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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ARCHER DANIELS MIDLAND CO. $43 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 659.0 million; Market cap: $28.3 billion; Priceto- sales ratio: 0.3; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.adm.com) has been forced to drop its offer to buy the 80.2% of GrainCorp, a leading Australian grain-storage and shipping company, that it does not already own.
That’s because Australian foreign investment regulators have blocked a full takeover. However, they could let Archer Daniels increase its GrainCorp stake to 24.9%. That would still let it profit as Australia ships more crops to Asia.
Meanwhile, the company is using the $3.0 billion it would have spent on this purchase to raise its quarterly dividend by 26.3%, to $0.24 a share from $0.19. The new annual rate of $0.96 yields 2.2%. It also plans to buy back 3% of its shares in 2014.
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That’s because Australian foreign investment regulators have blocked a full takeover. However, they could let Archer Daniels increase its GrainCorp stake to 24.9%. That would still let it profit as Australia ships more crops to Asia.
Meanwhile, the company is using the $3.0 billion it would have spent on this purchase to raise its quarterly dividend by 26.3%, to $0.24 a share from $0.19. The new annual rate of $0.96 yields 2.2%. It also plans to buy back 3% of its shares in 2014.
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CENOVUS ENERGY INC. $28 (New York symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $21.2 billion; Priceto- sales ratio: 1.2; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) gets 60% of its production from its three heavy oil projects in Alberta and one in Saskatchewan. Conventional oil and natural gas wells supply the remaining 40%.
U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. Cenovus ships the bitumen from these fields to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.
The company expects lower cash flow in 2014, partly due to rising operating costs at its oil sands projects. It’s now working on making these operations more efficient.
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U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. Cenovus ships the bitumen from these fields to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.
The company expects lower cash flow in 2014, partly due to rising operating costs at its oil sands projects. It’s now working on making these operations more efficient.
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APACHE CORP. $86 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 399.2 million; Market cap: $34.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 0.9%; TSINetwork Rating: Average; www. apachecorp.com) continues to sell some its less important oil and gas properties, including its offshore fields in the Gulf of Mexico and a third of its Egyptian operations. In all, the company expects to raise $4 billion from these sales in 2013.
Apache will use half of the proceeds to pay down its $10.9 billion of long-term debt (as of September 30, 2013), which is equal to 32% of its market cap.
The company is also using the cash to increase production from its North American onshore properties. This approach is much cheaper than offshore drilling and has less political risk. Apache now gets 56% of its production from its onshore fields, up from 32% in 2009.
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Apache will use half of the proceeds to pay down its $10.9 billion of long-term debt (as of September 30, 2013), which is equal to 32% of its market cap.
The company is also using the cash to increase production from its North American onshore properties. This approach is much cheaper than offshore drilling and has less political risk. Apache now gets 56% of its production from its onshore fields, up from 32% in 2009.
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CHEVRON CORP. $122 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $231.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www. chevron.com) is the second-largest integrated oil company in the U.S., after ExxonMobil.
The company plans to spend $39.8 billion on exploration and upgrading its operations in 2014. That’s down 5.2% from the $42 billion it will likely spend in 2013. Chevron will devote 90% of the 2014 capital budget to extracting oil and gas. The remaining 10% will go toward improving its refineries and gas stations.
Among Chevron’s bigger projects is its 47.3%-owned Gorgon natural gas development off Australia’s west coast. Gorgon, which includes a plant that liquefies gas for export, is 75% complete and should start up in 2015. Its reserves will last 40 years.
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The company plans to spend $39.8 billion on exploration and upgrading its operations in 2014. That’s down 5.2% from the $42 billion it will likely spend in 2013. Chevron will devote 90% of the 2014 capital budget to extracting oil and gas. The remaining 10% will go toward improving its refineries and gas stations.
Among Chevron’s bigger projects is its 47.3%-owned Gorgon natural gas development off Australia’s west coast. Gorgon, which includes a plant that liquefies gas for export, is 75% complete and should start up in 2015. Its reserves will last 40 years.
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3M COMPANY $136 (New York symbol MMM; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 665.2 million; Market cap: $90.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.3m.com) began operating as the Minnesota Mining & Manufacturing Company in 1902.
3M started off making sandpaper and abrasives for industrial customers. It later developed a variety of other consumer and manufacturing-related goods, such as pressure- sensitive masking and packaging tape, recording tape, reflective highway markings and medical bandages. The company now makes more than 55,000 different items.
The company owns a range of well-known brands, including Post-it notes, Scotch tape, Scotch-Brite household cleaning products, Scotchguard protection and Thinsulate insulation.
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3M started off making sandpaper and abrasives for industrial customers. It later developed a variety of other consumer and manufacturing-related goods, such as pressure- sensitive masking and packaging tape, recording tape, reflective highway markings and medical bandages. The company now makes more than 55,000 different items.
The company owns a range of well-known brands, including Post-it notes, Scotch tape, Scotch-Brite household cleaning products, Scotchguard protection and Thinsulate insulation.
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AGILENT TECHNOLOGIES INC. (New York symbol A) plans to break itself into two publicly traded companies. One of these businesses will keep the Agilent name and focus on testing equipment for medical-research labs. The second company will make testing systems for improving electronics, such as cellphones and computer equipment....
CAMECO CORP. $22.21 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.5 million; Market cap: $8.8 billion; Dividend yield 1.8%) is the world’s largest uranium producer. It supplies 14% of global mine production and has large, high-grade reserves, low-cost operations, significant market share and many mines.
Cameco also owns 31.6% of Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear complex. As well, it owns NUKEM, a trader and broker of nuclear fuel products and services.
In the three months ended September 30, 2013, Cameco’s revenue jumped 101.7%, to $597 million from $296 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share climbed to $0.53 from $0.12.
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Cameco also owns 31.6% of Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear complex. As well, it owns NUKEM, a trader and broker of nuclear fuel products and services.
In the three months ended September 30, 2013, Cameco’s revenue jumped 101.7%, to $597 million from $296 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share climbed to $0.53 from $0.12.
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SHERRITT INTERNATIONAL $3.02 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $900.8 million; Dividend yield: 5.7%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up soon.
The company is a major nickel producer, with operations in Cuba and Canada. As well, it has started up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.
In the three months ended September 30, 2013, Sherritt’s revenue fell 16.2%, to $286.2 million from $341.5 million a year earlier. Lower nickel and coal prices were the main reasons for the drop. Cash flow per share declined 33.3%, to $0.20 from $0.30.
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The company is a major nickel producer, with operations in Cuba and Canada. As well, it has started up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.
In the three months ended September 30, 2013, Sherritt’s revenue fell 16.2%, to $286.2 million from $341.5 million a year earlier. Lower nickel and coal prices were the main reasons for the drop. Cash flow per share declined 33.3%, to $0.20 from $0.30.
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ALIMENTATION COUCHE-TARD $78.27 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $14.9 billion; Dividend yield: 0.5%) reports that its earnings excluding one-time items jumped 45.6% in the quarter ended October 13, 2013, to $249.0 million, or $1.32 a share. A year earlier, it earned $171.0 million, or $0.91.
The company benefited from higher fuel volumes and merchandise sales.
Couche-Tard also raised its quarterly dividend by 14.3% with the December 2013 payment, to $0.10 from $0.0875. The shares yield 0.5%. The increase followed a 16.7% hike in September 2013.
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The company benefited from higher fuel volumes and merchandise sales.
Couche-Tard also raised its quarterly dividend by 14.3% with the December 2013 payment, to $0.10 from $0.0875. The shares yield 0.5%. The increase followed a 16.7% hike in September 2013.
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IAMGOLD $3.55 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.6 million; Market cap: $1.4 billion; No dividends paid) is suspending its dividend payments to conserve cash while it waits for gold prices to rebound. The move follows similar cuts by other gold miners.
Gold has dropped over 30%, from its high near $1,800 U.S. an ounce in September 2012 to $1,232 today.
IAMGold is still a buy for exposure to a rebound in gold prices....
Gold has dropped over 30%, from its high near $1,800 U.S. an ounce in September 2012 to $1,232 today.
IAMGold is still a buy for exposure to a rebound in gold prices....