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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THE CHURCHILL CORP. $11.43 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.9 million; Market cap: $284.4 million; Dividend yield: 4.2%) has added to its record backlog after two of its divisions won $250 million worth of contracts.
The company’s Stuart Olson Dominion Construction subsidiary secured $135 million in new projects, including the Mount Royal University Library in Calgary. And its Commercial Systems segment added another $115 million of new deals.
To put these contracts in perspective, Churchill’s total backlog stood at a record $2.12 billion at the end of December 2013, up 25.2% from $1.69 billion a year previous.
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The company’s Stuart Olson Dominion Construction subsidiary secured $135 million in new projects, including the Mount Royal University Library in Calgary. And its Commercial Systems segment added another $115 million of new deals.
To put these contracts in perspective, Churchill’s total backlog stood at a record $2.12 billion at the end of December 2013, up 25.2% from $1.69 billion a year previous.
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CARFINCO FINANCIAL GROUP $9.46 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $252.3 million; Dividend yield: 5.1%) provides car loans to consumers who can’t meet the criteria of banks and other traditional lenders.
In September 2013, Carfinco expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less-affluent borrowers. The acquisition boosted Carfinco’s loans outstanding by about 22%.
In the three months ended December 31, 2013, the company’s revenue rose 29.6%, to $24.9 million from $19.2 million a year earlier. Carfinco loaned $46.0 million in the quarter, up 14.8% from $40.1 million.
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In September 2013, Carfinco expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less-affluent borrowers. The acquisition boosted Carfinco’s loans outstanding by about 22%.
In the three months ended December 31, 2013, the company’s revenue rose 29.6%, to $24.9 million from $19.2 million a year earlier. Carfinco loaned $46.0 million in the quarter, up 14.8% from $40.1 million.
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INTACT FINANCIAL CORP. $69.42 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $9.2 billion; Dividend yield: 2.8%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended December 31, 2013, Intact’s revenue rose slightly, to $1.70 billion from $1.69 billion a year earlier. The company earned $143 million, or $1.05 a share, down sharply from $194 million, or $1.42.
However, the latest results include a pre-tax loss of $55 million related to December ice storms in Ontario and Quebec.
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In the three months ended December 31, 2013, Intact’s revenue rose slightly, to $1.70 billion from $1.69 billion a year earlier. The company earned $143 million, or $1.05 a share, down sharply from $194 million, or $1.42.
However, the latest results include a pre-tax loss of $55 million related to December ice storms in Ontario and Quebec.
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BELLATRIX EXPLORATION $9.96 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 171.0 million; Market cap: $1.7 billion; No dividends paid) has announced an expanded joint venture agreement with Grafton Energy Co. I Ltd. The deal should speed up the development of Bellatrix’s Cardium shale oil deposits in west-central Alberta.
Under the new deal, Grafton increased the amount it is paying Bellatrix to $250 million from $200 million.
In return, Grafton gets 54% of the production from a three-year, $244-million drilling program. It will get this share of the wells’ output until it earns back its $250 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.
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Under the new deal, Grafton increased the amount it is paying Bellatrix to $250 million from $200 million.
In return, Grafton gets 54% of the production from a three-year, $244-million drilling program. It will get this share of the wells’ output until it earns back its $250 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.
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CIMAREX ENERGY $118.11 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.0 million; Market cap: $10.0 billion; Dividend yield: 0.5%) produces and explores for oil and gas. Gas makes up 50% of its output.
Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (49% of production); the Permian Basin of western Texas and southeastern New Mexico (47%); and the Texas Gulf Coast (4%).
In the three months ended December 31, 2013, Cimarex’s production averaged 704.9 million cubic feet of natural gas equivalent per day (including oil). That’s up 4.2% from 676.7 million cubic feet a year earlier.
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Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (49% of production); the Permian Basin of western Texas and southeastern New Mexico (47%); and the Texas Gulf Coast (4%).
In the three months ended December 31, 2013, Cimarex’s production averaged 704.9 million cubic feet of natural gas equivalent per day (including oil). That’s up 4.2% from 676.7 million cubic feet a year earlier.
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DEVON ENERGY CORP. $68.68 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 407.4 million; Market cap: $27.6 billion; Dividend yield: 1.4%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 57% gas and 43% oil.
In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company aimed to focus on its North American projects, which include conventional production, Texas shale oil and Alberta oil sands.
Devon recently narrowed its focus even further by selling some of its Canadian properties to Canadian Natural Resources (symbol CNQ on Toronto) for $2.8 billion.
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In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company aimed to focus on its North American projects, which include conventional production, Texas shale oil and Alberta oil sands.
Devon recently narrowed its focus even further by selling some of its Canadian properties to Canadian Natural Resources (symbol CNQ on Toronto) for $2.8 billion.
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AIMIA INC. $17.56 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 173.0 million; Market cap: $3.0 billion; Dividend yield: 3.9%) owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.6 million members who collect Aeroplan miles from participating companies. Members can exchange miles for flights, car rentals, hotel rooms and merchandise.
Aimia also owns Nectar, the U.K.’s biggest loyalty program. In addition, it has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.
In the three months ended December 31, 2013, Aimia’s revenue rose 1.4%, to $687.6 million from $678.2 million a year earlier. Excluding one-time items, earnings per share fell 5.8%, to $0.49 from $0.52. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.
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Aimia also owns Nectar, the U.K.’s biggest loyalty program. In addition, it has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.
In the three months ended December 31, 2013, Aimia’s revenue rose 1.4%, to $687.6 million from $678.2 million a year earlier. Excluding one-time items, earnings per share fell 5.8%, to $0.49 from $0.52. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.
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DIEBOLD INC. $39 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.3 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.9%; TSINetwork Rating: Average; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. The company gets 52% of its revenue from overseas.
Diebold’s revenue rose 10.1%, from $2.7 billion in 2009 to $3.0 billion in 2012. That’s mainly because of pent-up ATM demand in the wake of the 2008 financial crisis. As well, U.S. banks had to upgrade their ATMs to comply with the Americans with Disabilities Act. However, revenue in 2013 fell 4.5% to $2.9 billion, due to slowing sales of ATMs to regional U.S. banks and unfavourable currency rates.
The company earned $0.97 a share (or a total of $65 million) in 2009, but it lost $0.37 a share (or $25 million) in 2010 due to goodwill writedowns and other charges. Earnings rebounded to $2.21 a share (or $143 million) in 2011, but additional writedowns cut them to $1.20 a share (or $77 million) in 2012.
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Diebold’s revenue rose 10.1%, from $2.7 billion in 2009 to $3.0 billion in 2012. That’s mainly because of pent-up ATM demand in the wake of the 2008 financial crisis. As well, U.S. banks had to upgrade their ATMs to comply with the Americans with Disabilities Act. However, revenue in 2013 fell 4.5% to $2.9 billion, due to slowing sales of ATMs to regional U.S. banks and unfavourable currency rates.
The company earned $0.97 a share (or a total of $65 million) in 2009, but it lost $0.37 a share (or $25 million) in 2010 due to goodwill writedowns and other charges. Earnings rebounded to $2.21 a share (or $143 million) in 2011, but additional writedowns cut them to $1.20 a share (or $77 million) in 2012.
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