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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ADOBE SYSTEMS $41.59 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 498.8 million; Market cap: $20.8 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages.
Excluding one-time items, Adobe’s earnings fell 7.4% in the three months ended November 30, 2012, to $307.9 million from $332.6 million a year earlier. Earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding.
Revenue was flat at $1.15 billion, although it did exceed the consensus estimate of $1.1 billion. The company continues to spend over 17% of its revenue on research.
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Excluding one-time items, Adobe’s earnings fell 7.4% in the three months ended November 30, 2012, to $307.9 million from $332.6 million a year earlier. Earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding.
Revenue was flat at $1.15 billion, although it did exceed the consensus estimate of $1.1 billion. The company continues to spend over 17% of its revenue on research.
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FAIR ISAAC CORP. $45.42 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 35.5 million; Market cap: $1.6 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 the three months ended December 31, 2012, Fair Isaac’s earnings per share before one-time items fell 6.4%, to $0.88 from $0.94. But that still beat the consensus estimate of $0.73. Revenue rose 11.5%, to $190.0 million from $170.3 million.
Revenue rose thanks to the contribution of recently acquired Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email. However, Fair Isaac earned lower profit margins on Adeptra’s products, which depressed its earnings.
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In the three months ended December 31, 2012, Fair Isaac’s earnings per share before one-time items fell 6.4%, to $0.88 from $0.94. But that still beat the consensus estimate of $0.73. Revenue rose 11.5%, to $190.0 million from $170.3 million.
Revenue rose thanks to the contribution of recently acquired Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email. However, Fair Isaac earned lower profit margins on Adeptra’s products, which depressed its earnings.
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TRILOGY ENERGY CORP. $30.03 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 116.7 million; Market cap: $3.5 billion; Dividend yield: 1.4%) is up over 18% since it reported improved production and cash flow.
In the three months ended December 31, 2012, Trilogy produced an average of 35,014 barrels of oil equivalent per day (including natural gas). That was up 23.8% from 28,288 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 41,000 barrels for all of 2013.
Cash flow per share rose 31.4%, to $0.67 from $0.51 a year earlier, due to the increased production and higher oil prices.
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In the three months ended December 31, 2012, Trilogy produced an average of 35,014 barrels of oil equivalent per day (including natural gas). That was up 23.8% from 28,288 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 41,000 barrels for all of 2013.
Cash flow per share rose 31.4%, to $0.67 from $0.51 a year earlier, due to the increased production and higher oil prices.
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CIMAREX ENERGY $74.03 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.4 million; Market cap: $6.2 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 49% of its output.
Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (52% of production); the Permian Basin of western Texas and southeastern New Mexico (43%); and the Texas Gulf Coast (5%).
In the three months ended December 31, 2012, Cimarex’s production averaged 676.7 million cubic feet of natural gas equivalent per day (including oil). That’s up 12.5%, from 601.4 million cubic feet a year earlier. Thanks to the higher production, Cimarex’s cash flow per share fell just 4.2%, to $3.46 from $3.61, despite lower oil and gas prices.
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Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (52% of production); the Permian Basin of western Texas and southeastern New Mexico (43%); and the Texas Gulf Coast (5%).
In the three months ended December 31, 2012, Cimarex’s production averaged 676.7 million cubic feet of natural gas equivalent per day (including oil). That’s up 12.5%, from 601.4 million cubic feet a year earlier. Thanks to the higher production, Cimarex’s cash flow per share fell just 4.2%, to $3.46 from $3.61, despite lower oil and gas prices.
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DEVON ENERGY CORP. $55.69 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $22.7 billion; Dividend yield: 1.6%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 61% gas and 39% oil.
In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.
Devon has formed joint ventures to cut the risk of its big development projects. Last year, it sold a onethird stake in five shale oil and gas fields to giant Chinese state-owned petroleum and chemical company Sinopec for $2.2 billion. As well, Japan’s Sumitomo Corp. bought 30% of the Cline and Wolfcamp shales in Texas for $1.4 billion.
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In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.
Devon has formed joint ventures to cut the risk of its big development projects. Last year, it sold a onethird stake in five shale oil and gas fields to giant Chinese state-owned petroleum and chemical company Sinopec for $2.2 billion. As well, Japan’s Sumitomo Corp. bought 30% of the Cline and Wolfcamp shales in Texas for $1.4 billion.
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DOMINO’S PIZZA $49.82 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 56.4 million; Market cap: $2.8 billion; Dividend yield: 1.6%) continues to expand internationally.
It just opened its first store in Thailand, in the city of Bangkok, and plans to add more outlets in the country in the next few years.
Domino’s now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings.
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It just opened its first store in Thailand, in the city of Bangkok, and plans to add more outlets in the country in the next few years.
Domino’s now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings.
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SYMANTEC CORP. $24.54 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 689.2 million; Market cap: $16.9 billion; No dividends paid) sells computersecurity technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software.
Symantec’s shares continue to rise on better-than-expected earnings and a new restructuring plan that should improve the company’s longterm profitability.
In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s revenue rose 4.4%, to a record $1.8 billion from $1.7 billion a year earlier. That’s mainly because its business clients are buying more of its data-security and storage services.
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Symantec’s shares continue to rise on better-than-expected earnings and a new restructuring plan that should improve the company’s longterm profitability.
In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s revenue rose 4.4%, to a record $1.8 billion from $1.7 billion a year earlier. That’s mainly because its business clients are buying more of its data-security and storage services.
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AMAZON.COM (Nasdaq symbol AMZN; www.amazon.com) is a major online retailer. It gets about 33% of its sales from books, music and videos. Other products, including electronics, computer games and toys, make up the other 67%. Amazon Marketplace lets other companies sell their products through Amazon’s websites....
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice on a wide range of topics, including strategies for international stock markets. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Foreign investments can strengthen your portfolio and here are 3 ways you can do it with less risk.”...
MOTOROLA SOLUTIONS INC. (New York symbol MSI; www.motorolasolutions.com) makes specialized electronic equipment, such as bar-code scanners and radios for police and fire vehicles. It gets 69% of its revenue by selling its products to governments; the U.S. government is the company’s largest single customer, accounting for 7% of its overall revenue. Businesses supply the remaining 31% of Motorola Solutions’revenue....
