in northern Saskatchewan.
Construction was several years behind schedule after a series of technical problems, including an underground flood in 2006. The $2.6-billion mine is tapping into one of the world’s largest high-grade uranium deposits.
Cigar Lake is 50% owned by Cameco, 37% by France’s Areva, 8% by Idemitsu Canada Resources Ltd. and 5% by Tepco Resources Inc.
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Construction was several years behind schedule after a series of technical problems, including an underground flood in 2006. The $2.6-billion mine is tapping into one of the world’s largest high-grade uranium deposits.
Cigar Lake is 50% owned by Cameco, 37% by France’s Areva, 8% by Idemitsu Canada Resources Ltd. and 5% by Tepco Resources Inc.
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AMAZON.COM $373.23 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 459.3 million; Market cap: $172.4 billion; No dividends paid) has raised the price of its Amazon Prime service to $99 a year from $79. This is the first price hike since the company launched Prime in 2005.
The fee gets customers two-day shipping on all their purchases. U.S. members also get two additional free services: Amazon Instant Video, which boasts 180,000 titles, and the Kindle Owners’ Lending Library, which lets users borrow a free book each month from the thousands of titles Kindle offers.
It’s uncertain how many—or if any—Prime members will cancel after the price increase. But while the company hasn’t said how many Prime subscribers it has, the number is likely over 20 million. So the hike could increase its annual revenue by up to $400 million. Amazon had revenue of $74.5 billion in 2013.
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The fee gets customers two-day shipping on all their purchases. U.S. members also get two additional free services: Amazon Instant Video, which boasts 180,000 titles, and the Kindle Owners’ Lending Library, which lets users borrow a free book each month from the thousands of titles Kindle offers.
It’s uncertain how many—or if any—Prime members will cancel after the price increase. But while the company hasn’t said how many Prime subscribers it has, the number is likely over 20 million. So the hike could increase its annual revenue by up to $400 million. Amazon had revenue of $74.5 billion in 2013.
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DOMINO’S PIZZA $78.27 (New York symbol DPZ; TSINetwork Rating: Average) (734-930- 3030; www.dominos.com; Shares outstanding: 55.7 million; Market cap: $4.4 billion; Dividend yield: 1.3%) reported earnings of $0.78 a share in the three months ended December 29, 2013. That’s up 21.9% from $0.64 a year earlier.
Sales gained 5.0%, to $566.5 million from $539.7 million. Same-store sales rose 7.0% internationally and 3.7% in the U.S. The company continues to pay down its long-term debt, which is now $1.5 billion, or a manageable 34% of its market cap.
The outlook for Domino’s is positive, but the stock has jumped over 57% for us in the last year. It now trades at a high 28.0 times its forecast 2014 earnings of $2.80 a share.
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Sales gained 5.0%, to $566.5 million from $539.7 million. Same-store sales rose 7.0% internationally and 3.7% in the U.S. The company continues to pay down its long-term debt, which is now $1.5 billion, or a manageable 34% of its market cap.
The outlook for Domino’s is positive, but the stock has jumped over 57% for us in the last year. It now trades at a high 28.0 times its forecast 2014 earnings of $2.80 a share.
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STANTEC INC. $68.12 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.6 million; Market cap: $3.1 billion; Dividend yield: 1.1%) sells a range of consulting, project-delivery, design and technology services. Its clients operate in a variety of industries, including transportation, construction, and oil and gas.
In the quarter ended December 31, 2013, revenue rose 15.7%, to $451.3 million from $390.1 million a year earlier. Acquisitions were one reason for the gain. Stantec is also working on many new projects, such as major pipelines and the huge Westside Subway Transit Corridor in southern California.
Earnings gained 14.8%, to $35.7 million, or $0.77 a share, from $31.1 million, or $0.68.
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In the quarter ended December 31, 2013, revenue rose 15.7%, to $451.3 million from $390.1 million a year earlier. Acquisitions were one reason for the gain. Stantec is also working on many new projects, such as major pipelines and the huge Westside Subway Transit Corridor in southern California.
Earnings gained 14.8%, to $35.7 million, or $0.77 a share, from $31.1 million, or $0.68.
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