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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NEW GOLD $9.93 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315- 9715; www.newgold.com; Shares outstanding: 476.0 million; Market cap: $4.7 billion; No dividends paid) produced 411,892 ounces of gold in 2012, up 6.4% from 387,155 ounces in 2011.
New Gold now has four operating mines. The company also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater gold project in B.C.
There is still room to increase production at New Gold’s mines and expand their reserves through exploration drilling. But even if the company doesn’t expand its operations or make acquisitions, its production could still top 1 million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 8.4 million ounces of gold.
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New Gold now has four operating mines. The company also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater gold project in B.C.
There is still room to increase production at New Gold’s mines and expand their reserves through exploration drilling. But even if the company doesn’t expand its operations or make acquisitions, its production could still top 1 million ounces within six years. Most of that rise will come from the successful development of the Blackwater project, which could hold up to 8.4 million ounces of gold.
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AMAZON.COM $269.47 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 454.6 million; Market cap: $122.5 billion; No dividends paid) 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.
In the three months ended December 31, 2012, Amazon’s earnings fell 45.2%, to $97.0 million, or $0.21 a share. A year earlier, it earned $177.0 million, or $0.38 a share. The profit decline came despite a 22.0% jump in sales, to $21.3 billion from $17.4 billion.
In the latest quarter, the company spent $1.3 billion on “technology and content,” up 56.0% from $862 million a year earlier. That was a major reason for the lower earnings. This additional spending included investments in new models of its Kindle reader, including the Kindle Fire tablet computer. It also invested in cloud computing services and expanded its digital content business to compete with rival Apple Inc.
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In the three months ended December 31, 2012, Amazon’s earnings fell 45.2%, to $97.0 million, or $0.21 a share. A year earlier, it earned $177.0 million, or $0.38 a share. The profit decline came despite a 22.0% jump in sales, to $21.3 billion from $17.4 billion.
In the latest quarter, the company spent $1.3 billion on “technology and content,” up 56.0% from $862 million a year earlier. That was a major reason for the lower earnings. This additional spending included investments in new models of its Kindle reader, including the Kindle Fire tablet computer. It also invested in cloud computing services and expanded its digital content business to compete with rival Apple Inc.
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WYNDHAM WORLDWIDE $59.05 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 140.3 million; Market cap: $8.3 billion; Dividend yield: 1.6%) is one of the world’s largest hospitality companies, with 7,340 franchised hotels worldwide.
In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 100,000 vacation rental properties worldwide.
In the three months ended December 31, 2012, Wyndham’s revenue rose 9.4%, to $1.09 billion from $1.0 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 2.6%.
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In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. The company now has 100,000 vacation rental properties worldwide.
In the three months ended December 31, 2012, Wyndham’s revenue rose 9.4%, to $1.09 billion from $1.0 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 2.6%.
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SYMANTEC CORP. $22.62 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408- 517-8000; www.symantec.com; Shares outstanding: 689.2 million; Market cap: $15.6 billion; No dividends paid) has reported better-than-expected quarterly earnings. The company has also launched a restructuring plan that should make it more profitable.
In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s earnings per share rose 7.1%, to $0.45 from $0.42. That easily beat the consensus estimate of $0.38 a share.
Symantec’s restructuring plan mainly involves streamlining its product lines and marketing operations. The company will also pay a quarterly dividend starting in the quarter ending June 30, 2013. The annual rate, probably $0.52 a share, would yield 2.3% based on today’s price.
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In its fiscal 2013 third quarter, which ended December 28, 2012, Symantec’s earnings per share rose 7.1%, to $0.45 from $0.42. That easily beat the consensus estimate of $0.38 a share.
Symantec’s restructuring plan mainly involves streamlining its product lines and marketing operations. The company will also pay a quarterly dividend starting in the quarter ending June 30, 2013. The annual rate, probably $0.52 a share, would yield 2.3% based on today’s price.
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CALIAN TECHNOLOGIES $20.80 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.6 million; Market cap: $158.1 million; Dividend yield: 5.4%) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.
In the three months ended December 31, 2012, Calian’s revenue rose 1.9%, to $57.9 million from $56.8 million a year earlier. Earnings fell 5.3%, to $3.4 million, or $0.45 a share, from $3.6 million, or $0.47 a share.
The Business and Technology Services division continues to benefit from steady orders from various Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, which pushed down the division’s revenue by 1%. That hurt Calian’s profit margins, which lowered its earnings.
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In the three months ended December 31, 2012, Calian’s revenue rose 1.9%, to $57.9 million from $56.8 million a year earlier. Earnings fell 5.3%, to $3.4 million, or $0.45 a share, from $3.6 million, or $0.47 a share.
The Business and Technology Services division continues to benefit from steady orders from various Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, which pushed down the division’s revenue by 1%. That hurt Calian’s profit margins, which lowered its earnings.
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TIM HORTONS $49.70 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons- .com; Shares outstanding: 153.4 million; Market cap: $7.6 billion; Dividend yield: 1.7%) operates 3,365 coffee-and-donut shops in Canada, 755 in the U.S. and 18 in the Middle East.
The company’s new menu items, such as lattes and panini sandwiches, continue to sell well. In addition, Tim Hortons now offers free Wi-Fi Internet access at its Canadian outlets. That’s helping it compete with bigger fast-food chains like McDonald’s, which is aggressively promoting its coffee in Canada.
These factors pushed up Tim Hortons’ sales by 10.3% in the three months ended September 30, 2012, to $802.0 million from $726.9 million a year earlier. Same-store sales rose 2.3% at its U.S. outlets and 1.9% in Canada.
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The company’s new menu items, such as lattes and panini sandwiches, continue to sell well. In addition, Tim Hortons now offers free Wi-Fi Internet access at its Canadian outlets. That’s helping it compete with bigger fast-food chains like McDonald’s, which is aggressively promoting its coffee in Canada.
These factors pushed up Tim Hortons’ sales by 10.3% in the three months ended September 30, 2012, to $802.0 million from $726.9 million a year earlier. Same-store sales rose 2.3% at its U.S. outlets and 1.9% in Canada.
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CHESAPEAKE ENERGY $20.57 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 664.7 million; Market cap: $13.7 billion; Dividend yield: 1.7%) reports that its controversial co-founder, CEO and chairman, Aubrey K. McClendon, has agreed to retire.
McClendon is under investigation by the U.S. Securities and Exchange Commission for taking out $1.1 billion of loans from EIG Global Energy Partners that may have put him in a conflict of interest.
The potential for further conflicts of interest could have slowed the company’s restructuring and eroded investor confidence.
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McClendon is under investigation by the U.S. Securities and Exchange Commission for taking out $1.1 billion of loans from EIG Global Energy Partners that may have put him in a conflict of interest.
The potential for further conflicts of interest could have slowed the company’s restructuring and eroded investor confidence.
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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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