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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ENERFLEX LTD. $15.26 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Dividend yield: 2.0%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.
The company has a strong position in three expanding markets: U.S. and Canadian shale gas; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, most of which gets converted to liquefied natural gas (LNG) for shipping worldwide.
In the quarter ended September 30, 2013, Enerflex’s revenue rose 5.7%, to $390.7 million from $369.7 million a year ago. However, earnings per share fell 37.0%, to $0.17 from $0.27, mostly due to cost overruns on three international projects.
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The company has a strong position in three expanding markets: U.S. and Canadian shale gas; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, most of which gets converted to liquefied natural gas (LNG) for shipping worldwide.
In the quarter ended September 30, 2013, Enerflex’s revenue rose 5.7%, to $390.7 million from $369.7 million a year ago. However, earnings per share fell 37.0%, to $0.17 from $0.27, mostly due to cost overruns on three international projects.
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TOROMONT INDUSTRIES LTD. $25.40 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 76.7 million; Market cap: $2.0 billion; Dividend yield: 2.1%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division.
The company completed the spinoff of Enerflex Ltd. (see right) in July 2011. Shareholders received shares of both the new Toromont Industries and Enerflex.
In the three months ended September 30, 2013, higher equipment sales and rentals, particularly to mining, construction and agriculture customers, pushed up Toromont’s revenue by 20.0%, to $498.3 million from $415.0 million a year earlier.
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The company completed the spinoff of Enerflex Ltd. (see right) in July 2011. Shareholders received shares of both the new Toromont Industries and Enerflex.
In the three months ended September 30, 2013, higher equipment sales and rentals, particularly to mining, construction and agriculture customers, pushed up Toromont’s revenue by 20.0%, to $498.3 million from $415.0 million a year earlier.
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AASTRA TECHNOLOGIES $44.59 (Toronto symbol AAH; TSINetwork Rating: Speculative) (905-760-4200; www.aastra.com; Shares outstanding: 11.8 million; Market cap: $531.1 million; Dividend yield: 1.8%) reports that its shareholders have approved a friendly takeover offer by Mitel Networks (symbol MNW on Toronto). Mitel’s shareholders have also approved the deal, which is expected to close soon.
Mitel is paying $6.52 U.S. in cash and 3.6 Mitel common shares for each Aastra share. Based on today’s price for Mitel stock, the offer is worth $44.87 per Aastra share.
Aastra shareholders will own 43% of the combined company, which will have over $1 billion in sales. The new firm will be a strong competitor in global business communications: it will have the largest share of the Western European market and will be No.3 in North America, behind Cisco and Avaya.
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Mitel is paying $6.52 U.S. in cash and 3.6 Mitel common shares for each Aastra share. Based on today’s price for Mitel stock, the offer is worth $44.87 per Aastra share.
Aastra shareholders will own 43% of the combined company, which will have over $1 billion in sales. The new firm will be a strong competitor in global business communications: it will have the largest share of the Western European market and will be No.3 in North America, behind Cisco and Avaya.
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TIM HORTONS $60.25 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 147.1 million; Market cap: $8.9 billion; Dividend yield: 1.7%) continues to successfully launch new products to take advantage of consumer trends. The latest is its diet-conscious Turkey Sausage Breakfast Sandwich.
This sandwich sells for $3.29 and can be ordered with egg and cheese on a toasted English muffin. Served this way, it contains 330 calories and 14 grams of fat. Customers can lower these amounts to 280 calories and nine grams of fat by ordering the sandwich with an egg-white option.
The breakfast market is extremely important to Tims: it served 208 million breakfast sandwiches in 2012 alone, and an estimated two-thirds of Canadians who buy breakfast at a restaurant choose Tim Hortons.
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This sandwich sells for $3.29 and can be ordered with egg and cheese on a toasted English muffin. Served this way, it contains 330 calories and 14 grams of fat. Customers can lower these amounts to 280 calories and nine grams of fat by ordering the sandwich with an egg-white option.
The breakfast market is extremely important to Tims: it served 208 million breakfast sandwiches in 2012 alone, and an estimated two-thirds of Canadians who buy breakfast at a restaurant choose Tim Hortons.
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NISSAN MOTOR (ADR) $18.42 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310- 771-3111; www.nissan-global.com; Shares outstanding: 2.3 billion; Market cap: $41.5 billion; No dividends paid) continues to profit from rising sales in China.
Sales of all car brands rose 15.7% in China in 2013, to 17.9 million vehicles. Sales were particularly strong in December 2013, at 2.1 million vehicles, about 17% higher than December 2012.
Nissan reports that its Chinese sales jumped 70.4% in December 2013, to a record 134,200 vehicles. That raised its total 2013 sales in the country by 17.2%, to 1.3 million.
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Sales of all car brands rose 15.7% in China in 2013, to 17.9 million vehicles. Sales were particularly strong in December 2013, at 2.1 million vehicles, about 17% higher than December 2012.
Nissan reports that its Chinese sales jumped 70.4% in December 2013, to a record 134,200 vehicles. That raised its total 2013 sales in the country by 17.2%, to 1.3 million.
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DOREL INDUSTRIES $41.21 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.3 billion; Dividend yield: 3.0%) has agreed to buy 100% of Tiny Love Ltd., a maker of baby products and developmental toys based in Tel Aviv, Israel, for an undisclosed sum.
Tiny Love has won awards in the developmental toy category, which includes products like activity gyms, mobiles and toys for babies and toddlers.
The company sells these products in over 50 countries and had about $45 million U.S. of revenue in 2013. To put that in perspective, Dorel’s sales were $607.3 million U.S. in the three months ended September 30, 2013. Tiny Love is also profitable, with strong cash flow.
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Tiny Love has won awards in the developmental toy category, which includes products like activity gyms, mobiles and toys for babies and toddlers.
The company sells these products in over 50 countries and had about $45 million U.S. of revenue in 2013. To put that in perspective, Dorel’s sales were $607.3 million U.S. in the three months ended September 30, 2013. Tiny Love is also profitable, with strong cash flow.
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SHERRITT INTERNATIONAL $3.71 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.1 billion; Dividend yield: 4.6%) has announced that it plans to sell all of its coal interests. Two buyers will pay a total of $793 million in cash and assume $153 million of leases.
These sales will let Sherritt focus on its nickel, cobalt and oil interests and pay down some of its $2.1-billion debt.
Separately, the company will hold a special shareholders’ meeting on May 6 in response to a request from activist investment firm Clarke Inc. (symbol CKI on Toronto), which owns 5.2% of Sherritt’s shares.
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These sales will let Sherritt focus on its nickel, cobalt and oil interests and pay down some of its $2.1-billion debt.
Separately, the company will hold a special shareholders’ meeting on May 6 in response to a request from activist investment firm Clarke Inc. (symbol CKI on Toronto), which owns 5.2% of Sherritt’s shares.
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AMERIGO RESOURCES $0.49 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 172.3 million; Market cap: $84.4 million; No dividends paid) processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest copper mine. This contract runs at least through 2037. Amerigo also has an agreement to process material from the nearby Cauquenes tailings pond.
Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
A landslide in one of Amerigo’s production areas has hurt its copper and molybdenum production. In the quarter ended September 30, 2013, copper production fell 13.1%, to 11.04 million pounds from 12.70 million a year earlier. Molybdenum output declined 40.0%, to 193,138 pounds from 321,788.
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Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
A landslide in one of Amerigo’s production areas has hurt its copper and molybdenum production. In the quarter ended September 30, 2013, copper production fell 13.1%, to 11.04 million pounds from 12.70 million a year earlier. Molybdenum output declined 40.0%, to 193,138 pounds from 321,788.
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AURICO GOLD $5.05 (Toronto symbol AUQ; TSINetwork Rating: Speculative) (604-681-2802; www.auricogold.com; Shares outstanding: 247.1 million; Market cap: $1.3 billion; Dividend yield: 3.3%) operates the El Chanate gold mine in Mexico, which produced 71,864 ounces in 2013.
The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The mine’s output should rise to over 152,000 ounces this year.
AuRico hasn’t yet released its financial results for 2013, but in the three months ended September 30, its revenue rose 36.5%, to $54.3 million from $39.8 million a year earlier. Cash flow jumped to $0.09 a share from nil. Higher gold production offset lower prices.
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The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The mine’s output should rise to over 152,000 ounces this year.
AuRico hasn’t yet released its financial results for 2013, but in the three months ended September 30, its revenue rose 36.5%, to $54.3 million from $39.8 million a year earlier. Cash flow jumped to $0.09 a share from nil. Higher gold production offset lower prices.
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BIRCHCLIFF ENERGY $8.40 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 142.9 million; Market cap: $1.2 billion; No dividends paid) jumped recently after it announced that it ended 2013 with record production of 30,000 barrels of oil equivalent a day (including natural gas).
Since then, the company’s output has risen to 32,100 barrels a day, mainly because it bought a partner’s 30% stake in one of its wells in Alberta’s Pouce Coupe area for $56 million.
The company plans to spend $275 million on exploration and development this year. That could let it end 2014 with production as high as 39,500 barrels of oil equivalent per day.
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Since then, the company’s output has risen to 32,100 barrels a day, mainly because it bought a partner’s 30% stake in one of its wells in Alberta’s Pouce Coupe area for $56 million.
The company plans to spend $275 million on exploration and development this year. That could let it end 2014 with production as high as 39,500 barrels of oil equivalent per day.
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