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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LEON’S FURNITURE $15.75 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $1.1 billion; Div. yield: 2.5%) has steadily opened new stores, growing from 27 stores in 2003, to 75 today.
But the company more than quadrupled in size overnight with the March 28, 2013 purchase of its main rival, The Brick, for $700 million. The Brick operates 234 outlets across Canada. Leon’s and The Brick will continue to operate as separate chains.
As a result of the acquisition, Leon’s sales jumped to $523.0 million in the three months ended December 31, 2013, from $188.5 million a year earlier. Earnings rose 61.5%, to $26.0 million, or $0.37 a share, from $16.1 million, or $0.23.
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But the company more than quadrupled in size overnight with the March 28, 2013 purchase of its main rival, The Brick, for $700 million. The Brick operates 234 outlets across Canada. Leon’s and The Brick will continue to operate as separate chains.
As a result of the acquisition, Leon’s sales jumped to $523.0 million in the three months ended December 31, 2013, from $188.5 million a year earlier. Earnings rose 61.5%, to $26.0 million, or $0.37 a share, from $16.1 million, or $0.23.
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ALIMENTATION COUCHE-TARD $91.36 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard. com; Shares outstanding: 179.4 million; Market cap: $17.3 billion; Dividend yield: 0.4%) grew from just 630 stores in Quebec in 1998 to 1,612 in 1999, mostly through the purchase of Silcorp Ltd. and its 980 Mac’s and Becker’s stores in Ontario and western Canada. Couche-Tard then continued to expand through profitable acquisitions, including buying 2,290 stores in the U.S. in 2003 from ConocoPhillips.
The company made another big acquisition in June 2012 with the $2.7-billion purchase of Norway’s Statoil Fuel & Retail chain of gas stations (all figures except share price in U.S. dollars).
In Europe, Couche-Tard now operates 2,263 outlets across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia. That’s in addition to its 6,221 stores throughout North America operating under the Couche- Tard and Circle K banners.
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The company made another big acquisition in June 2012 with the $2.7-billion purchase of Norway’s Statoil Fuel & Retail chain of gas stations (all figures except share price in U.S. dollars).
In Europe, Couche-Tard now operates 2,263 outlets across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia. That’s in addition to its 6,221 stores throughout North America operating under the Couche- Tard and Circle K banners.
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CAMPBELL SOUP CO. $43 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 315.0 million; Market cap: $13.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.campbellsoupcompany.com) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Wal-Mart accounts for 19% of its sales.
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NORDSTROM INC. $61 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 193.4 million; Market cap: $11.8 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.0%; TSINetwork Rating: Average; www.nordstrom.com) mainly sells upscale clothing, accessories and footwear.
In Nordstrom’s 2014 fiscal year, which ended February 1, 2014, its sales rose 3.3%, to $12.5 billion from $12.1 billion in 2013. Same-store sales gained 2.5%. Online sales jumped 30%.
Nordstrom continues to open new stores, particularly discount outlets. The related costs were part of the reason why its earnings fell 0.1%, to $734 million from $735 million. Per-share earnings rose 4.2%, to $3.71 from $3.56, on fewer shares outstanding.
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In Nordstrom’s 2014 fiscal year, which ended February 1, 2014, its sales rose 3.3%, to $12.5 billion from $12.1 billion in 2013. Same-store sales gained 2.5%. Online sales jumped 30%.
Nordstrom continues to open new stores, particularly discount outlets. The related costs were part of the reason why its earnings fell 0.1%, to $734 million from $735 million. Per-share earnings rose 4.2%, to $3.71 from $3.56, on fewer shares outstanding.
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EBAY INC. $57 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $74.1 billion; Priceto- sales ratio: 4.6; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) has paid an undisclosed sum for PhiSix Fashion Labs.
This private firm specializes in 3-D computergraphic simulations. eBay plans to use this technology to show customers of its auction and e-commerce websites how they look in different clothing items. This should reduce returns and spur more people to buy clothes online.
eBay is a buy....
This private firm specializes in 3-D computergraphic simulations. eBay plans to use this technology to show customers of its auction and e-commerce websites how they look in different clothing items. This should reduce returns and spur more people to buy clothes online.
eBay is a buy....
NVIDIA CORP. $19 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 568.5 million; Market cap: $10.8 billion; Priceto- sales ratio: 2.8; Dividend yield: 1.8%; TSINetwork Rating: Average; www.nvidia.com) earned $588.4 million in its 2014 fiscal year, which ended January 26, 2014. That’s down 19.2% from $728.4 million in fiscal 2013. Earnings per share fell 15.4%, to $0.99 from $1.17, on fewer shares outstanding.
Revenue declined 3.5%, to $4.1 billion from $4.3 billion. Weak demand for entry-level computers continues to hurt sales of Nvidia’s graphic chips, but sales of high-end desktops and servers remain strong. Sales of its Tegra chips for mobile devices also slowed, particularly in the first half of the year, as customers waited for the company to launch a new version.
Nvidia is a hold.
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Revenue declined 3.5%, to $4.1 billion from $4.3 billion. Weak demand for entry-level computers continues to hurt sales of Nvidia’s graphic chips, but sales of high-end desktops and servers remain strong. Sales of its Tegra chips for mobile devices also slowed, particularly in the first half of the year, as customers waited for the company to launch a new version.
Nvidia is a hold.
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GOOGLE INC. $1,220 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 336.1 million; Market cap: $410.0 billion; Price-to-sales ratio: 6.9; No dividends paid; TSINetwork Rating: Above Average; www.google.com) continues to launch new services to cut its reliance on Internet search.
For instance, it now offers TV and Internet access through its own fibre optic networks in Kansas City, Missouri, Austin, Texas and Provo, Utah. Google’s networks are up to 100 times faster than its rivals’, and it’s considering expanding them to 34 more cities.
More users are watching video-streaming services like Google’s YouTube. As a result, Internet providers want video sites to pay more to compensate for the heavy demand this puts on their networks. Owning its own broadband service strengthens Google’s bargaining position.
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For instance, it now offers TV and Internet access through its own fibre optic networks in Kansas City, Missouri, Austin, Texas and Provo, Utah. Google’s networks are up to 100 times faster than its rivals’, and it’s considering expanding them to 34 more cities.
More users are watching video-streaming services like Google’s YouTube. As a result, Internet providers want video sites to pay more to compensate for the heavy demand this puts on their networks. Owning its own broadband service strengthens Google’s bargaining position.
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AMEREN CORP. $40 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $9.7 billion; Price-to-sales ratio: 1.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.ameren.com) has received regulatory approval to build a 644-kilometre, $1.1-billion power line in central Illinois. The project will make the state’s power grid more reliable when it’s finished in 2019.
Meanwhile, the company earned $512 million in 2013, down 0.8% from $516 million in 2012. Due to more shares outstanding, earnings per share fell 1.4%, to $2.10 from $2.13. That’s mainly because the company had to shut down a nuclear reactor for refueling. Higher power rates raised its revenue by 1.0%, to $5.84 billion from $5.78 billion.
Ameren is a hold....
Meanwhile, the company earned $512 million in 2013, down 0.8% from $516 million in 2012. Due to more shares outstanding, earnings per share fell 1.4%, to $2.10 from $2.13. That’s mainly because the company had to shut down a nuclear reactor for refueling. Higher power rates raised its revenue by 1.0%, to $5.84 billion from $5.78 billion.
Ameren is a hold....
CEDAR FAIR L.P. $53 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.7 million; Market cap: $3.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 5.3%; TSINetwork Rating: Average; www.cedarfair.com) owns 11 amusement parks, three outdoor water parks, one indoor water park and five hotels.
In 2013, the partnership earned a record $108.2 million, or $1.94 a unit. That’s up 6.2% from $101.9 million, or $1.81 a unit, in 2012. Revenue rose 6.3%, to a record $1.14 billion from $1.07 billion.
These gains are mainly because guests spent an average of 5.2% more at its parks. Out-of-park revenue (mainly from hotel rooms and food) rose 6.3%. The partnership’s parks and hotels attracted 23.5 million guests in 2013, up 0.9%.
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In 2013, the partnership earned a record $108.2 million, or $1.94 a unit. That’s up 6.2% from $101.9 million, or $1.81 a unit, in 2012. Revenue rose 6.3%, to a record $1.14 billion from $1.07 billion.
These gains are mainly because guests spent an average of 5.2% more at its parks. Out-of-park revenue (mainly from hotel rooms and food) rose 6.3%. The partnership’s parks and hotels attracted 23.5 million guests in 2013, up 0.9%.
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