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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CHEMTRADE LOGISTICS INCOME FUND $17.15 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics- .com; Units outstanding: 41.7 million; Market cap: $710.0 million; Dividend yield: 7.1%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid.
Chemtrade’s Marsulex subsidiary provides a range of environmental services, including improving air quality and treating and handling industrial waste.
In the three months ended December 31, 2012, Chemtrade’s revenue fell 9.8%, to $223.0 million from $247.2 million a year earlier. The decline mostly reflects lower prices for sulphuric acid on international markets. However, cash flow per unit rose 13.1%, to $0.69 from $0.61.
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Chemtrade’s Marsulex subsidiary provides a range of environmental services, including improving air quality and treating and handling industrial waste.
In the three months ended December 31, 2012, Chemtrade’s revenue fell 9.8%, to $223.0 million from $247.2 million a year earlier. The decline mostly reflects lower prices for sulphuric acid on international markets. However, cash flow per unit rose 13.1%, to $0.69 from $0.61.
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INTACT FINANCIAL CORP. $64.30 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $8.6 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums.
In the three months ended December 31, 2012, Intact’s revenue rose 7.2%, to $1.69 billion from $1.58 billion a year earlier.
Before one-time items, Intact earned $1.51 a share in the quarter, up 32.5% from $1.14 a share a year earlier. The insurance business was helped by generally favourable weather. The company also saw higher gains on its investments in the latest quarter.
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In the three months ended December 31, 2012, Intact’s revenue rose 7.2%, to $1.69 billion from $1.58 billion a year earlier.
Before one-time items, Intact earned $1.51 a share in the quarter, up 32.5% from $1.14 a share a year earlier. The insurance business was helped by generally favourable weather. The company also saw higher gains on its investments in the latest quarter.
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INTUITIVE SURGICAL $509.33 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 40.1 million; Market cap: $20.7 billion; No dividends paid) makes the da Vinci, a computerized surgical system.
Intuitive fell as low as $493 a share on February 28, 2013, from $570. However, it has since regained a lot of that decline.
The shares fell on a report that the U.S. Food and Drug Administration (FDA) sent out surveys asking surgeons to detail any complications they may have seen with surgeries performed using the da Vinci. The FDA also asked them which procedures they think the system is best and least suited for, and also to describe their training.
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Intuitive fell as low as $493 a share on February 28, 2013, from $570. However, it has since regained a lot of that decline.
The shares fell on a report that the U.S. Food and Drug Administration (FDA) sent out surveys asking surgeons to detail any complications they may have seen with surgeries performed using the da Vinci. The FDA also asked them which procedures they think the system is best and least suited for, and also to describe their training.
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AASTRA TECHNOLOGIES $19.79 (Toronto symbol AAH; TSINetwork Rating: Speculative) (905- 760-4200; www.aastra.com; Shares outstanding: 11.8 million; Market cap: $234.6 million; Dividend yield: 4.1%) reported revenue of $175.2 million in the three months ended December 31, 2012. That was down 12.3% from $199.7 million a year earlier.
Sales declined in all regions, including Western Europe, where Aastra gets the majority of its revenue. Excluding the impact of foreign exchange rates, sales declined 7.1% from a year earlier.
Earnings per share rose sharply, to $2.42 from $1.30, due to a number of one-time items, including income-tax recoveries. Without those items, Aastra would have earned $1.15 a share in the latest quarter.
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Sales declined in all regions, including Western Europe, where Aastra gets the majority of its revenue. Excluding the impact of foreign exchange rates, sales declined 7.1% from a year earlier.
Earnings per share rose sharply, to $2.42 from $1.30, due to a number of one-time items, including income-tax recoveries. Without those items, Aastra would have earned $1.15 a share in the latest quarter.
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WYNDHAM WORLDWIDE $62.70 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 136.6 million; Market cap: $8.5 billion; Dividend yield: 1.9%) reports that its revenue rose 9.4% in the three months ended December 31, 2012, to $1.09 billion from $1.0 billion a year earlier. Higher vacation bookings helped push up the company’s occupancy rate by 2.6%.
Before one-time items, the hotel and resort operator’s earnings rose 34.0%, to $0.63 a share from $0.47.
The company has increased its quarterly dividend by 26.1%, to $0.29 from $0.23 a share. The shares now yield 1.9%.
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Before one-time items, the hotel and resort operator’s earnings rose 34.0%, to $0.63 a share from $0.47.
The company has increased its quarterly dividend by 26.1%, to $0.29 from $0.23 a share. The shares now yield 1.9%.
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DOREL INDUSTRIES $39.73 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.0%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles.
In the three months ended December 30, 2012, Dorel’s sales rose 10.9%, to $622.6 million from $561.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Excluding onetime items, earnings per share jumped 37.0%, to $0.63 from $0.46.
The home furnishing division’s revenue rose 7.5% on higher sales of imported furniture, mattresses and futons. The juvenile division’s revenue gained 11.6%, partly due to contributions from recent acquisitions, including Dorel Chile and distributors of children’s products in Colombia and Panama. Strong sales of new bicycle models helped push up the recreational/leisure division’s sales by 12.0%. Sales of the company’s premium Cannondale bicycles were particularly strong.
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In the three months ended December 30, 2012, Dorel’s sales rose 10.9%, to $622.6 million from $561.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Excluding onetime items, earnings per share jumped 37.0%, to $0.63 from $0.46.
The home furnishing division’s revenue rose 7.5% on higher sales of imported furniture, mattresses and futons. The juvenile division’s revenue gained 11.6%, partly due to contributions from recent acquisitions, including Dorel Chile and distributors of children’s products in Colombia and Panama. Strong sales of new bicycle models helped push up the recreational/leisure division’s sales by 12.0%. Sales of the company’s premium Cannondale bicycles were particularly strong.
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STANTEC INC. $43.25 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.0 million; Market cap: $2.0 billion; Dividend yield: 1.5%) sells a range of consulting, project delivery, design and technology services. Stantec’s clients operate in a variety of industries, including transportation, construction and oil and gas.
In the three months ended December 31, 2012, Stantec’s revenue rose 13.3%, to $483.9 million from $432.0 million a year earlier. Acquisitions were one reason for the increase. Stantec is also working on several new projects. Earnings rose 28.0%, to $31.1 million, or $0.67 a share, from $24.3 million, or $0.53.
Stantec continues to grow by acquisition, including purchases of seven companies in 2012. Its most recent addition was Landmark Survey and Mapping, a 24- person firm specializing in surveying and mapping for pipelines. Stantec sees major growth potential in the oil and gas and mining industries.
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In the three months ended December 31, 2012, Stantec’s revenue rose 13.3%, to $483.9 million from $432.0 million a year earlier. Acquisitions were one reason for the increase. Stantec is also working on several new projects. Earnings rose 28.0%, to $31.1 million, or $0.67 a share, from $24.3 million, or $0.53.
Stantec continues to grow by acquisition, including purchases of seven companies in 2012. Its most recent addition was Landmark Survey and Mapping, a 24- person firm specializing in surveying and mapping for pipelines. Stantec sees major growth potential in the oil and gas and mining industries.
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HECLA MINING COMPANY $4.21 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769-4100; www.hecla-mining.com; Shares outstanding: 285.2 million; Market cap: $1.3 billion) is now purchasing Canadian mining company Aurizon Mines Ltd. (Toronto symbol AZK) for $796 million. Aurizon shareholders can choose to receive $4.75 a share in cash or 0.9953 of a Hecla share.
In January 2013, Aurizon rejected a takeover offer from Alamos Gold (Toronto symbol AGI), which held 14% of Aurizon’s stock. Alamos offered 0.2801 of its shares for each Aurizon share. However, Alamos’s shares have dropped since the offer, which is now worth $4.00 per Aurizon share, based on Alamos’s current price of $14.29.
Hecla expects its current mines to produce 8 million to 9 million ounces of silver this year, while Aurizon forecasts 125,000 to 130,000 ounces of gold production at its Casa Berardi mine in Quebec. Aurizon is also developing other gold properties.
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In January 2013, Aurizon rejected a takeover offer from Alamos Gold (Toronto symbol AGI), which held 14% of Aurizon’s stock. Alamos offered 0.2801 of its shares for each Aurizon share. However, Alamos’s shares have dropped since the offer, which is now worth $4.00 per Aurizon share, based on Alamos’s current price of $14.29.
Hecla expects its current mines to produce 8 million to 9 million ounces of silver this year, while Aurizon forecasts 125,000 to 130,000 ounces of gold production at its Casa Berardi mine in Quebec. Aurizon is also developing other gold properties.
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ENERFLEX LTD., $13.01 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.7 million; Market cap: $1.0 billion; Dividend yield: 2.2%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.
The company has a strong position in three expanding markets: U.S. and Canadian shale gas production; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, which is converted to liquefied natural gas (LNG) for shipping.
In the quarter ended December 31, 2012, Enerflex’s revenue rose 9.8%, to $421.6 million from $383.8 million a year ago. Earnings per share rose 59.1%, to $0.35 from $0.22, due to the higher revenue and improved profit margins.
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The company has a strong position in three expanding markets: U.S. and Canadian shale gas production; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, which is converted to liquefied natural gas (LNG) for shipping.
In the quarter ended December 31, 2012, Enerflex’s revenue rose 9.8%, to $421.6 million from $383.8 million a year ago. Earnings per share rose 59.1%, to $0.35 from $0.22, due to the higher revenue and improved profit margins.
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ACI WORLDWIDE $47 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402- 334-5101; www.tsainc.com; Shares outstanding: 39.4 million; Market cap: $1.9 billion; No dividends paid) reported 66.0% higher revenue in the three months ended December 31, 2012, to $224.1 million from $135.0 million a year earlier. The February 2012 acquisition of S1Corp. was the main reason for the gain. Without one-time items, earnings per share jumped 80.3%, to $1.37 from $0.76.
The company’s outlook is positive, and it is well positioned to profit from global growth in payment processing. However, the stock is up over 23% since November 2012 and now trades at a high 29.4 times the company’s forecast 2013 earnings of $1.60 a share.
ACI Worldwide is a hold.
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The company’s outlook is positive, and it is well positioned to profit from global growth in payment processing. However, the stock is up over 23% since November 2012 and now trades at a high 29.4 times the company’s forecast 2013 earnings of $1.60 a share.
ACI Worldwide is a hold.
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