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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AEROPOSTALE INC.$13.75 (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) saw its sales fall 9.0% in the three months ended May 4, 2013, to $452.3 million from $497.2 million a year earlier. Samestore sales declined 14%.
The teen-clothing retailer lost $0.16 a share, compared to a year-ago profit of $0.13 a share. Aeropostale had to spend heavily on promotions and marketing to clear out inventory from the preceding quarter.
The company will likely be able to repeat its past success at attracting customers, but its sales may remain weak in the near term.
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The teen-clothing retailer lost $0.16 a share, compared to a year-ago profit of $0.13 a share. Aeropostale had to spend heavily on promotions and marketing to clear out inventory from the preceding quarter.
The company will likely be able to repeat its past success at attracting customers, but its sales may remain weak in the near term.
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LEON’S FURNITURE LTD. $12.97 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $897.5 million; Dividend yield: 3.1%) built its 75-store furniture chain on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.
In the three months ended March 31, 2013, Leon’s sales rose 3.2%, to $162.5 million from $157.4 million a year earlier. However, earnings fell 36.9%, to $5.4 million, or $0.08 a share. A year earlier, it earned $8.6 million, or $0.12 a share. The decline mostly resulted from costs related to its $700-million purchase of The Brick, which closed on March 28, 2013.
The Brick operates 234 stores across Canada, while Leon’s has 75 outlets in every province except British Columbia. Leon’s and The Brick will continue to operate as separate chains.
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In the three months ended March 31, 2013, Leon’s sales rose 3.2%, to $162.5 million from $157.4 million a year earlier. However, earnings fell 36.9%, to $5.4 million, or $0.08 a share. A year earlier, it earned $8.6 million, or $0.12 a share. The decline mostly resulted from costs related to its $700-million purchase of The Brick, which closed on March 28, 2013.
The Brick operates 234 stores across Canada, while Leon’s has 75 outlets in every province except British Columbia. Leon’s and The Brick will continue to operate as separate chains.
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REITMANS (CANADA) LTD. $8.45 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $544.7 million; Dividend yield: 9.5%) owns 909 women’s clothing stores across Canada.
The chain consists of 359 Reitmans, 145 Smart Set, 157 Penningtons, 103 Addition Elle, 72 Thyme Maternity and 73 RW & Co. stores. In addition, it has 20 Thyme Maternity boutiques in some Canadian Babies “R” Us locations, as well as 154 in U.S. Babies “R” Us stores.
In the three months ended May 4, 2013, Reitmans’ sales fell slightly, to $216.9 million from $217.1 million a year earlier. However, same-store sales declined 3.5%.
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The chain consists of 359 Reitmans, 145 Smart Set, 157 Penningtons, 103 Addition Elle, 72 Thyme Maternity and 73 RW & Co. stores. In addition, it has 20 Thyme Maternity boutiques in some Canadian Babies “R” Us locations, as well as 154 in U.S. Babies “R” Us stores.
In the three months ended May 4, 2013, Reitmans’ sales fell slightly, to $216.9 million from $217.1 million a year earlier. However, same-store sales declined 3.5%.
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NEW GOLD $6.63 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 476.9 million; Market cap: $3.2 billion; No dividends paid) has just agreed to buy Rainy River Resources (Toronto symbol RR) in a friendly takeover for $381.9 million.
Rainy River’s project in northwestern Ontario could hold as much as 4.0 million ounces of gold. The company has already completed a feasibility study that projects a mine producing 225,000 ounces annually for 16 years. Production could start as early as 2016.
New Gold produced 411,892 ounces of gold in 2012. That could top 1 million ounces within six years, even without Rainy River.
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Rainy River’s project in northwestern Ontario could hold as much as 4.0 million ounces of gold. The company has already completed a feasibility study that projects a mine producing 225,000 ounces annually for 16 years. Production could start as early as 2016.
New Gold produced 411,892 ounces of gold in 2012. That could top 1 million ounces within six years, even without Rainy River.
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DUNDEE REIT $33.17 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dundeereit.com; Units outstanding: 104.4 million; Market cap: $3.7 billion; Dividend yield: 6.8%) owns and manages 24.1 million square feet of office and retail space across Canada.
As the Canadian economy improves, the trend in interest rates is likely to be upward. That rise—or the anticipation of an increase—can push down prices of REITs and high-yielding stocks, such as utilities. That’s largely why a number of REITs, including Dundee, have moved down lately.
When interest rates rise, REITs may suffer because they have a lot of mortgage debt, and it’s more expensive to raise money and refinance existing loans. As well, their units, which typically offer high yields, compete with fixed-income instruments for investor interest.
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As the Canadian economy improves, the trend in interest rates is likely to be upward. That rise—or the anticipation of an increase—can push down prices of REITs and high-yielding stocks, such as utilities. That’s largely why a number of REITs, including Dundee, have moved down lately.
When interest rates rise, REITs may suffer because they have a lot of mortgage debt, and it’s more expensive to raise money and refinance existing loans. As well, their units, which typically offer high yields, compete with fixed-income instruments for investor interest.
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IBM (New York symbol IBM; www.ibm.com) started up in 1911, which makes it the world’s oldest computer company. Today, it operates in over 170 countries....
CALIAN TECHNOLOGIES $20.35 (Toronto symbol CTY; www.calian.com) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems....
CANADIAN TIRE CORP. $74 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.2 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 490 Canadian Tire stores, which specialize in automotive, household and sporting goods. The company owns these stores, but franchisees (called dealers) operate most of them.
The company recently negotiated a new 11-year contract with its dealers. This should make it easier for Canadian Tire and its dealers to remodel stores and adjust inventories as they compete with U.S.- based retailers like Wal-Mart and Target.
Canadian Tire is a buy....
The company recently negotiated a new 11-year contract with its dealers. This should make it easier for Canadian Tire and its dealers to remodel stores and adjust inventories as they compete with U.S.- based retailers like Wal-Mart and Target.
Canadian Tire is a buy....
Pat McKeough responds to many requests for advice on specific stocks and other questions on investment and the economy from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, an Inner Circle member asked about the largest wireless provider in the world. China Mobile competes with two other Chinese wireless providers, each of which has the advantage of being compatible with Apple iPhones, while China Mobile is not. Pat looks at whether an upgrade of China Mobile’s network and new chip technology will let it hook up with Apple and other popular smartphones and keep its lead in the Chinese market. ...
SYMANTEC CORP. $23 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 696.6 million; Market cap: $16.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.symantec.com) makes software that protects computers from viruses and intruders, including the popular Norton anti-virus program. It also sells products and services, such as e-mail filtering and data backup, to businesses.
In July 2005, the company paid $13.2 billion for Veritas Software, whose software stores and protects information in large databases. The deal cut the company’s reliance on selling software to consumers and helped it compete with larger computer-services firms, like IBM.
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In July 2005, the company paid $13.2 billion for Veritas Software, whose software stores and protects information in large databases. The deal cut the company’s reliance on selling software to consumers and helped it compete with larger computer-services firms, like IBM.
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