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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BELLATRIX EXPLORATION $5.17 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266- 8670; www.bellatrixexploration.com; Shares outstanding: 107.9 million; Market cap: $557.8 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 66% of its output; the remaining 34% is oil.
In the three months ended September 30, 2012, Bellatrix’s production rose 31.0%, to 15,503 barrels of oil equivalent per day (including natural gas) from 11,837 barrels.
Cash flow per share rose 13.6%, to $0.25 from $0.22. Bellatrix’s selling price for gas fell 37.3%, to $2.45 U.S. per thousand cubic feet from $3.91 U.S. a year ago. However, the big production increase offset that decline. The company’s long-term debt is $154.9 million, or a low 28% of its market cap.
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In the three months ended September 30, 2012, Bellatrix’s production rose 31.0%, to 15,503 barrels of oil equivalent per day (including natural gas) from 11,837 barrels.
Cash flow per share rose 13.6%, to $0.25 from $0.22. Bellatrix’s selling price for gas fell 37.3%, to $2.45 U.S. per thousand cubic feet from $3.91 U.S. a year ago. However, the big production increase offset that decline. The company’s long-term debt is $154.9 million, or a low 28% of its market cap.
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BIRCHCLIFF ENERGY $7.52 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 141.6 million; Market cap: $1.1 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil.
In the three months ended September 30, 2012, Birchcliff’s production rose 21.4%, to 21,426 barrels of oil equivalent per day (including natural gas) from 17,648 barrels a year earlier. Even so, cash flow per share fell 25.9%, to $0.20 from $0.27. The production increase was offset by a 37.0% decline in gas prices.
The company’s exploration efforts continue to be successful, and its production keeps rising as it starts up the resulting new wells. In addition, Birchcliff has completed Phase III of its gas-plant expansion in Pouce Coupe, Alberta.
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In the three months ended September 30, 2012, Birchcliff’s production rose 21.4%, to 21,426 barrels of oil equivalent per day (including natural gas) from 17,648 barrels a year earlier. Even so, cash flow per share fell 25.9%, to $0.20 from $0.27. The production increase was offset by a 37.0% decline in gas prices.
The company’s exploration efforts continue to be successful, and its production keeps rising as it starts up the resulting new wells. In addition, Birchcliff has completed Phase III of its gas-plant expansion in Pouce Coupe, Alberta.
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ACI WORLDWIDE $48.38 (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) is buying Online Resources for $126.6 million. The move will help ACI further expand into online banking and bill payments.
Online Resources processes more than 245 million bill payments a year. It will also add 1,000 banks, credit unions, billers, credit card issuers and other credit and payment service providers to ACI’s customer base.
ACI’s outlook is positive. However, the stock is up 35% in the past year and now trades at a high 31.0 times the company’s forecast 2013 earnings of $1.56 a share.
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Online Resources processes more than 245 million bill payments a year. It will also add 1,000 banks, credit unions, billers, credit card issuers and other credit and payment service providers to ACI’s customer base.
ACI’s outlook is positive. However, the stock is up 35% in the past year and now trades at a high 31.0 times the company’s forecast 2013 earnings of $1.56 a share.
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Alimentation Couche-Tard $53.33, symbol ATD.B on Toronto, was our #1 pick for 2012 in Stock Pickers Digest at $30.55. Its shares are now up 74.6%.
WestJet, our #1 pick for this year (see left), was trading at $14.10 when we made it our #1 Stock of the Year for 2011. It was a year late getting started, but it’s now up 58.1% since then.
Even with that jump, we think WestJet has big gains ahead. In an industry that thrives on passenger satisfaction and trust, the company’s non-unionized workforce is a huge plus.
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WestJet, our #1 pick for this year (see left), was trading at $14.10 when we made it our #1 Stock of the Year for 2011. It was a year late getting started, but it’s now up 58.1% since then.
Even with that jump, we think WestJet has big gains ahead. In an industry that thrives on passenger satisfaction and trust, the company’s non-unionized workforce is a huge plus.
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AIMIA INC. $15.93 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.3 million; Market cap: $2.7 billion; Dividend yield: 4.0%) owns and operates Aeroplan, Canada’s largest loyalty program, and Nectar, the U.K.’s biggest loyalty program. In addition, Aimia has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.
In the nine months ended September 30, 2012, Aimia’s revenue rose 1.0%, to $1.63 billion from $1.61 billion a year earlier. Excluding one-time items, earnings per share rose 33.8%, to $1.03 from $0.77. The company’s cost per mile awarded dropped significantly, partly because it is making better use of its computer systems. Redemptions also fell.
In the nine months ended September 30, 2012, Aimia’s revenue rose 1.0%, to $1.63 billion from $1.61 billion a year earlier. Excluding one-time items, earnings per share rose 33.8%, to $1.03 from $0.77. The company’s cost per mile awarded dropped significantly, partly because it is making better use of its computer systems. Redemptions also fell.
… but it faces three risks in 2013
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WESTJET AIRLINES $22.29 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 132.3 million; Market cap: $2.9 billion; Divd. yield: 1.8%) serves 81 destinations in North America, Central America and the Caribbean. Its fleet of 100 modern Boeing 737s are 30% more fuel efficient than older jets. WestJet plans to take delivery of 35 more 737s through 2018.
In the three months ended December 31, 2012, the company’s revenue rose 10.1%, to $860.6 million from $781.5 million a year earlier. Demand for its flights remains high. Earnings per share rose 76.9%, to $0.46 from $0.26. WestJet has also raised its quarterly dividend by 25%, to $0.10 from $0.08. The shares now yield 1.9%.
WestJet continues to add ticketing and baggage-transfer alliances with other airlines, including Cathay Pacific, British Airways, Delta Airlines and American Airlines. This lets it reach new markets while limiting its risk. WestJet has also invested heavily in a state-of-the-art computer reservation system.
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In the three months ended December 31, 2012, the company’s revenue rose 10.1%, to $860.6 million from $781.5 million a year earlier. Demand for its flights remains high. Earnings per share rose 76.9%, to $0.46 from $0.26. WestJet has also raised its quarterly dividend by 25%, to $0.10 from $0.08. The shares now yield 1.9%.
WestJet continues to add ticketing and baggage-transfer alliances with other airlines, including Cathay Pacific, British Airways, Delta Airlines and American Airlines. This lets it reach new markets while limiting its risk. WestJet has also invested heavily in a state-of-the-art computer reservation system.
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LOBLAW COMPANIES $42(Toronto symbol L; Sharesoutstanding: 281.6 million; Marketcap: $11.8 billion; TSINetworkRating: Above Average; Dividendyield: 2.1%; www.loblaw.ca) is upover 25% since December 6, 2012,when it said that it plans to form areal estate investment trust (REIT) tohold the bulk of its real estate assets.
The company currently owns 47million square feet of real estate witha value between $9 billion and $10billion.
Loblaw will transfer 35 millionsquare feet of these holdings—includingstores, warehouses andoffice buildings—to the REIT. In all,these assets are worth about $7billion. Loblaw will then rent theseproperties from the new trust.
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The company currently owns 47million square feet of real estate witha value between $9 billion and $10billion.
Loblaw will transfer 35 millionsquare feet of these holdings—includingstores, warehouses andoffice buildings—to the REIT. In all,these assets are worth about $7billion. Loblaw will then rent theseproperties from the new trust.
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GOOGLE INC. (Nasdaq symbol GOOG; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. The company makes money by selling advertising on its websites. Google gets 96% of its revenue from advertising....
A month ago, we examined one of the energy stocks we cover in our newsletter for aggressive investing, Stock Pickers Digest. Zargon Oil and Gas (Toronto symbol ZAR) has trimmed its commitment to natural gas due to the slump in prices (view the article here). Today, in the wake of a recent rally in oil prices, we look at the prospects for a tech stock that serves the oil and gas drilling industry.
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p>GOOGLE INC. $742 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 328.6 million; Market cap: $243.8 billion; Price-to-sales ratio: 4.6; No dividends paid; TSINetwork Rating: Above Average; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. The company makes money by selling advertising on its websites. Google gets 96% of its revenue from advertising.
The company also offers a variety of free services such as Gmail (email), YouTube (videos) and Google+ (social networking). These services help draw more users to Google’s websites, which lets the company sell more ads and charge higher ad rates.
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The company also offers a variety of free services such as Gmail (email), YouTube (videos) and Google+ (social networking). These services help draw more users to Google’s websites, which lets the company sell more ads and charge higher ad rates.
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