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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INTERNATIONAL FLAVORS & FRAGRANCES INC. $86 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $7.0 billion; Priceto- sales ratio: 2.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 unique compounds that improve the taste of foods and the smell of a wide variety of consumer products. Major clients include Procter & Gamble, Nestle, Kraft, Unilever and General Mills.
The company has two divisions: Flavors, which makes ingredients for soups, soft drinks and gum; and Fragrances, which produces compounds for soaps, detergents and air fresheners. Each business supplies roughly half of IFF’s sales and earnings.
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The company has two divisions: Flavors, which makes ingredients for soups, soft drinks and gum; and Fragrances, which produces compounds for soaps, detergents and air fresheners. Each business supplies roughly half of IFF’s sales and earnings.
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INTEL CORP. $25 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $125.0 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.intel.com) is selling its Intel Media business, which is developing a service calle...
BHP BILLITON LTD. ADRs $64 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $172.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.7%; TSINetwork Rating: Average; www.bhpbilliton.com) produced a record 97.8 million tonnes of iron ore in the six months ended December 31, 2013, up 19.3% from a year earlier. That’s mainly due to the start-up of its 85%-owned Jimblebar mine in Western Australia. BHP still expects to produce 192 million tonnes of iron ore for its full 2014 fiscal year.
The company also produced more metallurgical coal (up 21.9%), alumina (up 8.4%) and copper (up 6.2%). As well, new onshore oil wells in the U.S. pushed up its oil output by 6.3%. However, natural gas production fell 6.7% as BHP shifts its focus to its more profitable oil operations.
BHP Billiton is a buy....
The company also produced more metallurgical coal (up 21.9%), alumina (up 8.4%) and copper (up 6.2%). As well, new onshore oil wells in the U.S. pushed up its oil output by 6.3%. However, natural gas production fell 6.7% as BHP shifts its focus to its more profitable oil operations.
BHP Billiton is a buy....
FEDEX CORP. $132 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 312.2 million; Market cap: $41.2 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) plans to sell $2 billion worth of new long-term notes. The delivery firm will use the cash to buy back 11.4 million of its common shares, or 4% of the total outstanding, at current market prices. It aims to complete these purchases by May 31, 2014.
Share buybacks raise earnings per share and other per-share calculations and give the remaining shareholders a larger stake in the company.
The notes will raise the company’s long-term debt to around $4.7 billion. That’s still a low 11% of its market cap. FedEx also held cash of $3.9 billion, or $12.37 a share, as of November 30, 2013.
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Share buybacks raise earnings per share and other per-share calculations and give the remaining shareholders a larger stake in the company.
The notes will raise the company’s long-term debt to around $4.7 billion. That’s still a low 11% of its market cap. FedEx also held cash of $3.9 billion, or $12.37 a share, as of November 30, 2013.
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THE BOEING CO. $130 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 751.5 million; Market cap: $97.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.boeing.com) delivered a record 648 passenger jets in 2013, beating its earlier forecast of 645. The 2013 figure is also 7.8% higher than the 601 planes the company delivered in 2012.
In addition, Boeing won orders for 1,531 commercial planes in 2013 (or 1,355 after cancellations). It ended the year with a record backlog of 5,080 aircraft orders.
Boeing is a buy.
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In addition, Boeing won orders for 1,531 commercial planes in 2013 (or 1,355 after cancellations). It ended the year with a record backlog of 5,080 aircraft orders.
Boeing is a buy.
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MCKESSON CORP. $173 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 229.7 million; Market cap: $39.7 billion; Price-to-sales ratio: 0.3; Dividend yield: 0.6%; TSINetwork Rating: Above Average; www.mckesson- .com) has agreed to buy shares of Celesio AG, a German firm that distributes prescription drugs in Europe and Brazil, from its two largest investors. The move will give McKesson about 75% of Celesio. It then plans to buy the remaining 25%.
Buying all of Celesio will cost $8.4 billion, including its debt. However, the purchase should add $1.00 to $1.20 a share to McKesson’s annual earnings; it earned $6.33 a share in the fiscal year ended March 31, 2013.
McKesson is a buy....
Buying all of Celesio will cost $8.4 billion, including its debt. However, the purchase should add $1.00 to $1.20 a share to McKesson’s annual earnings; it earned $6.33 a share in the fiscal year ended March 31, 2013.
McKesson is a buy....
NEWMONT MINING CORP. $25 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $12.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.2%; TSINetwork Rating: Average; www.newmont.com) owns 48.5% of the Batu Hijau copper/gold mine in Indonesia, which supplies 7% of its revenue.
The Indonesian government wants miners to process more ore in the country, so it recently announced a ban on mineral exports. Batu Hijau can still export its ore until 2016, but it will face a new export tax in the meantime. Newmont will challenge these changes, because its contract exempts it from extra taxes and fees.
Newmont is still a hold....
The Indonesian government wants miners to process more ore in the country, so it recently announced a ban on mineral exports. Batu Hijau can still export its ore until 2016, but it will face a new export tax in the meantime. Newmont will challenge these changes, because its contract exempts it from extra taxes and fees.
Newmont is still a hold....
INTERNATIONAL BUSINESS MACHINES CORP. $176 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $193.6 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.ibm.com) is selling its low-end server operations to China’s Lenovo Group, the same company that acquired IBM’s personal computer division in 2005. IBM will hang on to its more profitable mainframe computer business.
Because Lenovo is a Chinese company, the deal could run into trouble on national security grounds. But if regulators approve, IBM will receive $2 billion in cash and $300 million in Lenovo shares. The cash would help the company expand in areas with greater potential, including cloud computing and analytics services, which help businesses analyze large amounts of data and improve their efficiency.
IBM is a buy....
Because Lenovo is a Chinese company, the deal could run into trouble on national security grounds. But if regulators approve, IBM will receive $2 billion in cash and $300 million in Lenovo shares. The cash would help the company expand in areas with greater potential, including cloud computing and analytics services, which help businesses analyze large amounts of data and improve their efficiency.
IBM is a buy....
TEXAS INSTRUMENTS INC. $42 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $46.2 billion; Price-to-sales ratio: 4.0; Dividend yield: 2.9%; TSINetwork Rating: Average; www.ti.com) gets 65% of its revenue from analog chips, which convert inputs like touch, sound and pressure into electronic signals. Manufacturers use these chips in a variety of products, including cars, medical devices and appliances.
The company gets a further 20% of its revenue by making processor chips, which perform mathematical calculations. Many clients supply their own software for these chips. That lets Texas Instruments form long-term relationships with these users, as it helps them carry their software over when they upgrade.
The remaining 15% of revenue comes from other chips, handheld calculators and licensing. In the quarter ended December 31, 2013, the company’s earnings jumped 93.6%, to $511 million from $264 million a year earlier. Earnings per share rose 100.0%, to $0.46 from $0.23, on fewer shares outstanding. Texas Instruments recently quit making chips for mobile devices and closed plants as a result. Without closure-related costs, it earned $0.49 a share in the latest quarter.
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The company gets a further 20% of its revenue by making processor chips, which perform mathematical calculations. Many clients supply their own software for these chips. That lets Texas Instruments form long-term relationships with these users, as it helps them carry their software over when they upgrade.
The remaining 15% of revenue comes from other chips, handheld calculators and licensing. In the quarter ended December 31, 2013, the company’s earnings jumped 93.6%, to $511 million from $264 million a year earlier. Earnings per share rose 100.0%, to $0.46 from $0.23, on fewer shares outstanding. Texas Instruments recently quit making chips for mobile devices and closed plants as a result. Without closure-related costs, it earned $0.49 a share in the latest quarter.
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