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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TRILOGY ENERGY CORP. $29.90 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290- 2900; www.trilogy.com; Shares outstanding: 91.7 million; Market cap: $3.5 billion; Dividend yield: 1.4%) owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 54% of Trilogy’s production is natural gas. The remaining 46% is oil.
In the three months ended March 31, 2013, Trilogy produced 36,119 barrels of oil equivalent per day (including gas), up 3.2% from 35,014 barrels a year earlier. Cash flow per share was unchanged at $0.67.
Trilogy pays out just 15% of its cash flow as dividends. That gives it a low 1.4% yield, but it’s also letting the company maintain an active drilling program. In the first quarter of 2013, Trilogy spent $169 million on exploration and development, down 6.3% from $180.4 million a year earlier. The company drilled 35 wells, up from 31.
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In the three months ended March 31, 2013, Trilogy produced 36,119 barrels of oil equivalent per day (including gas), up 3.2% from 35,014 barrels a year earlier. Cash flow per share was unchanged at $0.67.
Trilogy pays out just 15% of its cash flow as dividends. That gives it a low 1.4% yield, but it’s also letting the company maintain an active drilling program. In the first quarter of 2013, Trilogy spent $169 million on exploration and development, down 6.3% from $180.4 million a year earlier. The company drilled 35 wells, up from 31.
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ZARGON OIL & GAS $6.39 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 30.0 million; Market cap: $189.3 million; Dividend yield: 11.3%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. The company’s production is 67% oil and 33% gas.
In the three months ended March 31, 2013, Zargon produced 7,648 barrels of oil equivalent per day, down 13.4% from 8,834 barrels a year earlier. Cash flow per share was unchanged at $0.46.
Zargon expects cash flow of $2.03 a share in 2013. It trades at 3.1 times that estimate. But cash flow could fall to $1.60 a share in 2014. The shares yield a high 11.3%.
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In the three months ended March 31, 2013, Zargon produced 7,648 barrels of oil equivalent per day, down 13.4% from 8,834 barrels a year earlier. Cash flow per share was unchanged at $0.46.
Zargon expects cash flow of $2.03 a share in 2013. It trades at 3.1 times that estimate. But cash flow could fall to $1.60 a share in 2014. The shares yield a high 11.3%.
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ALARMFORCE $9.86(Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267- 2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $122.3 million; Dividend yield: 1.0%) has completed the strategic review of business opportunities that it launched in August 2012. This process included a possible sale of the company.
The review did not result in a takeover offer that the company felt reflected its value. As a result, it will now focus on growth.
AlarmForce’s outlook is bright, and it has potential to grow by offering new services to its subscribers. That includes its VideoRelay system, which lets users watch their homes through computers and smartphones.
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The review did not result in a takeover offer that the company felt reflected its value. As a result, it will now focus on growth.
AlarmForce’s outlook is bright, and it has potential to grow by offering new services to its subscribers. That includes its VideoRelay system, which lets users watch their homes through computers and smartphones.
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strong>DOREL INDUSTRIES $38.10 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.2%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles.
In the three months ended March 31, 2013, Dorel’s sales fell 4.3%, to $594.2 million from $621.1 million a year earlier (all figures except share price and market cap in U.S. dollars). Earnings per share fell 23.1%, to $0.70 from $0.91.
In mid-June, the company said that it expects its results to remain weak for the quarter ended June 30, 2013. That’s because poor weather across the U.S., Canada and Europe has led to lower-than-expected sales volumes, particularly for bicycles, which supply 34% of Dorel’s overall sales. The slowdown has also prompted the company’s competitors in the bicycle industry to cut their prices.
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In the three months ended March 31, 2013, Dorel’s sales fell 4.3%, to $594.2 million from $621.1 million a year earlier (all figures except share price and market cap in U.S. dollars). Earnings per share fell 23.1%, to $0.70 from $0.91.
In mid-June, the company said that it expects its results to remain weak for the quarter ended June 30, 2013. That’s because poor weather across the U.S., Canada and Europe has led to lower-than-expected sales volumes, particularly for bicycles, which supply 34% of Dorel’s overall sales. The slowdown has also prompted the company’s competitors in the bicycle industry to cut their prices.
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STANTEC INC. $46.56 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.2 million; Market cap: $2.1 billion; Dividend yield: 1.4%) sells a range of consulting, project delivery, design and technology services. Its clients operate in a variety of industries, including transportation, construction and oil and gas.
In the three months ended March 31, 2013, Stantec’s revenue rose 17.7%, to $513.2 million from $436.2 million a year earlier. Acquisitions were one reason for the increase. Stantec is also working on several new projects. Earnings gained 13.7%, to $28.4 million, or $0.62 a share, from $25.0 million, or $0.55 a share.
The company continues to grow by acquisition, with seven purchases in 2012. Its most recent addition was Roth Hill, a 30-person firm that designs systems for collecting and treating water and wastewater. Stantec sees major growth potential in the water industry.
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In the three months ended March 31, 2013, Stantec’s revenue rose 17.7%, to $513.2 million from $436.2 million a year earlier. Acquisitions were one reason for the increase. Stantec is also working on several new projects. Earnings gained 13.7%, to $28.4 million, or $0.62 a share, from $25.0 million, or $0.55 a share.
The company continues to grow by acquisition, with seven purchases in 2012. Its most recent addition was Roth Hill, a 30-person firm that designs systems for collecting and treating water and wastewater. Stantec sees major growth potential in the water industry.
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REITMANS (CANADA) LTD. $8.99 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $560.8 million; Dividend yield: 8.9%) has reached an agreement with Sears Canada to sell its Penningtons clothing in Sears’ stores.
The Penningtons chain sells plus-sized clothing, starting at size 14, that aims to be both fashionable and affordable. It consists of 156 stores.
Under the deal, Reitmans will start selling Penningtons’ clothes in five Sears stores with about 4,000 square feet of space each and online at sears.ca. It will introduce it in additional Sears stores in 2014.
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The Penningtons chain sells plus-sized clothing, starting at size 14, that aims to be both fashionable and affordable. It consists of 156 stores.
Under the deal, Reitmans will start selling Penningtons’ clothes in five Sears stores with about 4,000 square feet of space each and online at sears.ca. It will introduce it in additional Sears stores in 2014.
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IMPERIAL METALS $11.16 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.4 million; Market cap: $803.6 million) is a Vancouver-based mining firm that produces and explores for base and precious metals. Its producing assets include two B.C. mines: 100%-owned Mount Polley (copper and gold) and 50% of Huckleberry (copper and molybdenum). Japan’s Mitsubishi Materials owns 31.1% of Huckleberry, and Furukawa Co., Dowa Holdings and Marubeni Corp. own 6.3% each.
Imperial restarted Mount Polley in 2005. It continues to explore around the known deposit to increase the mine’s reserves and lengthen its life. Right now, Imperial expects Mount Polley to produce until mid- 2023.
The company is also developing its Red Chris copper/ gold property in northwestern B.C. and could start up an open-pit mine as early as late 2014. The property holds as much as 9 billion pounds of copper and 13.8 million ounces of gold.
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Imperial restarted Mount Polley in 2005. It continues to explore around the known deposit to increase the mine’s reserves and lengthen its life. Right now, Imperial expects Mount Polley to produce until mid- 2023.
The company is also developing its Red Chris copper/ gold property in northwestern B.C. and could start up an open-pit mine as early as late 2014. The property holds as much as 9 billion pounds of copper and 13.8 million ounces of gold.
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strong>YAMANA GOLD $10.43 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.- yamana.com; Shares outstanding: 752.4 million; Market cap: $8.1 billion; Dividend yield: 2.5%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development.
In the quarter ended March 31, 2013, Yamana’s revenue fell 4.4%, to $534.9 million from $559.7 million a year earlier (all figures except share price and market cap in U.S. dollars). Gold production rose, but prices for gold, as well as copper and silver, which are both significant by-products of Yamana’s gold mining, dropped. Cash flow per share fell 3.3%, to $0.29 from $0.30.
Yamana held a high cash balance of $342.6 million, or $0.46 a share, on March 31. Its $860.5 million of debt is just 10.6% of its market cap. The shares yield 2.5%.
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In the quarter ended March 31, 2013, Yamana’s revenue fell 4.4%, to $534.9 million from $559.7 million a year earlier (all figures except share price and market cap in U.S. dollars). Gold production rose, but prices for gold, as well as copper and silver, which are both significant by-products of Yamana’s gold mining, dropped. Cash flow per share fell 3.3%, to $0.29 from $0.30.
Yamana held a high cash balance of $342.6 million, or $0.46 a share, on March 31. Its $860.5 million of debt is just 10.6% of its market cap. The shares yield 2.5%.
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CHESAPEAKE ENERGY $21.75 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848- 8000; www.chkenergy.com; Shares outstanding: 666.5 million; Market cap: $14.5 billion; Dividend yield: 1.6%) is the second-largest natural gas producer in the U.S.
Chesapeake continues to sell assets to meet its debt-reduction targets—it’s now selling properties in the Eagle Ford and Haynesville shale formations to Exco Resources for $1 billion.
With this deal, Chesapeake has now sold $3.6 billion of properties this year. By the end of 2013, it aims to raise that to $6 billion to $7 billion. These sales, plus its cash flow from production, will let it pay for its planned 2013 exploration and development spending of $7.6 billion.
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Chesapeake continues to sell assets to meet its debt-reduction targets—it’s now selling properties in the Eagle Ford and Haynesville shale formations to Exco Resources for $1 billion.
With this deal, Chesapeake has now sold $3.6 billion of properties this year. By the end of 2013, it aims to raise that to $6 billion to $7 billion. These sales, plus its cash flow from production, will let it pay for its planned 2013 exploration and development spending of $7.6 billion.
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AIMIA INC. $15.12 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.5 million; Market cap: $2.6 billion; Dividend yield: 4.5%) owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.6 million members. It also owns Nectar, the U.K.’s biggest loyalty program. In addition, Aimia has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.
In the three months ended March 31, 2013, Aimia’s revenue rose 7.4%, to $609.5 million from $567.7 million a year earlier. Excluding one-time items, earnings per share fell 12.9%, to $0.27 from $0.31. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.
TD Bank has just agreed to become the main credit card issuer for Aeroplan. Under a new 10-year deal that will begin January 1, 2014, TD will launch new credit cards under the Aeroplan banner, including cards for frequent flyers and small businesses. TD will also pay Aimia $100 million at the start of the deal and commit to buying a minimum number of Aeroplan miles from Aimia for the first three years. In addition, the partners will spend a total of $140 million in the first four years to promote these new cards and rewards.
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In the three months ended March 31, 2013, Aimia’s revenue rose 7.4%, to $609.5 million from $567.7 million a year earlier. Excluding one-time items, earnings per share fell 12.9%, to $0.27 from $0.31. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.
TD Bank has just agreed to become the main credit card issuer for Aeroplan. Under a new 10-year deal that will begin January 1, 2014, TD will launch new credit cards under the Aeroplan banner, including cards for frequent flyers and small businesses. TD will also pay Aimia $100 million at the start of the deal and commit to buying a minimum number of Aeroplan miles from Aimia for the first three years. In addition, the partners will spend a total of $140 million in the first four years to promote these new cards and rewards.
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