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.
Read More
Close
IAMGOLD $5.23 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold- .com; Shares outstanding: 376.6 million; Market cap: $1.9 billion; Dividend yield: 4.7%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America.
IAMGold also has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. As well, it owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat resistant and easier to weld.
In the three months ended March 31, 2013, IAMGold’s revenue fell 13.8%, to $305.3 million from $354.l million a year earlier. Cash flow per share fell 35.4%, to $0.49 from $0.57. The declines mostly resulted from lower gold prices, partly offset by a decline in the company’s costs.
...
IAMGold also has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. As well, it owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat resistant and easier to weld.
In the three months ended March 31, 2013, IAMGold’s revenue fell 13.8%, to $305.3 million from $354.l million a year earlier. Cash flow per share fell 35.4%, to $0.49 from $0.57. The declines mostly resulted from lower gold prices, partly offset by a decline in the company’s costs.
...
TIM HORTONS $57.34 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.4 million; Market cap: $8.9 billion; Dividend yield: 1.8%) has renovated and redesigned its stores over the last couple of years to make them more appealing to customers and boost traffic.
However, the company is now under pressure to do more from Highfields Capital, a U.S.-based activist investment firm that owns 1.5% of Tim Hortons’ shares.
Highfields has proposed several ways to unlock shareholder value, including slowing Tim Hortons’ expansion in the intensely competitive U.S. market; borrowing money to buy back roughly 40% of its stock; selling or spinning off its distribution operations; and transferring its real estate holdings to a new real estate investment trust.
...
However, the company is now under pressure to do more from Highfields Capital, a U.S.-based activist investment firm that owns 1.5% of Tim Hortons’ shares.
Highfields has proposed several ways to unlock shareholder value, including slowing Tim Hortons’ expansion in the intensely competitive U.S. market; borrowing money to buy back roughly 40% of its stock; selling or spinning off its distribution operations; and transferring its real estate holdings to a new real estate investment trust.
...
FAIR ISAAC CORP. $49.29 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 35.9 million; Market cap: $1.8 billion; Dividend yield: 0.2%) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze their clients’ spending patterns.
In its fiscal 2013 second quarter, which ended March 31, 2013, Fair Isaac’s earnings per share before one-time items rose 4.4% from a year ago, to $0.69 from $0.66. Revenue rose 12.4%, to $179.3 million from $159.5 million.
Fair Isaac continues to spend around 8% of its revenue on research. That lets it keep producing innovative new products that help it stay ahead of its competitors. It’s also building its expertise by purchasing other technology firms. That adds risk, but most of these are small purchases that it can easily integrate into its current businesses.
...
In its fiscal 2013 second quarter, which ended March 31, 2013, Fair Isaac’s earnings per share before one-time items rose 4.4% from a year ago, to $0.69 from $0.66. Revenue rose 12.4%, to $179.3 million from $159.5 million.
Fair Isaac continues to spend around 8% of its revenue on research. That lets it keep producing innovative new products that help it stay ahead of its competitors. It’s also building its expertise by purchasing other technology firms. That adds risk, but most of these are small purchases that it can easily integrate into its current businesses.
...
MCKESSON CORP. $107 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 232.9 million; Market cap: $24.9 billion; Price-to-sales ratio: 0.2; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www. mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor.
McKesson’s clients include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. It also sells surgical tools and health and beauty products.
The company continues to expand its technology solutions division, which makes computers and software that help clinics and pharmacies manage their drug inventories. This division accounts for just 3% of McKesson’s revenue but supplies 15% of its earnings.
...
McKesson’s clients include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. It also sells surgical tools and health and beauty products.
The company continues to expand its technology solutions division, which makes computers and software that help clinics and pharmacies manage their drug inventories. This division accounts for just 3% of McKesson’s revenue but supplies 15% of its earnings.
...
J.P. MORGAN CHASE & CO. $49 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $186.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.1%; TSINetwork Rating: Average; www.jpmorganchase.com) earned a record $6.5 billion in the three months ended March 31, 2013. That’s up 32.6% from $4.9 billion a year earlier. Earnings per share rose 33.6%, to $1.59 from $1.19, on fewer shares outstanding.
Morgan’s revenue in the quarter fell 3.6%, to $25.1 billion from $26.1 billion. The slow economy is hurting loan demand. The bank is also placing new loans at lower interest rates. However, more borrowers are repaying their loans on time: Morgan set aside $617 million to cover bad loans, down 15.0% from $726 million.
J.P. Morgan Chase is a buy....
Morgan’s revenue in the quarter fell 3.6%, to $25.1 billion from $26.1 billion. The slow economy is hurting loan demand. The bank is also placing new loans at lower interest rates. However, more borrowers are repaying their loans on time: Morgan set aside $617 million to cover bad loans, down 15.0% from $726 million.
J.P. Morgan Chase is a buy....
BROADRIDGE FINANCIAL SERVICES INC. $24 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 121.9 million; Market cap: $2.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.0%; TSINetwork Rating: Average; www.broadridge.com) 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.
The U.S. Patent and Trademark Office recently confirmed one of the company’s key patents, which covers how Broadridge creates and organizes data that mutual fund operators must file with the Securities and Exchange Commission. Broadridge’s unique system makes it easier for brokerage firms, insurance companies and pension plans to access this information in a timely manner. Reaffirming this patent will help Broadridge maintain its leading position in this niche market.
Broadridge is a buy.
...
The U.S. Patent and Trademark Office recently confirmed one of the company’s key patents, which covers how Broadridge creates and organizes data that mutual fund operators must file with the Securities and Exchange Commission. Broadridge’s unique system makes it easier for brokerage firms, insurance companies and pension plans to access this information in a timely manner. Reaffirming this patent will help Broadridge maintain its leading position in this niche market.
Broadridge is a buy.
...
FAIR ISAAC CORP. $44 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.5 million; Market cap: $1.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. The company also makes software that helps credit card issuers control fraud and analyze cardholders’spending patterns.
The company has paid an undisclosed sum for Infoglide Software Corp. This privately held firm makes programs that help businesses and government agencies detect identity theft, money laundering and other fraudulent activities. It does this by simultaneously searching a wide variety of databases for hidden relationships between people, places and things. For example, Infoglide’s technology can quickly check to see if a witness to an insurance claim has a connection to a known fraudster.
Fair Isaac is a buy.
...
The company has paid an undisclosed sum for Infoglide Software Corp. This privately held firm makes programs that help businesses and government agencies detect identity theft, money laundering and other fraudulent activities. It does this by simultaneously searching a wide variety of databases for hidden relationships between people, places and things. For example, Infoglide’s technology can quickly check to see if a witness to an insurance claim has a connection to a known fraudster.
Fair Isaac is a buy.
...
YUM! BRANDS INC. $69 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 450.7 million; Market cap: $31.1 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.yum.com) earned $0.70 a share in the first quarter of 2013, down 7.9% from $0.76 a year earlier. Sales fell 7.6%, to $2.5 billion from $2.7 billion.
These declines are mainly due to bad publicity over allegations that Yum’s KFC outlets in China bought raw chicken with higherthan- permitted levels of antibiotics. As a result, profits at the China division (45% of sales) fell 39.8% in the quarter. However, Chinese regulators did not charge Yum with violating safety standards.
Yum Brands is still a buy....
These declines are mainly due to bad publicity over allegations that Yum’s KFC outlets in China bought raw chicken with higherthan- permitted levels of antibiotics. As a result, profits at the China division (45% of sales) fell 39.8% in the quarter. However, Chinese regulators did not charge Yum with violating safety standards.
Yum Brands is still a buy....
IDEXX LABORATORIES INC. $84 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 54.6 million; Market cap: $4.6 billion; Priceto- sales ratio: 3.6; No dividends paid; TSINetwork Rating: Average; www.idexx.com) gets 83% of its revenue by making equipment that veterinarians use to detect diseases in pets. The remaining 17% comes from sales of systems that detect contaminants in livestock and water.
The company continues to enjoy strong demand for its new Pro-Cyte Dx hematology analyzer, which processes animal blood tests in just two minutes. That makes veterinarians less reliant on outside labs, and lowers their costs. This new model is attracting new customers and encouraging many of Idexx’s existing customers to upgrade.
In the three months ended March 31, 2013, Idexx earned $44.9 million, up 10.1% from $40.7 million a year earlier. Earnings per share rose 12.5%, to $0.81 from $0.72, on fewer shares outstanding. Revenue rose 2.9%, to $332.1 million from $322.7 million. Idexx spent 6.6% of its revenue on research in the quarter.
...
The company continues to enjoy strong demand for its new Pro-Cyte Dx hematology analyzer, which processes animal blood tests in just two minutes. That makes veterinarians less reliant on outside labs, and lowers their costs. This new model is attracting new customers and encouraging many of Idexx’s existing customers to upgrade.
In the three months ended March 31, 2013, Idexx earned $44.9 million, up 10.1% from $40.7 million a year earlier. Earnings per share rose 12.5%, to $0.81 from $0.72, on fewer shares outstanding. Revenue rose 2.9%, to $332.1 million from $322.7 million. Idexx spent 6.6% of its revenue on research in the quarter.
...
PETSMART INC. $67 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 102.7 million; Market cap: $6.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petm.com) operates 1,269 pet stores in the U.S. and Canada. It also has 195 in-store PetsHotels, which look after pets while their owners are away.
In its 2013 fiscal year, which ended February 3, 2013, PetSmart’s earnings rose 34.2%, to $389.5 million from $290.2 million in fiscal 2012. The company spent $457 million on share buybacks during the year. Due to fewer shares outstanding, earnings per share rose 39.2%, to $3.55 from $2.55.
Sales rose 10.6%, to $6.8 billion from $6.1 billion. That’s mainly because same-store sales rose 6.3%, while sales of pet services, such as grooming and Pets- Hotel stays, increased 9.7%. Services accounted for 11.0% of PetSmart’s revenue, unchanged from the prior year. Sales also benefited from 46 new stores and four new PetsHotels.
...
In its 2013 fiscal year, which ended February 3, 2013, PetSmart’s earnings rose 34.2%, to $389.5 million from $290.2 million in fiscal 2012. The company spent $457 million on share buybacks during the year. Due to fewer shares outstanding, earnings per share rose 39.2%, to $3.55 from $2.55.
Sales rose 10.6%, to $6.8 billion from $6.1 billion. That’s mainly because same-store sales rose 6.3%, while sales of pet services, such as grooming and Pets- Hotel stays, increased 9.7%. Services accounted for 11.0% of PetSmart’s revenue, unchanged from the prior year. Sales also benefited from 46 new stores and four new PetsHotels.
...