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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BUCKEYE PARTNERS L.P. $75 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 123.2 million; Market cap: $9.2 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.8%; TSINetwork Rating: Average; www.buckeye.com) operates over 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. The partnership also owns oil and gas storage terminals.
Buckeye continues to expand by acquisition. In December 2013, it bought 19 oil-storage terminals on the U.S. east coast and one on the Caribbean island of St. Lucia from Hess Corp. (New York symbol HES). It now has over 120 terminals.
These assets cost Buckeye $850 million. To put that in context, it earned $351.6 million in 2013. That’s up 49.1% from $235.9 million in 2012, which included a $60.0- million charge for a pipeline closure. Earnings per unit rose 36.3%, to $3.23 from $2.37, on more units outstanding.
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Buckeye continues to expand by acquisition. In December 2013, it bought 19 oil-storage terminals on the U.S. east coast and one on the Caribbean island of St. Lucia from Hess Corp. (New York symbol HES). It now has over 120 terminals.
These assets cost Buckeye $850 million. To put that in context, it earned $351.6 million in 2013. That’s up 49.1% from $235.9 million in 2012, which included a $60.0- million charge for a pipeline closure. Earnings per unit rose 36.3%, to $3.23 from $2.37, on more units outstanding.
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FORD MOTOR CO. $15 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.0 billion; Market cap: $60.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.3%; TSINetwork Rating: Extra Risk; www.ford.com) sold 2.5 million vehicles in the U.S. in 2013, up 10.8% from 2.25 million in 2012. Truck sales supplied 38% of the 2013 total and rose 13.0%, followed by cars (34%, up 10.0%) and SUVs (28%, up 9.1%).
Thanks to its improving outlook, Ford recently raised its dividend by 25.0%. The new annual rate of $0.50 a share yields 3.3%. The stock also trades at a low 9.9 times the $1.51 a share that the company will probably earn in 2014.
Ford is a buy....
Thanks to its improving outlook, Ford recently raised its dividend by 25.0%. The new annual rate of $0.50 a share yields 3.3%. The stock also trades at a low 9.9 times the $1.51 a share that the company will probably earn in 2014.
Ford is a buy....
HONDA MOTOR CO. LTD. ADRs $36 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $64.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s secondlargest carmaker and the world’s biggest motorcycle manufacturer.
In 2013, the company sold 1.53 million cars and trucks in the U.S., up 7.2% from 1.42 million in 2012. Honda continues to see strong demand for its Civic compact and Accord sedan. As well, it sold over 300,000 of its CR-V sport utility vehicles for the first time in its history.
The company recently launched new motorcycle models in fast-growing markets like India and Indonesia. (Asia accounts for 87% of Honda’s worldwide motorcycle sales.)
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In 2013, the company sold 1.53 million cars and trucks in the U.S., up 7.2% from 1.42 million in 2012. Honda continues to see strong demand for its Civic compact and Accord sedan. As well, it sold over 300,000 of its CR-V sport utility vehicles for the first time in its history.
The company recently launched new motorcycle models in fast-growing markets like India and Indonesia. (Asia accounts for 87% of Honda’s worldwide motorcycle sales.)
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TOYOTA MOTOR CO. ADRs $116 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $185.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s biggest carmaker by sales. It also makes industrial equipment, such as forklifts and prefabricated housing. Like most automakers, the company offers vehicle loans through its financing division.
In 2013, Toyota sold 2.24 million cars and trucks in the U.S., up 7.4% from 2.08 million in 2012. That’s partly due to strong demand for its hybrid cars, which use gasoline and electricity. The company has sold 6.1 million of these vehicles since it started offering them in 1997.
Toyota now sells 24 hybrid car models and one plug-in version in over 80 countries. Over the next two years, it plans to launch 15 new hybrids, which should help it maintain its leading 50% share of this fastgrowing market.
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In 2013, Toyota sold 2.24 million cars and trucks in the U.S., up 7.4% from 2.08 million in 2012. That’s partly due to strong demand for its hybrid cars, which use gasoline and electricity. The company has sold 6.1 million of these vehicles since it started offering them in 1997.
Toyota now sells 24 hybrid car models and one plug-in version in over 80 countries. Over the next two years, it plans to launch 15 new hybrids, which should help it maintain its leading 50% share of this fastgrowing market.
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HEWLETT-PACKARD CO. $30 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.9 billion; Market cap: $57.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hp.com) is starting to benefit from a major restructuring that includes merging its computer and printing divisions and cutting 11% of its workforce.
In its fiscal 2014 first quarter, which ended January 31, 2014, earnings before unusual items rose 8.5%, to $1.7 billion from $1.6 billion a year earlier. Earnings per share rose 9.8%, to $0.90 from $0.82, on fewer shares outstanding.
Revenue in the quarter fell 0.7%, to $28.2 billion from $28.4 billion. Sales of computers rose 4% during the busy Christmas shopping season. However, printer sales fell 2%. Sales of servers and software to businesses also declined.
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In its fiscal 2014 first quarter, which ended January 31, 2014, earnings before unusual items rose 8.5%, to $1.7 billion from $1.6 billion a year earlier. Earnings per share rose 9.8%, to $0.90 from $0.82, on fewer shares outstanding.
Revenue in the quarter fell 0.7%, to $28.2 billion from $28.4 billion. Sales of computers rose 4% during the busy Christmas shopping season. However, printer sales fell 2%. Sales of servers and software to businesses also declined.
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MOLSON COORS BREWING CO. $57 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 184.2 million; Market cap: $10.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.6%; TSINetwork Rating: Average; www.molson coors.com) continues to make progress integrating StarBev LP, which it bought for $3.4 billion in June 2012. StarBev owns nine breweries in central and eastern Europe.
In 2013, Molson Coors’ earnings rose 2.3%, to $727.1 million from $710.5 million in 2012. Due to more shares outstanding, earnings per share gained 1.0%, to $3.95 from $3.91. Sales rose 7.4%, to $4.2 billion from $3.9 billion.
Molson Coors is doing a good job absorbing StarBev, and cutting costs at its existing businesses. In 2013, it lowered its expenses by $113 million.
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In 2013, Molson Coors’ earnings rose 2.3%, to $727.1 million from $710.5 million in 2012. Due to more shares outstanding, earnings per share gained 1.0%, to $3.95 from $3.91. Sales rose 7.4%, to $4.2 billion from $3.9 billion.
Molson Coors is doing a good job absorbing StarBev, and cutting costs at its existing businesses. In 2013, it lowered its expenses by $113 million.
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PHILIPS ELECTRONICS N.V. ADRs $35 (New York symbol PHG; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 913.3 million; Market cap: $32.0 billion; Priceto- sales ratio: 1.0; Dividend yield: 2.8%; TSINetwork Rating: Average; www.philips.com) gets 41% of its revenue by making health care products, such as X-ray and magnetic resonance imaging (MRI) scanners.
The company also makes lighting (36% of revenue) and consumer electronics, such as appliances and electric shavers (20%). Licensing revenue and other services supply the remaining 3%.
Philips continues to benefit from a major restructuring plan that includes efficiency improvements and cutting 4% of its workforce. The company has also sold its less profitable video and audio products business, which makes TV sets and CD players.
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The company also makes lighting (36% of revenue) and consumer electronics, such as appliances and electric shavers (20%). Licensing revenue and other services supply the remaining 3%.
Philips continues to benefit from a major restructuring plan that includes efficiency improvements and cutting 4% of its workforce. The company has also sold its less profitable video and audio products business, which makes TV sets and CD players.
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CANON INC. ADRs $31 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.1 billion; Market cap: $34.1 billion; Price-to-sales ratio: 1.0; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.canon.com) gets 52% of its revenue by making office equipment, mainly printers and copiers.
It also makes consumer products, such as cameras and inkjet printers (38% of revenue), and industrial components, including chips and other parts for TV sets, medical gear and mobile devices (10%).
Demand for printers and other business products is slowly improving with the overall economy. The low Japanese yen also makes Canon’s products cheaper in other countries.
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It also makes consumer products, such as cameras and inkjet printers (38% of revenue), and industrial components, including chips and other parts for TV sets, medical gear and mobile devices (10%).
Demand for printers and other business products is slowly improving with the overall economy. The low Japanese yen also makes Canon’s products cheaper in other countries.
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DIAGEO PLC ADRs $125 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.8 million; Market cap: $78.5 billion; Price-to-sales ratio: 4.2; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest maker of spirits. Its major brands include Guinness stout, Smirnoff vodka and Captain Morgan rum.
In the first six months of its 2014 fiscal year, which ended December 31, 2013, Diageo’s sales fell 0.7%, to 5.9 billion British pounds from 6.0 billion a year earlier (1 pound = $1.86 Canadian).
Gains in Latin America (up 8%), North America (up 5%) and Africa (up 2%) offset weakness in Asia (down 6%) and Western Europe (down 1%).
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In the first six months of its 2014 fiscal year, which ended December 31, 2013, Diageo’s sales fell 0.7%, to 5.9 billion British pounds from 6.0 billion a year earlier (1 pound = $1.86 Canadian).
Gains in Latin America (up 8%), North America (up 5%) and Africa (up 2%) offset weakness in Asia (down 6%) and Western Europe (down 1%).
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YUM! BRANDS INC. $73 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 442.9 million; Market cap: $32.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.yum .com) will soon start selling breakfast foods and coffee through 5,500 of its Taco Bell outlets in the U.S.
The new breakfast menu features the Waffle Taco, a warm waffle wrapped around either bacon or sausage, with scrambled eggs, cheese and maple syrup. The A.M. Crunchwrap sandwich holds sausage, eggs and cheese inside a soft tortilla shell.
These foods are sure to draw a lot of criticism from health advocates. But that may be part of Yum’s plan to attract media attention and spur sales.
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The new breakfast menu features the Waffle Taco, a warm waffle wrapped around either bacon or sausage, with scrambled eggs, cheese and maple syrup. The A.M. Crunchwrap sandwich holds sausage, eggs and cheese inside a soft tortilla shell.
These foods are sure to draw a lot of criticism from health advocates. But that may be part of Yum’s plan to attract media attention and spur sales.
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