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.
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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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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....