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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DOREL INDUSTRIES $38.76 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.4%) makes a range of items, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational goods, mainly bicycles.
In the three months ended December 31, 2013, Dorel’s sales rose 1.8%, to $633.5 million from $622.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Higher sales at the recreational and home-furnishing segments offset lower demand for juvenile products.
Excluding one-time items, earnings per share fell 34.8%, to $0.60 from $0.92. The company’s bicycle sales rose in the latest quarter, but its competitors discounted their bikes heavily, forcing Dorel to sharply cut its prices—and its profit margins with them.
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In the three months ended December 31, 2013, Dorel’s sales rose 1.8%, to $633.5 million from $622.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Higher sales at the recreational and home-furnishing segments offset lower demand for juvenile products.
Excluding one-time items, earnings per share fell 34.8%, to $0.60 from $0.92. The company’s bicycle sales rose in the latest quarter, but its competitors discounted their bikes heavily, forcing Dorel to sharply cut its prices—and its profit margins with them.
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DEVON ENERGY CORP. $63.46 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $25.9 billion; Dividend yield: 1.5%) continues to sell assets to focus on its fast-growing U.S. properties.
Devon is selling some of its Canadian properties to Canadian Natural Resources (symbol CNQ on Toronto) for $2.8 billion.
The company will use the cash to fund last year’s $6-billion purchase of oilproducing properties in Texas’s Eagle Ford shale formation. It also plans to further expand its U.S. operations.
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Devon is selling some of its Canadian properties to Canadian Natural Resources (symbol CNQ on Toronto) for $2.8 billion.
The company will use the cash to fund last year’s $6-billion purchase of oilproducing properties in Texas’s Eagle Ford shale formation. It also plans to further expand its U.S. operations.
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ZARGON OIL & GAS $8.61 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 30.1 million; Market cap: $259.1 million; Dividend yield: 8.4%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. Its production is 64% oil and 36% gas.
In the quarter ended December 31, 2013, Zargon produced 7,276 barrels of oil equivalent a day, down 5.8% from 7,634 a year earlier. That’s because it sold some less-important properties and cut back on natural gas drilling in response to lower gas prices.
That lower output more than offset slightly higher oil and gas prices in the latest quarter, dropping the company’s cash flow per share by 27.3%, to $0.40 from $0.55. Zargon expects cash flow of $1.66 a share in 2014. The stock trades at 5.2 times that estimate.
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In the quarter ended December 31, 2013, Zargon produced 7,276 barrels of oil equivalent a day, down 5.8% from 7,634 a year earlier. That’s because it sold some less-important properties and cut back on natural gas drilling in response to lower gas prices.
That lower output more than offset slightly higher oil and gas prices in the latest quarter, dropping the company’s cash flow per share by 27.3%, to $0.40 from $0.55. Zargon expects cash flow of $1.66 a share in 2014. The stock trades at 5.2 times that estimate.
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BIRCHCLIFF ENERGY $10.35 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 144.0 million; Market cap: $1.5 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 81% of its output is gas. The remaining 19% is oil.
In the three months ended December 31, 2013, Birchcliff’s production rose 6.5%, to 28,391 barrels of oil equivalent per day (including gas) from 26,655 barrels a year earlier. Cash flow per share gained 25.0%, to $0.35 from $0.28, on the increased production and higher gas prices.
In 2012, Birchcliff completed Phase III of its gas plant expansion in Pouce Coupe, Alberta. This project doubled the facility’s capacity and is letting the company bring the additional gas it is producing to market.
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In the three months ended December 31, 2013, Birchcliff’s production rose 6.5%, to 28,391 barrels of oil equivalent per day (including gas) from 26,655 barrels a year earlier. Cash flow per share gained 25.0%, to $0.35 from $0.28, on the increased production and higher gas prices.
In 2012, Birchcliff completed Phase III of its gas plant expansion in Pouce Coupe, Alberta. This project doubled the facility’s capacity and is letting the company bring the additional gas it is producing to market.
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DUNDEE REIT $28.39 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416- 365-3535; www.dundeereit.com; Units outstanding: 103.4 million; Market cap: $3.0 billion; Dividend yield: 7.9%) owns and manages 24.6 million square feet of office and retail space.
In the quarter ended December 31, 2013, Dundee REIT’s revenue rose 8.6%, to $208.4 million from $192.0 million a year earlier. The trust bought $592.5 million worth of new buildings comprising 1.7 million feet of leasable area. That was the reason for most of the revenue increase.
Cash flow gained 15.4%, to $67.0 million from $58.1 million. However, Dundee issued new units to pay for the acquired properties, so its cash flow per unit rose 8.8%, to $0.62 from $0.57, on more units outstanding.
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In the quarter ended December 31, 2013, Dundee REIT’s revenue rose 8.6%, to $208.4 million from $192.0 million a year earlier. The trust bought $592.5 million worth of new buildings comprising 1.7 million feet of leasable area. That was the reason for most of the revenue increase.
Cash flow gained 15.4%, to $67.0 million from $58.1 million. However, Dundee issued new units to pay for the acquired properties, so its cash flow per unit rose 8.8%, to $0.62 from $0.57, on more units outstanding.
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THE CHURCHILL CORP. $10.47 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.9 million; Market cap: $260.5 million; Dividend yield: 4.6%) provides building-construction, commercial and industrial electrical contracting, earthmoving and industrial insulation services to government and private sector clients, mainly in Western Canada.
In the three months ended December 31, 2013, Churchill earned $3.3 million, or $0.13 a share. That’s a big improvement from a loss of $62.8 million, or $2.56 a share, a year earlier. The year-ago results include a one-time writedown of $64.6 million.
Revenue increased 2.5%, to $297.0 million from $289.9 million. Churchill has worked through most of the less-profitable contracts it took on as part of its acquisitions, or that it negotiated when its markets were more competitive in 2009 and 2010.
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In the three months ended December 31, 2013, Churchill earned $3.3 million, or $0.13 a share. That’s a big improvement from a loss of $62.8 million, or $2.56 a share, a year earlier. The year-ago results include a one-time writedown of $64.6 million.
Revenue increased 2.5%, to $297.0 million from $289.9 million. Churchill has worked through most of the less-profitable contracts it took on as part of its acquisitions, or that it negotiated when its markets were more competitive in 2009 and 2010.
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RUSSEL METALS $30.34 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.0 million; Market cap: $1.9 billion; Dividend yield: 4.4%) is one of North America’s largest metal distributors. It serves 39,000 clients at 53 locations in Canada and 12 in the U.S.
In the quarter ended December 31, 2013, Russel’s revenue rose 5.9%, to $811.1 million from $765.9 million a year earlier. Sales at the company’s metalservices business rose 4%, as higher demand offset lower selling prices. The energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 12%.
Earnings gained 13.4%, to $22.8 million from $20.1 million. Per-share earnings rose 8.8%, to $0.37 from $0.34, on more shares outstanding.
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In the quarter ended December 31, 2013, Russel’s revenue rose 5.9%, to $811.1 million from $765.9 million a year earlier. Sales at the company’s metalservices business rose 4%, as higher demand offset lower selling prices. The energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 12%.
Earnings gained 13.4%, to $22.8 million from $20.1 million. Per-share earnings rose 8.8%, to $0.37 from $0.34, on more shares outstanding.
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SHERRITT INTERNATIONAL $3.64 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.1 billion; Yield: 1.1%) has cut its dividend to $0.01 a share from $0.043. It now yields 1.1%.
In the quarter ended December 31, 2013, Sherritt’s revenue fell 16.7%, to $108.6 million from $130.3 million a year earlier. It lost $0.13 a share, compared to a loss of $0.01.
Sherritt’s long-term debt is $2.1 billion, or a high 2.3 times its market cap. But after the upcoming sale of its coal business, it will hold cash of $1.5 billion, or $5.05 a share.
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In the quarter ended December 31, 2013, Sherritt’s revenue fell 16.7%, to $108.6 million from $130.3 million a year earlier. It lost $0.13 a share, compared to a loss of $0.01.
Sherritt’s long-term debt is $2.1 billion, or a high 2.3 times its market cap. But after the upcoming sale of its coal business, it will hold cash of $1.5 billion, or $5.05 a share.
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YAMANA GOLD $10.77 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.- yamana.com; Shares outstanding: 753.3 million; Market cap: $8.1 billion; Dividend yield: 1.5%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development.
In the three months ended December 31, 2013, Yamana’s revenue fell 33.2%, to $420.7 million from $629.5 million a year earlier (all figures except share price and market cap in U.S. dollars).
Gold production declined 6.0%, to 303,768 ounces from 322,990. Prices for gold, copper and silver also fell. (Copper and silver are significant by-products of the company’s gold mining.) Yamana’s cash flow per share declined 45.0%, to $0.22 from $0.40.
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In the three months ended December 31, 2013, Yamana’s revenue fell 33.2%, to $420.7 million from $629.5 million a year earlier (all figures except share price and market cap in U.S. dollars).
Gold production declined 6.0%, to 303,768 ounces from 322,990. Prices for gold, copper and silver also fell. (Copper and silver are significant by-products of the company’s gold mining.) Yamana’s cash flow per share declined 45.0%, to $0.22 from $0.40.
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NEW GOLD $6.24 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 503.3 million; Market cap: $3.1 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.
New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.
In the three months ended December 31, 2013, New Gold’s cash flow per share fell 17.4%, to $0.19 from $0.23 a year earlier. Prices of gold, copper and silver fell, as did production from Cerro San Pedro, which is scheduled to close next year.
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New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.
In the three months ended December 31, 2013, New Gold’s cash flow per share fell 17.4%, to $0.19 from $0.23 a year earlier. Prices of gold, copper and silver fell, as did production from Cerro San Pedro, which is scheduled to close next year.
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