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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PEPSICO INC. $79 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $118.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.pepsico.com) earned $2.05 billion in the three months ended June 15, 2013, up 16.1% from $1.8 billion a year earlier. Earnings per share rose 17.0%, to $1.31 from $1.12, on fewer shares outstanding. The latest earnings included a $0.09-a-share gain on a deal to refranchise PepsiCo’s bottling operations in Vietnam. Revenue rose 2.1%, to $16.8 billion from $16.5 billion.
The company expects to save $900 million this year, mainly by closing plants and cutting jobs. PepsiCo will use some of these savings to develop and promote new products, particularly healthier snack foods. The savings will also help the company offset higher ingredient costs. However, soft drink sales continue to decline, particularly in North America.
PepsiCo is a hold....
The company expects to save $900 million this year, mainly by closing plants and cutting jobs. PepsiCo will use some of these savings to develop and promote new products, particularly healthier snack foods. The savings will also help the company offset higher ingredient costs. However, soft drink sales continue to decline, particularly in North America.
PepsiCo is a hold....
MICROSOFT CORP. $33 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.3 billion; Market cap: $273.9 billion; Price-to-sales ratio: 3.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www. microsoft.com) jumped 8% after it announced that Steve Ballmer, its chief executive officer since 2000, will soon retire. Microsoft expects to name a replacement within the next 12 months.
The company continues to generate strong cash flows from its business products, such as server software, particularly as more companies move to a cloud computing model. However, weak sales of its new consumer devices, such as the Surface tablet computer, have held back its earnings. Investors feel a new CEO from outside the company may sell these struggling businesses.
Microsoft is still a buy....
The company continues to generate strong cash flows from its business products, such as server software, particularly as more companies move to a cloud computing model. However, weak sales of its new consumer devices, such as the Surface tablet computer, have held back its earnings. Investors feel a new CEO from outside the company may sell these struggling businesses.
Microsoft is still a buy....
FAIR ISAAC CORP. $51 .(New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. The company also produces software that helps credit card issuers control fraud and analyze cardholders’spending patterns.
In the company’s fiscal 2013 third quarter, which ended June 30, 2013, its earnings per share before one-time items rose 9.6% from a year ago, to $0.80 from $0.73.
Revenue gained 14.5%, to $183.8 million from $160.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through various channels, including voice, text messaging, mobile applications and email.
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In the company’s fiscal 2013 third quarter, which ended June 30, 2013, its earnings per share before one-time items rose 9.6% from a year ago, to $0.80 from $0.73.
Revenue gained 14.5%, to $183.8 million from $160.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through various channels, including voice, text messaging, mobile applications and email.
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BROADRIDGE FINANCIAL SERVICES INC. $30 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.1 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.
In its 2013 fiscal year, which ended June 30, 2013, Broadridge’s earnings rose 10.6%, to $236.0 million from $213.4 million in fiscal 2012. Earnings per share rose 12.6%, to $1.88 from $1.67. These figures exclude unusual items, such as writedowns and costs to integrate recent acquisitions.
Revenue rose 5.5%, to $2.4 billion from $2.3 billion. Revenue from the company’s Investor Communications division (which supplies 73% of the total) rose 7.7%. Broadridge held on to 99% of its existing customers. It also continues to do a good job of signing clients to long-term deals that generate recurring revenue.
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In its 2013 fiscal year, which ended June 30, 2013, Broadridge’s earnings rose 10.6%, to $236.0 million from $213.4 million in fiscal 2012. Earnings per share rose 12.6%, to $1.88 from $1.67. These figures exclude unusual items, such as writedowns and costs to integrate recent acquisitions.
Revenue rose 5.5%, to $2.4 billion from $2.3 billion. Revenue from the company’s Investor Communications division (which supplies 73% of the total) rose 7.7%. Broadridge held on to 99% of its existing customers. It also continues to do a good job of signing clients to long-term deals that generate recurring revenue.
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DUN & BRADSTREET CORP. $100 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 38.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) is the world’s largest provider of credit reports on individual companies. Its customers use these reports to make buying and lending decisions.
Credit reports supply two-thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.
In the quarter ended June 30, 2013, Dun & Bradstreet’s revenue rose just 0.7%, to $386.4 million from $383.7 million a year earlier. Stronger demand for its credit reports and other products in Europe (which accounts for 15% of its revenue) and Asia (13%) offset weaker sales in North America (72%).
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Credit reports supply two-thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.
In the quarter ended June 30, 2013, Dun & Bradstreet’s revenue rose just 0.7%, to $386.4 million from $383.7 million a year earlier. Stronger demand for its credit reports and other products in Europe (which accounts for 15% of its revenue) and Asia (13%) offset weaker sales in North America (72%).
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NEWELL RUBBERMAID INC. $25 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 288.0 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.newellrubbermaid.com), like Stanley (see left), is a good example of an out-of-the-limelight stock with long-term appeal.
Also like Stanley, Newell is selling its less profitable operations and focusing on products with greater growth potential, such as pens and tools for industrial users.
For example, it recently agreed to sell some of its hardware businesses, which make a variety of hooks, hinges, door knobs and paint brushes. Newell will receive $175 million after taxes when the sale closes in the new few weeks.
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Also like Stanley, Newell is selling its less profitable operations and focusing on products with greater growth potential, such as pens and tools for industrial users.
For example, it recently agreed to sell some of its hardware businesses, which make a variety of hooks, hinges, door knobs and paint brushes. Newell will receive $175 million after taxes when the sale closes in the new few weeks.
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STANLEY BLACK & DECKER INC. $85 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 160.1 million; Market cap: $13.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) began operating in 1843 and is now one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. In 2012, this business supplied 51% of Stanley’s sales and 50% of its earnings.
The company also makes specialized tools for industrial users, such as auto mechanics and construction firms. This division accounts for 25% of Stanley’s sales and 29% of its earnings.
The remaining 24% of the company’s sales and 21% of its earnings come from making building-security products, such as locks, automatic doors and gates. It also monitors properties for its clients, typically by closed-circuit audio and TV systems.
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The company also makes specialized tools for industrial users, such as auto mechanics and construction firms. This division accounts for 25% of Stanley’s sales and 29% of its earnings.
The remaining 24% of the company’s sales and 21% of its earnings come from making building-security products, such as locks, automatic doors and gates. It also monitors properties for its clients, typically by closed-circuit audio and TV systems.
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GOOGLE INC. (Nasdaq symbol GOOG; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. It makes money by selling advertising on its websites. Google charges advertisers every time a user clicks on one of their ads. The company gets 93% of its revenue from advertising....
HECLA MINING COMPANY $3.61 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 342.2 million; Market cap: $1.3 billion) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of its silver output comes from its Greens Creek mine in Alaska and its Lucky Friday mine in Idaho.
In the three months ended June 30, 2013, Hecla’s revenue rose 27.3%, to $85.3 million from $67.0 million a year earlier. The company lost $0.03 a share, compared to a profit of $0.01. The loss mostly came from lower silver prices and costs related to its recent acquisition of Aurizon Mines.
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In the three months ended June 30, 2013, Hecla’s revenue rose 27.3%, to $85.3 million from $67.0 million a year earlier. The company lost $0.03 a share, compared to a profit of $0.01. The loss mostly came from lower silver prices and costs related to its recent acquisition of Aurizon Mines.
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SHERRITT INTERNATIONAL $3.70 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.1 billion; Dividend yield: 4.7%) 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 this year.
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 June 30, 2013, Sherritt’s revenue fell 10.2%, to $338.5 million from $377.1 million a year earlier. Lower nickel, cobalt and coal prices were the main reasons for the drop. Cash flow per share declined 10.0%, to $0.18 from $0.20.
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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 June 30, 2013, Sherritt’s revenue fell 10.2%, to $338.5 million from $377.1 million a year earlier. Lower nickel, cobalt and coal prices were the main reasons for the drop. Cash flow per share declined 10.0%, to $0.18 from $0.20.
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