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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SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software....
DUN & BRADSTREET CORP. $82 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 40.9 million; Market cap: $3.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; www.dnb.com) began operating in 1841 and is now the world’s largest provider of credit reports on individual companies. Its database contains information on 220 million businesses in over 200 countries. Companies use these reports to make lending and purchasing decisions and to cut their credit losses.
The company gets 63% of its revenue from credit reports. The remaining 37% comes from other information products, including software to help businesses manage customer data and websites.
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The company gets 63% of its revenue from credit reports. The remaining 37% comes from other information products, including software to help businesses manage customer data and websites.
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MCCORMICK & CO. INC. $72 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 132.7 million; Market cap: $9.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mccormick.com) earned $407.8 million, or $3.04 a share, in its 2012 fiscal year, which ended November 30, 2012. That’s up 9.0% from $374.2 million, or $2.79 a share, in 2011. Sales rose 8.6%, to $4.0 billion from $3.7 billion.
The company is benefiting from its recent purchases of spice makers and food companies in India and Eastern Europe. As well, its ongoing cost-cutting plan saved it $56 million in 2012.
Earnings should rise to between $3.15 and $3.23 a share in 2013. The stock trades at a high but still reasonable 22.6 times the midpoint of that range.
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The company is benefiting from its recent purchases of spice makers and food companies in India and Eastern Europe. As well, its ongoing cost-cutting plan saved it $56 million in 2012.
Earnings should rise to between $3.15 and $3.23 a share in 2013. The stock trades at a high but still reasonable 22.6 times the midpoint of that range.
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GENUINE PARTS CO. $77 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 154.9 million; Market cap: $11.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) has exercised its option to buy full control of privately held Exego Group, which sells auto parts through 290 stores in Australia and 92 in New Zealand.
Genuine Parts paid $150 million for 30% of Exego in January 2012. It will pay $800 million for the remaining 70% when the deal closes in April 2013.
This is a big purchase for Genuine Parts, which earned $648.0 million, or $4.14 a share, in 2012. However, Exego is profitable, and this purchase will cut the company’s reliance on North America, which accounts for nearly all of its sales.
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Genuine Parts paid $150 million for 30% of Exego in January 2012. It will pay $800 million for the remaining 70% when the deal closes in April 2013.
This is a big purchase for Genuine Parts, which earned $648.0 million, or $4.14 a share, in 2012. However, Exego is profitable, and this purchase will cut the company’s reliance on North America, which accounts for nearly all of its sales.
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TEXAS INSTRUMENTS INC. $35 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $38.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.2%; TSINetwork Rating: Average; www.ti.com) is receiving more orders for its analog chips, which convert sounds and temperatures into digital signals that computers can understand. Manufacturers use analog chips in a wide variety of products, including cars, medical devices and home appliances.
Texas Instruments now expects revenue of $2.80 billion to $2.91 billion in the first quarter of 2013. That’s up from its earlier forecast of $2.69 billion to $2.91 billion. It also expects to earn $0.28 to $0.32 a share in the quarter, up from its prior forecast of $0.24 to $0.32.
As well, Texas Instruments has raised its quarterly dividend by 33.3%, to $0.28 a share from $0.21. The new annual rate of $1.12 yields 3.2%. The company also added $5 billion to its share repurchase authorization. It can now buy back up to $8.4 billion of its shares, or 22% of its market cap. There is no time limit for these purchases.
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Texas Instruments now expects revenue of $2.80 billion to $2.91 billion in the first quarter of 2013. That’s up from its earlier forecast of $2.69 billion to $2.91 billion. It also expects to earn $0.28 to $0.32 a share in the quarter, up from its prior forecast of $0.24 to $0.32.
As well, Texas Instruments has raised its quarterly dividend by 33.3%, to $0.28 a share from $0.21. The new annual rate of $1.12 yields 3.2%. The company also added $5 billion to its share repurchase authorization. It can now buy back up to $8.4 billion of its shares, or 22% of its market cap. There is no time limit for these purchases.
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AMERICAN EXPRESS CO. $66 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $72.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.4%; TSINetwork Rating: Average; www.- americanexpress.com) has passed the Federal Reserve’s latest “stress test,” which measures how well banks and other financial firms would cope with a sharp jump in unemployment, falling stock prices and other unfavourable economic conditions.
As a result, the company raised its quarterly dividend by 15.0%, to $0.23 a share from $0.20. The new annual rate of $0.92 yields 1.4%. Amex also announced that it would buy back $4.0 billion worth of its shares in 2013, and $1 billion more in the first quarter of 2014.
American Express is a buy.
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As a result, the company raised its quarterly dividend by 15.0%, to $0.23 a share from $0.20. The new annual rate of $0.92 yields 1.4%. Amex also announced that it would buy back $4.0 billion worth of its shares in 2013, and $1 billion more in the first quarter of 2014.
American Express is a buy.
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ARCHER DANIELS MIDLAND CO. $33 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 658.6 million; Market cap: $21.7 billion; Priceto- sales ratio: 0.2; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.adm.com) has moved up nearly 20% in the past three months. That’s partly because Berkshire Hathaway, the holding company controlled by billionaire investor Warren Buffett, now owns 1% of Archer Daniel’s shares.
The company is also profiting from strong demand for sweeteners and soybean products. That let it raise its its dividend by 8.6%. The new annual rate of $0.76 a share yields 2.3%.
Archer Daniels Midland is a buy....
The company is also profiting from strong demand for sweeteners and soybean products. That let it raise its its dividend by 8.6%. The new annual rate of $0.76 a share yields 2.3%.
Archer Daniels Midland is a buy....
NEWMONT MINING CORP. $40 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.7 million; Market cap: $19.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.3%; TSINetwork Rating: Average; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru. Copper, zinc and other metals supply the remaining 10%.
In 2012, Newmont sold its gold for an average of $1,662 an ounce, up 6.4% from $1,562 in 2011. But production fell 4.9%, to 5.6 million ounces from 5.9 million. That’s because it had to cut production at its 31.5%-owned Batu Hijau gold/copper project in Indonesia as the mine prepares to open a new phase in 2014.
As a result of the lower production, Newmont’s revenue fell 4.7% to $9.9 billion from $10.4 billion. Rising operating costs and higher royalty payments have also pushed up Newmont’s cost per ounce by 14.6%, to $677 from $591. That cut its 2012 earnings by 14.7%, to $1.85 billion, or $3.73 a share. In 2011, it earned $2.2 billion, or $4.39 a share.
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In 2012, Newmont sold its gold for an average of $1,662 an ounce, up 6.4% from $1,562 in 2011. But production fell 4.9%, to 5.6 million ounces from 5.9 million. That’s because it had to cut production at its 31.5%-owned Batu Hijau gold/copper project in Indonesia as the mine prepares to open a new phase in 2014.
As a result of the lower production, Newmont’s revenue fell 4.7% to $9.9 billion from $10.4 billion. Rising operating costs and higher royalty payments have also pushed up Newmont’s cost per ounce by 14.6%, to $677 from $591. That cut its 2012 earnings by 14.7%, to $1.85 billion, or $3.73 a share. In 2011, it earned $2.2 billion, or $4.39 a share.
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NORDSTROM INC. $53 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.9 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.3%; TSINetwork Rating: Average; www.nordstrom.com) plans to invest $240 million to expand its online operations, which supply about 10% of its sales. This cost is equal to a third of the $735 million, or $3.56 a share, that Nordstrom earned in the fiscal year ended February 2, 2013.
These upgrades will help the department-store operator handle an increase in purchases from customers using mobile devices. In the past year, mobile sales accounted for 20% of its online orders.
Nordstrom is a buy....
These upgrades will help the department-store operator handle an increase in purchases from customers using mobile devices. In the past year, mobile sales accounted for 20% of its online orders.
Nordstrom is a buy....
JONES GROUP INC. $13 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 81.0 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.jonesgroupinc- .com) designs clothing, accessories and footwear for men and women. Major brands include Jones New York, Gloria Vanderbilt, Rachel Roy, Anne Klein and Nine West. Jones sells its products through department stores and 594 company-owned outlets.
As part of an ongoing restructuring, Jones closed 103 stores in 2012, and plans to close more in 2013. It’s also improving the quality of its products and making acquisitions. For example, in June 2012 it paid $5.5 million for the rights to upscale shoes by designer Brain Atwood.
Even with these new businesses, Jones’s sales rose just 0.3% in 2012, to $3.80 billion from $3.79 billion in 2011. Higher costs for cotton and labour caused its earnings to fall 11.3%, to $93.7 million from $105.6 million. Due to fewer shares outstanding, earnings per share fell just 4.6%, to $1.24 from $1.30.
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As part of an ongoing restructuring, Jones closed 103 stores in 2012, and plans to close more in 2013. It’s also improving the quality of its products and making acquisitions. For example, in June 2012 it paid $5.5 million for the rights to upscale shoes by designer Brain Atwood.
Even with these new businesses, Jones’s sales rose just 0.3% in 2012, to $3.80 billion from $3.79 billion in 2011. Higher costs for cotton and labour caused its earnings to fall 11.3%, to $93.7 million from $105.6 million. Due to fewer shares outstanding, earnings per share fell just 4.6%, to $1.24 from $1.30.
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