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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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....
MOTOROLA SOLUTIONS INC. $61 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 276.0 million; Market cap: $16.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.7%; TSINetwork Rating: Average; 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.
The company took its current form on January 4, 2011. That’s when Motorola Inc. spun off of its struggling cellphone business, Motorola Mobility, as a separate company. Following the transaction, the remaining operations became Motorola Solutions.
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The company took its current form on January 4, 2011. That’s when Motorola Inc. spun off of its struggling cellphone business, Motorola Mobility, as a separate company. Following the transaction, the remaining operations became Motorola Solutions.
Big gains as a stand-alone company
CAMPBELL SOUP CO. $40 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 314.4 million; Market cap: $12.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.campbellsoupcompany. com) aims to increase its Mexican sales through new alliances with two of that country’s leading food makers. As a result, Campbell will close its plant in Mexico. It expects to pay $6 million in severance and other costs.
Meanwhile, Campbell earned $220 million in the three months ended January 27, 2013. That’s up 6.3% from $207 million a year earlier. Earnings per share rose 9.4%, to $0.70 from $0.64, on fewer shares outstanding. Sales rose 10.5%, to $2.3 billion from $2.1 billion, mainly due to a recent acquisition.
Campbell Soup is a buy.
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Meanwhile, Campbell earned $220 million in the three months ended January 27, 2013. That’s up 6.3% from $207 million a year earlier. Earnings per share rose 9.4%, to $0.70 from $0.64, on fewer shares outstanding. Sales rose 10.5%, to $2.3 billion from $2.1 billion, mainly due to a recent acquisition.
Campbell Soup is a buy.
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SHERWIN-WILLIAMS CO. $159 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.1 million; Market cap: $16.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.3%; TSINetwork Rating: Above Average; www.sherwin-williams.com) has raised its quarterly dividend by 28.2%, to $0.50 a share from $0.39. The new annual rate of $2.00 yields 1.3%. Sherwin has now raised its dividend for 34 consecutive years.
The company recently agreed to buy privately held Consorcio Comex, Mexico’s largest paint and coating maker. Comex sells its products through 3,300 stores in Mexico, 240 in the U.S. and 78 in Canada.
Sherwin will pay $2.3 billion, including assumed debt, when the sale closes later this year. Expanding by acquisition, particularly in foreign countries, adds risk. The stock is also expensive at 20.7 times Sherwin’s likely 2013 earnings of $7.68 a share.
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The company recently agreed to buy privately held Consorcio Comex, Mexico’s largest paint and coating maker. Comex sells its products through 3,300 stores in Mexico, 240 in the U.S. and 78 in Canada.
Sherwin will pay $2.3 billion, including assumed debt, when the sale closes later this year. Expanding by acquisition, particularly in foreign countries, adds risk. The stock is also expensive at 20.7 times Sherwin’s likely 2013 earnings of $7.68 a share.
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