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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AMAZON.COM $262.96 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 455.2 million; Market cap: $122.4 billion; No dividends paid) plans to start selling original TV shows through its website.
Traditionally, TV producers make pilot episodes of new shows. If broadcast or cable networks like a pilot, they order a series of about 13 episodes.
Amazon recently began streaming pilots for 14 new shows on its website, which viewers can watch for free. If enough people like a show, the company will produce more episodes and sell them through Amazon Prime, its $79-a-year rewards program, which offers free two-day shipping and access to other online content.
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Traditionally, TV producers make pilot episodes of new shows. If broadcast or cable networks like a pilot, they order a series of about 13 episodes.
Amazon recently began streaming pilots for 14 new shows on its website, which viewers can watch for free. If enough people like a show, the company will produce more episodes and sell them through Amazon Prime, its $79-a-year rewards program, which offers free two-day shipping and access to other online content.
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COMPUTER MODELLING GROUP $21.63 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 38.1 million; Market cap: $820.0 million; Dividend yield: 3.0%) 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 December 31, 2012, Computer Modelling’s revenue rose 5.7%, to $16.8 million from $15.9 million a year earlier. Software licence sales increased, which offset a decline in consulting and professional services revenue. Earnings also rose 5.7%, to $6.2 million from $5.8 million. Earnings per share were unchanged at $0.16 on more shares outstanding.
Computer Modelling holds cash of $52.2 million, or $1.38 a share, and has no debt. It spent $3.1 million, or a high 18.7% of its revenue, on research in the latest quarter. The shares yield 3.0%.
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In the three months ended December 31, 2012, Computer Modelling’s revenue rose 5.7%, to $16.8 million from $15.9 million a year earlier. Software licence sales increased, which offset a decline in consulting and professional services revenue. Earnings also rose 5.7%, to $6.2 million from $5.8 million. Earnings per share were unchanged at $0.16 on more shares outstanding.
Computer Modelling holds cash of $52.2 million, or $1.38 a share, and has no debt. It spent $3.1 million, or a high 18.7% of its revenue, on research in the latest quarter. The shares yield 3.0%.
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PASON SYSTEMS $17.93 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.1 million; Market cap: $1.5 billion; Dividend yield: 2.9%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended March 31, 2013, Pason’s revenue fell 5.1%, to $109.3 million from $115.1 million a year earlier. Less drilling in the U.S. and Canada offset strong international sales. 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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In the three months ended March 31, 2013, Pason’s revenue fell 5.1%, to $109.3 million from $115.1 million a year earlier. Less drilling in the U.S. and Canada offset strong international sales. 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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DUNDEE REIT $35.56 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416- 365-3535; www.dundeereit.com; Shares outstanding: 97.7 million; Market cap: $4.0 billion; Dividend yield: 6.3%) owns and manages 24.1 million square feet of office and retail space.
In the three months ended March 31, 2013, Dundee REIT’s revenue jumped 36.2%, to $189.6 million from $139.2 million a year earlier. The trust bought $2.6 billion worth of new buildings and added 9.9 million square feet of office space in 2012. So far this year, it has made $459.5 million of acquisitions and added 1.4 million square feet. These new properties supplied most of the revenue increase.
Cash flow jumped 32.1%, to $61.6 million from $46.7 million. However, cash flow per unit fell 3.2%, to $0.61 from $0.63, on more units outstanding. The trust issued new units to pay for the acquired properties. Dundee REIT yields 6.3%.
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In the three months ended March 31, 2013, Dundee REIT’s revenue jumped 36.2%, to $189.6 million from $139.2 million a year earlier. The trust bought $2.6 billion worth of new buildings and added 9.9 million square feet of office space in 2012. So far this year, it has made $459.5 million of acquisitions and added 1.4 million square feet. These new properties supplied most of the revenue increase.
Cash flow jumped 32.1%, to $61.6 million from $46.7 million. However, cash flow per unit fell 3.2%, to $0.61 from $0.63, on more units outstanding. The trust issued new units to pay for the acquired properties. Dundee REIT yields 6.3%.
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DOMINO’S PIZZA $56.61 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 56.3 million; Market cap: $3.2 billion; Dividend yield: 1.4%) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,040 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores.
Excluding one-time items, the company’s earnings per share rose 25.5% in the quarter ended March 24, 2013, to $0.59 from $0.47 a year earlier. Sales rose 8.6%, to $417.6 million from $384.6 million. Samestore sales rose 6.5% internationally and 6.2% in the U.S.
Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. The company is also profiting by moving into ordering online and through software applications, or apps, on smartphones. In addition, Domino’s still has lots of growth potential overseas.
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Excluding one-time items, the company’s earnings per share rose 25.5% in the quarter ended March 24, 2013, to $0.59 from $0.47 a year earlier. Sales rose 8.6%, to $417.6 million from $384.6 million. Samestore sales rose 6.5% internationally and 6.2% in the U.S.
Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. The company is also profiting by moving into ordering online and through software applications, or apps, on smartphones. In addition, Domino’s still has lots of growth potential overseas.
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CARFINCO FINANCIAL GROUP $8.42 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $226.9 million; Dividend yield: 5.7%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.
In the three months ended March 31, 2013, Carfinco’s revenue rose 14.4%, to $19.2 million from $16.8 million a year ago. It loaned $36.6 million in the quarter, up 12.9% from $32.4 million. Earnings per share rose 5.3%, to $0.20 from $0.19.
The company raised its monthly dividend by 14.3%, to $0.04 from $0.035, starting with the October 2012 payment. That was Carfinco’s fourth dividend increase since the start of 2011. The higher payout gives the stock a 5.7% yield.
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In the three months ended March 31, 2013, Carfinco’s revenue rose 14.4%, to $19.2 million from $16.8 million a year ago. It loaned $36.6 million in the quarter, up 12.9% from $32.4 million. Earnings per share rose 5.3%, to $0.20 from $0.19.
The company raised its monthly dividend by 14.3%, to $0.04 from $0.035, starting with the October 2012 payment. That was Carfinco’s fourth dividend increase since the start of 2011. The higher payout gives the stock a 5.7% yield.
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INTACT FINANCIAL CORP. $60.40 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 133.3 million; Market cap: $8.0 billion; Dividend yield: 2.9%) 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 March 31, 2013, Intact’s revenue rose 8.6%, to $1.52 billion from $1.40 billion a year earlier. Before one-time items, it earned $1.36 a share, down 12.2% from $1.55 a year earlier. The insurance business was hit by higher snow and windrelated claims compared to the year-earlier quarter.
Intact’s shares are down from over $65 in March 2013 because Ontario’s minority Liberal government looks like it will vote for an NDP motion calling for a 15% cut to auto insurance premiums. The vote would be in exchange for NDP support on the next provincial budget, which would avoid triggering an election.
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In the three months ended March 31, 2013, Intact’s revenue rose 8.6%, to $1.52 billion from $1.40 billion a year earlier. Before one-time items, it earned $1.36 a share, down 12.2% from $1.55 a year earlier. The insurance business was hit by higher snow and windrelated claims compared to the year-earlier quarter.
Intact’s shares are down from over $65 in March 2013 because Ontario’s minority Liberal government looks like it will vote for an NDP motion calling for a 15% cut to auto insurance premiums. The vote would be in exchange for NDP support on the next provincial budget, which would avoid triggering an election.
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BROADRIDGE FINANCIAL SOLUTIONS $26.81 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 121.9 million; Market cap: $3.3 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 third quarter, which ended March 31, 2013, Broadridge’s earnings per share, excluding one-time items, climbed 21.9%, to $0.39 from $0.32.
Revenue rose 5.4%, to $576.7 million from $547.0 million. Broadridge continues to do a good job of attracting new clients. It also held on to 99% of its existing customers.
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In its fiscal 2013 third quarter, which ended March 31, 2013, Broadridge’s earnings per share, excluding one-time items, climbed 21.9%, to $0.39 from $0.32.
Revenue rose 5.4%, to $576.7 million from $547.0 million. Broadridge continues to do a good job of attracting new clients. It also held on to 99% of its existing customers.
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SHERRITT INTERNATIONAL $4.74 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.4 billion; Dividend yield: 3.6%) reported cash flow of $0.20 a share in the three months ended March 31, 2013. That was down 35.4% from $0.31 a year earlier. A decline in coal sales and lower nickel, cobalt and oil prices were the main reasons for the drop.
Sherritt recently raised its quarterly dividend by 13.2%. The shares now yield 3.6%.
The company needs an improving global economy to fuel commodity demand. But its low production costs and ongoing geographic diversification enhance its prospects.
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Sherritt recently raised its quarterly dividend by 13.2%. The shares now yield 3.6%.
The company needs an improving global economy to fuel commodity demand. But its low production costs and ongoing geographic diversification enhance its prospects.
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NEW GOLD $6.89 (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 four operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico, the Peak mine in Australia and the just-completed New Afton mine in B.C. It also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater project in B.C.
In the quarter ended March 31, 2013, New Gold’s cash flow fell 5.6%, to $0.17 a share from $0.18 a year earlier. Lower gold prices offset new production from New Afton, which started up in late 2012.
New Gold’s $854.3 million of long-term debt is a moderate 26.7% of its market cap. It also holds cash of $672.4 million, or $1.41 a share.
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In the quarter ended March 31, 2013, New Gold’s cash flow fell 5.6%, to $0.17 a share from $0.18 a year earlier. Lower gold prices offset new production from New Afton, which started up in late 2012.
New Gold’s $854.3 million of long-term debt is a moderate 26.7% of its market cap. It also holds cash of $672.4 million, or $1.41 a share.
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