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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GENUINE PARTS CO. $78 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 154.9 million; Market cap: $12.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets half of its sales and earnings by selling auto parts. The company operates 1,300 of its own outlets under the NAPA banner, and its distribution business serves 4,750 independent stores across North America.
Genuine also distributes industrial parts, office furniture and electrical equipment.
In the three months ended September 30, 2013, revenue rose 9.2%, to a record $3.7 billion from $3.4 billion a year earlier. The gain is mainly because Genuine bought the 70% of an Australian auto parts distributor that it didn’t already own last April. The company paid $820 million for this additional stake. However, revenue fell 2.5% at the industrial parts division, 3.1% at office products and 5.3% at electrical materials.
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Genuine also distributes industrial parts, office furniture and electrical equipment.
In the three months ended September 30, 2013, revenue rose 9.2%, to a record $3.7 billion from $3.4 billion a year earlier. The gain is mainly because Genuine bought the 70% of an Australian auto parts distributor that it didn’t already own last April. The company paid $820 million for this additional stake. However, revenue fell 2.5% at the industrial parts division, 3.1% at office products and 5.3% at electrical materials.
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ALCOA INC. $9.27 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.1 billion; Market cap: $10.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.3%; TSINetwork Rating: Average; www.alcoa.com) owns 25.1% of a joint venture that operates a new aluminum smelter in Saudi Arabia; a state-owned mining company owns the remaining 74.9%.
This facility recently suffered problems while ramping up its production, which forced it to shut down one of its two production lines. Repairs will take about six months, but the other production line should let the plant make its initial deliveries on time.
Alcoa is a buy....
This facility recently suffered problems while ramping up its production, which forced it to shut down one of its two production lines. Repairs will take about six months, but the other production line should let the plant make its initial deliveries on time.
Alcoa is a buy....
MOLSON COORS BREWING CO. $54 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 183.5 million; Market cap: $9.9 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.molsoncoors.com) continues to benefit from last year’s $3.5-billion purchase of StarBev, which owns nine breweries in central and eastern Europe.
Thanks to StarBev, Molson Coors’ sales rose 17.9% in the quarter ended June 29, 2013, to $1.2 billion from $999.4 million a year ago. StarBev is also helping offset slower North American sales.
If you exclude costs to integrate StarBev and other unusual items, the company earned $278.6 million in the quarter, up 11.4% from $250.1 million a year earlier. Due to more shares outstanding, earnings per share rose 9.4%, to $1.51 from $1.38.
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Thanks to StarBev, Molson Coors’ sales rose 17.9% in the quarter ended June 29, 2013, to $1.2 billion from $999.4 million a year ago. StarBev is also helping offset slower North American sales.
If you exclude costs to integrate StarBev and other unusual items, the company earned $278.6 million in the quarter, up 11.4% from $250.1 million a year earlier. Due to more shares outstanding, earnings per share rose 9.4%, to $1.51 from $1.38.
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DIAGEO PLC ADRs $131 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.6 million; Market cap: $82.2 billion; Price-to-sales ratio: 4.5; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker whisky and Captain Morgan rum.
Diageo’s sales rose 6.2% in its 2013 fiscal year, which ended June 30, 2013, to 11.4 billion British pounds from 10.8 billion pounds in 2012 (1 pound = $1.68 Canadian). Gains in Latin America (up 15%), Africa (up 10%), North America (up 5%) and Asia (up 3%) offset a 4% drop in European sales.
Thanks to the higher sales and a successful costcutting plan, earnings rose 28.0%, to 2.5 billion pounds from 1.9 billion. Earnings per ADR gained 21.9% to 3.97 pounds from 3.11 pounds (each American Depositary Receipt represents four common shares).
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Diageo’s sales rose 6.2% in its 2013 fiscal year, which ended June 30, 2013, to 11.4 billion British pounds from 10.8 billion pounds in 2012 (1 pound = $1.68 Canadian). Gains in Latin America (up 15%), Africa (up 10%), North America (up 5%) and Asia (up 3%) offset a 4% drop in European sales.
Thanks to the higher sales and a successful costcutting plan, earnings rose 28.0%, to 2.5 billion pounds from 1.9 billion. Earnings per ADR gained 21.9% to 3.97 pounds from 3.11 pounds (each American Depositary Receipt represents four common shares).
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WAL-MART STORES INC. $76 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.3 billion; Market cap: $250.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart. com) is ending its joint venture in India with Bharti Enterprises.
Under the terms of the breakup, Wal-Mart will own 100% of 20 Best Price Modern Wholesale stores, which sell a wide variety of food and other goods to restaurants and other businesses. Bharti will gain full control of 212 Wal-Mart-style stores.
India has opened up its retail market to foreign companies in the past few years. However, many restrictions remain, such as requiring foreign supermarkets to buy 30% of their products from small Indian firms. That hurts these stores’profits.
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Under the terms of the breakup, Wal-Mart will own 100% of 20 Best Price Modern Wholesale stores, which sell a wide variety of food and other goods to restaurants and other businesses. Bharti will gain full control of 212 Wal-Mart-style stores.
India has opened up its retail market to foreign companies in the past few years. However, many restrictions remain, such as requiring foreign supermarkets to buy 30% of their products from small Indian firms. That hurts these stores’profits.
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TERADATA CORP. $43 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 163.1 million; Market cap: $7.0 billion; Price-to-sales ratio: 2.8; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. It then analyzes this information and identifies buying habits and trends, which helps its clients make better decisions.
In the three months ended June 30, 2013, the company’s earnings fell 4.5%, to $126 million from $132 million a year earlier.
Teradata spent $91 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 1.3%, to $0.76 from $0.77.
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In the three months ended June 30, 2013, the company’s earnings fell 4.5%, to $126 million from $132 million a year earlier.
Teradata spent $91 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 1.3%, to $0.76 from $0.77.
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CANON INC. ADRs $32 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.2 billion; Market cap: $38.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www.canon.com) gets 50% of its revenue by making office equipment, mainly printers and copiers. It also makes consumer products, such as cameras and inkjet printers (40% of revenue) and industrial components, including chips and other parts for TV sets, medical gear and mobile devices (10%).
The Bank of Japan’s move to lower the value of the yen has made the company’s products more affordable outside of Japan. However, the slow global economy is prompting companies to hold off on buying new office equipment.
At the same time, more consumers are using their smartphones to take pictures, which is hurting sales of entry-level digital cameras. In response, Canon plans to focus on more expensive models.
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The Bank of Japan’s move to lower the value of the yen has made the company’s products more affordable outside of Japan. However, the slow global economy is prompting companies to hold off on buying new office equipment.
At the same time, more consumers are using their smartphones to take pictures, which is hurting sales of entry-level digital cameras. In response, Canon plans to focus on more expensive models.
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HEWLETT-PACKARD CO. $24 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.9 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.hp.com) is a leading maker of personal computers and printers. It also makes server computers and networking products for businesses.
Demand for computers and printers, which account for half of Hewlett’s sales, continues to suffer as consumers shift to mobile devices. As a result, the company’s sales will likely fall to $111 billion in its 2013 fiscal year, which ends October 31, 2013, from $120.4 billion in 2012. However, Hewlett believes its sales will stabilize in 2014 and rise in 2015.
Meanwhile, it continues to make progress on a major restructuring plan that includes merging its computer and printing divisions, simplifying its product lines and cutting 8% of its workforce. Hewlett expects to complete these moves in 2014.
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Demand for computers and printers, which account for half of Hewlett’s sales, continues to suffer as consumers shift to mobile devices. As a result, the company’s sales will likely fall to $111 billion in its 2013 fiscal year, which ends October 31, 2013, from $120.4 billion in 2012. However, Hewlett believes its sales will stabilize in 2014 and rise in 2015.
Meanwhile, it continues to make progress on a major restructuring plan that includes merging its computer and printing divisions, simplifying its product lines and cutting 8% of its workforce. Hewlett expects to complete these moves in 2014.
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GENERAL ELECTRIC CO. $26 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.2 billion; Market cap: $265.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.ge.com) continues to shrink its GE Capital subsidiary, which provides loans and other financial services to buyers of its industrial products, such as power-transmission gear, jet engines and locomotives.
GE Capital supplies around 30% of GE’s overall revenue and earnings. As part of a plan to focus on its main industrial businesses, the company aims to cut GE Capital’s assets to half of what they were prior to the 2008 financial crisis. It plans to complete these reductions by 2014.
Due to GE Capital’s smaller size, the company’s overall revenue in the three months ended September 30, 2013 fell 1.5%, to $35.7 billion from $36.3 billion a year earlier. Earnings fell 5.1%, to $3.3 billion from $3.5 billion a year earlier. Earnings per share fell 3.0%, to $0.32 from $0.33, on fewer shares outstanding. If you exclude unusual items, earnings per share rose 11.1%, to $0.40 from $0.36.
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GE Capital supplies around 30% of GE’s overall revenue and earnings. As part of a plan to focus on its main industrial businesses, the company aims to cut GE Capital’s assets to half of what they were prior to the 2008 financial crisis. It plans to complete these reductions by 2014.
Due to GE Capital’s smaller size, the company’s overall revenue in the three months ended September 30, 2013 fell 1.5%, to $35.7 billion from $36.3 billion a year earlier. Earnings fell 5.1%, to $3.3 billion from $3.5 billion a year earlier. Earnings per share fell 3.0%, to $0.32 from $0.33, on fewer shares outstanding. If you exclude unusual items, earnings per share rose 11.1%, to $0.40 from $0.36.
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UNITED TECHNOLOGIES CORP. $106 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 917.5 million; Market cap: $97.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.utc.com) has four main divisions: Building & Industrial Systems (formed in September 2013) makes heating and air-conditioning equipment under the Carrier brand, as well as burglar alarms, fire-safety products and Otis elevators (50% of 2012 revenue, 61% of earnings); Pratt & Whitney manufactures aircraft engines (24%, 19%); Aerospace Systems makes aircraft controls (14%, 11%); and Sikorsky makes helicopters (12%, 9%).
The recession cut United Technologies’revenue by 11.1%, from $56.8 billion in 2008 to $50.5 billion in 2009. Revenue quickly turned around and rose to $57.7 billion in 2012. The U.S. government is the company’s biggest customer and accounts for roughly 18% of its yearly revenue.
Earnings fell 17.0%, from $4.9 billion in 2008 to $4.1 billion in 2009. The company is an aggressive buyer of its own shares. As a result, its earnings per share fell at a slower pace of 15.6%, from $4.74 to $4.00. Thanks to the higher revenue, earnings improved to $5.2 billion, or $5.35 a share, in 2012.
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The recession cut United Technologies’revenue by 11.1%, from $56.8 billion in 2008 to $50.5 billion in 2009. Revenue quickly turned around and rose to $57.7 billion in 2012. The U.S. government is the company’s biggest customer and accounts for roughly 18% of its yearly revenue.
Earnings fell 17.0%, from $4.9 billion in 2008 to $4.1 billion in 2009. The company is an aggressive buyer of its own shares. As a result, its earnings per share fell at a slower pace of 15.6%, from $4.74 to $4.00. Thanks to the higher revenue, earnings improved to $5.2 billion, or $5.35 a share, in 2012.
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