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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CARFINCO FINANCIAL GROUP $9.45 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $250.2 million; Dividend yield: 5.1%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.
In the three months ended June 30, 2013, Carfinco’s revenue rose 10.6%, to $19.5 million from $17.7 million a year earlier. Earnings rose 7.0%, to $5.8 million from $5.4 million. Earnings per share were unchanged at $0.22 on more shares outstanding.
The stock is up 19% since we first recommended it in our July 2012 issue at $7.93. The company’s outlook remains positive, and the shares trade at just 11.1 times Carfinco’s latest 12 months of earnings.
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In the three months ended June 30, 2013, Carfinco’s revenue rose 10.6%, to $19.5 million from $17.7 million a year earlier. Earnings rose 7.0%, to $5.8 million from $5.4 million. Earnings per share were unchanged at $0.22 on more shares outstanding.
The stock is up 19% since we first recommended it in our July 2012 issue at $7.93. The company’s outlook remains positive, and the shares trade at just 11.1 times Carfinco’s latest 12 months of earnings.
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INTACT FINANCIAL CORP. $61.99 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 132.0 million; Market cap: $8.2 billion; Dividend yield: 2.8%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended June 30, 2013, Intact’s revenue rose 10.4%, to $2.18 billion from $1.98 billion a year earlier. The company earned $0.89 a share, down sharply from $1.35. However, the latest results include a one-time loss of $0.79 a share related to storms and flooding in Alberta.
Earlier this year, Ontario’s minority Liberal government agreed to meet an NDP demand for a 15% cut to auto insurance premiums. This was in exchange for NDP support on the June 2013 provincial budget, which avoided triggering an election.
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In the three months ended June 30, 2013, Intact’s revenue rose 10.4%, to $2.18 billion from $1.98 billion a year earlier. The company earned $0.89 a share, down sharply from $1.35. However, the latest results include a one-time loss of $0.79 a share related to storms and flooding in Alberta.
Earlier this year, Ontario’s minority Liberal government agreed to meet an NDP demand for a 15% cut to auto insurance premiums. This was in exchange for NDP support on the June 2013 provincial budget, which avoided triggering an election.
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BROADRIDGE FINANCIAL SOLUTIONS $30.69 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 121.2 million; Market cap: $3.7 billion; Dividend yield: 2.7%) 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 fiscal 2013 fourth quarter, which ended June 30, 2013, Broadridge’s earnings jumped 61.4%, to $134.6 million from $83.4 million a year earlier. Pershare earnings rose 67.2%, to $1.12 from $0.67, on fewer shares outstanding.
If you disregard unusual items, such as writedowns and costs to integrate recent acquisitions, Broadridge’s per-share earnings would have risen 12.7%, to $1.15 from $1.02. On that basis, the company’s latest earnings beat the consensus estimate of $1.09 a share.
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In its fiscal 2013 fourth quarter, which ended June 30, 2013, Broadridge’s earnings jumped 61.4%, to $134.6 million from $83.4 million a year earlier. Pershare earnings rose 67.2%, to $1.12 from $0.67, on fewer shares outstanding.
If you disregard unusual items, such as writedowns and costs to integrate recent acquisitions, Broadridge’s per-share earnings would have risen 12.7%, to $1.15 from $1.02. On that basis, the company’s latest earnings beat the consensus estimate of $1.09 a share.
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THE CHURCHILL CORP. $9.11 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.6 million; Market cap: $224.1 million; Dividend yield: 5.3%) has reported earnings of just $485,000, or $0.02 a share, in the three months ended June 30, 2013. However, that’s a big improvement from a loss of $4.3 million, or $0.18 a share, a year earlier.
Churchill’s long-term prospects are sound, and the stock has rebounded from its low of $7 earlier this year. The company’s order backlog stood at $1.81 billion at the end of June 2013, up 15.2% from $1.57 billion a year previous. Meanwhile, its dividend, which yields a high 5.3%, appears safe.
However, the stock trades at a high 31.4 times the company’s forecast 2013 earnings of $0.29 a share, and its long-term debt of $150.2 million, which is a high 67% of its market cap, adds risk.
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Churchill’s long-term prospects are sound, and the stock has rebounded from its low of $7 earlier this year. The company’s order backlog stood at $1.81 billion at the end of June 2013, up 15.2% from $1.57 billion a year previous. Meanwhile, its dividend, which yields a high 5.3%, appears safe.
However, the stock trades at a high 31.4 times the company’s forecast 2013 earnings of $0.29 a share, and its long-term debt of $150.2 million, which is a high 67% of its market cap, adds risk.
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WAJAX CORP. $36.32 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $601.0 million; Dividend yield: 6.6%) sells and services cranes, forklifts and other heavy equipment. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).
In the three months ended June 30, 2013, Wajax’s revenue declined 6.4%, to $362.1 million from $386.6 million a year earlier. Earnings fell 26.8%, to $13.5 million, or $0.81 a share, from $18.5 million, or $1.11.
The declines mostly came from reduced activity in the Western Canadian oil and gas industry, which hurt results at Wajax’s power systems business. Lower mining equipment and construction sales more than offset strength in the materials-handling market.
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In the three months ended June 30, 2013, Wajax’s revenue declined 6.4%, to $362.1 million from $386.6 million a year earlier. Earnings fell 26.8%, to $13.5 million, or $0.81 a share, from $18.5 million, or $1.11.
The declines mostly came from reduced activity in the Western Canadian oil and gas industry, which hurt results at Wajax’s power systems business. Lower mining equipment and construction sales more than offset strength in the materials-handling market.
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MCCOY CORP. $6.25 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.8 million; Market cap: $167.6 million; Dividend yield: 3.2%) operates through two divisions: Mobile Solutions and Energy Products and Services.
Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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LEON’S FURNITURE LTD. $13.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $930.0 million; Dividend yield: 3.0%) reports that its sales jumped to $480.6 million in the three months ended June 30, 2013, from $162.1 million a year earlier. Earnings rose 60.4%, to $14.4 million, or $0.20 a share, from $9.0 million, or $0.13.
The latest three months was the first full quarter in which the furniture chain owned former rival The Brick. Its $700-million purchase of The Brick closed on March 28, 2013.
The Brick operates 234 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.
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The latest three months was the first full quarter in which the furniture chain owned former rival The Brick. Its $700-million purchase of The Brick closed on March 28, 2013.
The Brick operates 234 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.
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TIM HORTONS $58.56 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.1 million; Market cap: $8.8 billion; Dividend yield: 1.8%) operates 3,468 coffee-anddonut shops in Canada, 807 in the U.S. and 29 in the Persian Gulf.
In the three months ended June 30, 2013, Tim Hortons’ sales rose 1.9%, to $800.1 million from $785.6 million a year earlier. Same-store sales increased 1.5% at its Canadian outlets and 1.4% in the U.S. Earnings per share rose 17.4%, to $0.81 from $0.69.
The company continues to benefit from new menu items it has recently introduced, such as panini sandwiches. It also raised its prices to cover higher ingredient costs.
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In the three months ended June 30, 2013, Tim Hortons’ sales rose 1.9%, to $800.1 million from $785.6 million a year earlier. Same-store sales increased 1.5% at its Canadian outlets and 1.4% in the U.S. Earnings per share rose 17.4%, to $0.81 from $0.69.
The company continues to benefit from new menu items it has recently introduced, such as panini sandwiches. It also raised its prices to cover higher ingredient costs.
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CGI GROUP INC. (Toronto symbol GIB.A; www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses. CGI is a long-term recommendation of our Successful Investor newsletter. We made it our #1 Canadian stock of the year in 2010 at $15. The stock has risen 107% for our subscribers since then. We also made it our stock of the year in 2011. The stock is up 73% since then....
COMPUTER MODELLING GROUP (Toronto symbol CMG; www.cmgroup.com) sells consulting services and software that help oil and gas producers use advanced recovery techniques to get more out of their existing wells. The company has customers in over 50 countries and offices in Calgary, Houston, London, Caracas and Dubai. In the three months ended March 31, 2013, Computer Modelling reported revenue of $19.3 million. That’s up 12.0% from $17.2 million a year earlier....
