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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TIM HORTONS $58.90 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.1 million; Market cap: $9.0 billion; Dividend yield: 1.8%) has a long track record of successfully launching new products to take advantage of consumer trends.
The latest is its first gluten-free snack, the Gluten- Free Coconut Macaroon. Gluten-free baked goods are for people who can’t digest wheat or are concerned about the possible unhealthy effects of eating gluten, first popularized in the 2011 book Wheat Belly.
Tim Hortons is a buy....
The latest is its first gluten-free snack, the Gluten- Free Coconut Macaroon. Gluten-free baked goods are for people who can’t digest wheat or are concerned about the possible unhealthy effects of eating gluten, first popularized in the 2011 book Wheat Belly.
Tim Hortons is a buy....
PASON SYSTEMS $18.98 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.1 million; Market cap: $1.6 billion; Dividend yield: 2.7%) has lost a patent dispute with its main competitor involving its AutoDriller product, which runs drilling operations more accurately and efficiently. The judgment awards the competitor $52.9 million of damages.
Pason rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that companies use to remotely collect data from their drilling operations. Pason serves oil and gas firms and drilling contractors in Canada, the U.S., Mexico and Argentina.
In the quarter ended March 31, 2013, revenue fell 5.1%, to $109.3 million from $115.1 million a year earlier. Strong international sales were offset by slower activity in the U.S. and Canada. Cash flow per share fell 7.9%, to $0.58 from $0.63. Pason holds cash of $168.9 million, or $2.06 a share, and has no debt.
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Pason rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that companies use to remotely collect data from their drilling operations. Pason serves oil and gas firms and drilling contractors in Canada, the U.S., Mexico and Argentina.
In the quarter ended March 31, 2013, revenue fell 5.1%, to $109.3 million from $115.1 million a year earlier. Strong international sales were offset by slower activity in the U.S. and Canada. Cash flow per share fell 7.9%, to $0.58 from $0.63. Pason holds cash of $168.9 million, or $2.06 a share, and has no debt.
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strong>AEROPOSTALE $14.15 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 78.5 million; Market cap: $1.1 billion; No dividends paid) now plans to launch the Aeropo
This summer, Aeropostale plans to open small outlets inside Liverpool’s department stores across the country. It will also roll out standalone stores, with the first one scheduled to open in Mexico City’s Sante Fe Mall.
Aeropostale is still a hold.
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This summer, Aeropostale plans to open small outlets inside Liverpool’s department stores across the country. It will also roll out standalone stores, with the first one scheduled to open in Mexico City’s Sante Fe Mall.
Aeropostale is still a hold.
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INTUITIVE SURGICAL $415.54 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 40.2 million; Market cap: $17.0 billion; No dividends paid) is down over 16% since it released a preliminary revenue forecast for the latest quarter that was below the consensus estimate.
In the second quarter of 2013, the company expects to report revenue of about $575 million, up 7% from $537 million a year earlier. However, that’s well below the consensus estimate of $629.8 million.
Intuitive expects revenue from sales of replacement parts, training and other services to rise 18%, but it predicts a 6% decline in da Vinci system sales. That’s mainly due to tightening hospital budgets in the U.S.
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In the second quarter of 2013, the company expects to report revenue of about $575 million, up 7% from $537 million a year earlier. However, that’s well below the consensus estimate of $629.8 million.
Intuitive expects revenue from sales of replacement parts, training and other services to rise 18%, but it predicts a 6% decline in da Vinci system sales. That’s mainly due to tightening hospital budgets in the U.S.
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WYNDHAM WORLDWIDE $59.05 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 140.3 million; Market cap: $8.3 billion; Dividend yield: 1.6%) is one of the world’s largest hospitality companies, with 7,380 franchised hotels worldwide.
In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has over 106,000 vacation rental properties worldwide.
In the three months ended March 31, 2013, the hotel and resort operator’s revenue rose 9.4%, to $1.13 billion from $1.04 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 2.4%.
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In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has over 106,000 vacation rental properties worldwide.
In the three months ended March 31, 2013, the hotel and resort operator’s revenue rose 9.4%, to $1.13 billion from $1.04 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 2.4%.
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ATLANTIC TELE-NETWORK $54 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.7 million; Market cap: $855.6 million; Yield: 1.9%) expects to soon complete the sale of its Alltel wireless business to AT&T (symbol T on New York) for cash of $780 million. In April 2010, Atlantic bought Alltel from Verizon Wireless for just $223 million.
In the three months ended March 31, 2013, Atlantic’s revenue fell 5.6%, to $172.9 million from $183.1 million a year earlier. Alltel accounted for $108.0 million of revenue in the latest quarter, and slowed in the latest quarter. Earnings fell 5.8%, to $8.8 million, or $0.56 a share, from $9.3 million, or $0.60 a share.
After the sale, Atlantic Tele-Network will still have telecom operations in the U.S. southwest, New England, New York State, Guyana, Bermuda and portions of the Caribbean islands.
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In the three months ended March 31, 2013, Atlantic’s revenue fell 5.6%, to $172.9 million from $183.1 million a year earlier. Alltel accounted for $108.0 million of revenue in the latest quarter, and slowed in the latest quarter. Earnings fell 5.8%, to $8.8 million, or $0.56 a share, from $9.3 million, or $0.60 a share.
After the sale, Atlantic Tele-Network will still have telecom operations in the U.S. southwest, New England, New York State, Guyana, Bermuda and portions of the Caribbean islands.
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BELLATRIX EXPLORATION $6.74 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 107.9 million; Market cap: $715.5 million; No dividends paid) has entered into a joint venture agreement with Grafton Energy that should speed up the development of its Cardium shale oil deposits in Alberta.
Under the agreement, Grafton will pay Bellatrix $100 million. In return, it will get 54% of the production from a 29-well, $122- million drilling program. Grafton will receive this share of the wells’ output until it earns back its $100 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.
On top of that, Bellatrix plans to spend a total of $210 million to $220 million on exploration and development this year.
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Under the agreement, Grafton will pay Bellatrix $100 million. In return, it will get 54% of the production from a 29-well, $122- million drilling program. Grafton will receive this share of the wells’ output until it earns back its $100 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.
On top of that, Bellatrix plans to spend a total of $210 million to $220 million on exploration and development this year.
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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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