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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GANNETT CO. INC. $24 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 229.1 million; Market cap: $5.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 3.3%; TSINetwork Rating: Average; www.gannett.com) publishes 99 newspapers in the U.S. and U.K., including USA Today, its flagship paper. It also publishes 680 magazines and weekly papers and owns 23 U.S. television stations.
Newspapers account for 70% of Gannett’s revenue, followed by TV (16%) and websites (14%).
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Newspapers account for 70% of Gannett’s revenue, followed by TV (16%) and websites (14%).
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TOYOTA MOTOR CO. ADRs $124 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $198.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 1.1%; TSINetwork Rating: Above Average; www.toyota.com) sold 193,394 vehicles in the U.S. in July 2013. That’s up 17.3% from 164,898 in July 2012.
The company continues to benefit from rising demand for hybrid cars: sales of its Prius hybrid subcompact jumped 40.0%. Rising home construction also helped push up truck sales by 11.5%.
Toyota should also continue to gain from the Japanese government’s move to weaken the yen, because it makes the company’s cars cheaper for buyers outside Japan. It also raises the value of the foreign currencies that Toyota’s international operations earn.
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The company continues to benefit from rising demand for hybrid cars: sales of its Prius hybrid subcompact jumped 40.0%. Rising home construction also helped push up truck sales by 11.5%.
Toyota should also continue to gain from the Japanese government’s move to weaken the yen, because it makes the company’s cars cheaper for buyers outside Japan. It also raises the value of the foreign currencies that Toyota’s international operations earn.
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HILLSHIRE BRANDS CO. $32 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 123.3 million; Market cap: $3.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.2%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats.
The company has raised its quarterly dividend by 40.0%, to $0.175 a share from $0.125. The new annual rate of $0.70 yields 2.2%. It also plans to buy back $200 million of its shares in the next two years.
The stock trades at 18.6 times the $1.72 a share it will probably earn in the fiscal year ending June 30, 2014. That’s a high p/e ratio for a company that faces strong price competition from larger food makers.
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The company has raised its quarterly dividend by 40.0%, to $0.175 a share from $0.125. The new annual rate of $0.70 yields 2.2%. It also plans to buy back $200 million of its shares in the next two years.
The stock trades at 18.6 times the $1.72 a share it will probably earn in the fiscal year ending June 30, 2014. That’s a high p/e ratio for a company that faces strong price competition from larger food makers.
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PETSMART INC. $70 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 103.3 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.petm.com) operates 1,301 pet stores in the U.S. and Canada. It also has 196 in-store PetsHotels, which look after pets while their owners are away.
In the second quarter of its 2014 fiscal year, which ended August 4, 2013, PetSmart’s earnings jumped 18.9%, to $93.4 million from $78.5 million a year earlier. PetSmart bought back $24 million of its shares during the quarter. Due to fewer shares outstanding, earnings per share rose 25.4%, to $0.89 from $0.71.
Sales gained 5.3%, to $1.7 billion from $1.6 billion. Same-store sales rose 3.4%, while sales of pet services, such as grooming, rose 7.3%. Services supplied 12.0% of PetSmart’s total sales.
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In the second quarter of its 2014 fiscal year, which ended August 4, 2013, PetSmart’s earnings jumped 18.9%, to $93.4 million from $78.5 million a year earlier. PetSmart bought back $24 million of its shares during the quarter. Due to fewer shares outstanding, earnings per share rose 25.4%, to $0.89 from $0.71.
Sales gained 5.3%, to $1.7 billion from $1.6 billion. Same-store sales rose 3.4%, while sales of pet services, such as grooming, rose 7.3%. Services supplied 12.0% of PetSmart’s total sales.
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GOOGLE INC. $849 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 333.2 million; Market cap: $282.9 billion; Price-to-sales ratio: 5.0; No dividends paid; TSINetwork Rating: Above Average; www.google.com) has started selling Chromecast, a new $35 device that connects to the back of a television set. Chromecast makes it easy to stream movies, TV shows and other video content from a home wireless network to a television.
The company is also interested in securing exclusive content for YouTube, such as NFL football. Programming like this would let Google earn subscription fees and charge advertisers higher rates.
Google is a buy.
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The company is also interested in securing exclusive content for YouTube, such as NFL football. Programming like this would let Google earn subscription fees and charge advertisers higher rates.
Google is a buy.
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T. ROWE PRICE GROUP INC. $71 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 260.1 million; Market cap: $18.5 billion; Price-to-sales ratio: 5.7; Dividend yield: 2.1%; TSINetwork Rating: Average; www.troweprice .com) has agreed to sell its banking subsidiary, which mainly offers certificates of deposit.
The company will receive $24 million for this business when the deal closes, probably by the end of 2013. That’s just 12% of the $206.8 million, or $0.79 a share, it earned in the second quarter of 2013. However, selling the banking business will let T. Rowe Price avoid new banking regulations that could interfere with its main mutual fund and wealth management operations.
T. Rowe Price is a buy....
The company will receive $24 million for this business when the deal closes, probably by the end of 2013. That’s just 12% of the $206.8 million, or $0.79 a share, it earned in the second quarter of 2013. However, selling the banking business will let T. Rowe Price avoid new banking regulations that could interfere with its main mutual fund and wealth management operations.
T. Rowe Price is a buy....
NEWMONT MINING CORP. $31 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 497.7 million; Market cap: $15.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.2%; TSINetwork Rating: Average; www.newmont.com) has written down the value of its gold inventories, as well as two of its gold mines in Australia, by $1.8 billion. That’s because gold prices have dropped 21%, from around $1,800 an ounce in October 2012 to $1,420 today.
The company links its dividend to gold prices, so it has also cut the quarterly payout by 28.6%, to $0.25 a share from $0.35. The new annual rate of $1.00 yields 3.2%.
Newmont is still a hold.
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The company links its dividend to gold prices, so it has also cut the quarterly payout by 28.6%, to $0.25 a share from $0.35. The new annual rate of $1.00 yields 3.2%.
Newmont is still a hold.
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J.C. PENNEY CO. INC. $13 (New York symbol JCP; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 220.4 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.2; Dividend suspended in May 2012; TSINetwork Rating: Extra Risk; www. jcpenney.com) operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods online.
Over a year ago, the company switched to an everyday low prices strategy. It felt the move would entice shoppers to come into its stores more often and not wait for clearance sales.
However, the plan alienated Penney’s regular customers. In response to a sharp drop in its sales, the company switched back to its original marketing strategy.
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Over a year ago, the company switched to an everyday low prices strategy. It felt the move would entice shoppers to come into its stores more often and not wait for clearance sales.
However, the plan alienated Penney’s regular customers. In response to a sharp drop in its sales, the company switched back to its original marketing strategy.
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NORDSTROM INC. $57 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.5 million; Market cap: $11.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.nordstrom.com) mainly sells clothing, accessories and footwear. The company owns and operates 248 stores in 33 states.
In the second quarter of its 2014 fiscal year, which ended August 3, 2013, Nordstrom’s sales rose 6.3%, to $3.2 billion from $3.0 billion a year earlier. Samestore sales rose 4.2% on strong demand for men’s apparel, men’s shoes and children’s clothing. Online sales jumped 37%.
Earnings gained 17.9%, to $184 million from $156 million. Per-share earnings rose 24.0%, to $0.93 from $0.75, on fewer shares outstanding.
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In the second quarter of its 2014 fiscal year, which ended August 3, 2013, Nordstrom’s sales rose 6.3%, to $3.2 billion from $3.0 billion a year earlier. Samestore sales rose 4.2% on strong demand for men’s apparel, men’s shoes and children’s clothing. Online sales jumped 37%.
Earnings gained 17.9%, to $184 million from $156 million. Per-share earnings rose 24.0%, to $0.93 from $0.75, on fewer shares outstanding.
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MACY’S INC. $44 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 377.9 million; Market cap: $16.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.
The company continues to benefit from strong online sales. That’s largely because it is offering free shipping and letting customers pick up their orders at its stores. Macy’s recent move to tailor its merchandise to local tastes is also helping it compete.
Even so, Macy’s sales fell 0.8% in the second quarter of its 2014 fiscal year, which ended August 3, 2013, to $6.07 billion from $6.12 billion a year earlier. Same-store sales, which include online orders, also declined 0.8%.
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The company continues to benefit from strong online sales. That’s largely because it is offering free shipping and letting customers pick up their orders at its stores. Macy’s recent move to tailor its merchandise to local tastes is also helping it compete.
Even so, Macy’s sales fell 0.8% in the second quarter of its 2014 fiscal year, which ended August 3, 2013, to $6.07 billion from $6.12 billion a year earlier. Same-store sales, which include online orders, also declined 0.8%.
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