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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YAMANA GOLD $17.14 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416- 815-0220; www.yamana.com; Shares outstanding: 752.0 million; Market cap: $12.9 billion; Dividend yield: 1.5%) saw its production rise 9% in 2012, to a record 1.2 million gold-equivalent ounces (including silver and copper) from 2011.
The company now forecasts production of 1.44 million to 1.6 million ounces in 2013, up 20% from 2012. Most of the increase will come from the expansion of its Minera Florida mine and production from three new Brazilian projects: Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar.
As the company starts up more mines, its output will keep increasing: in 2014, its production should rise about 33% from 2012, to between 1.6 million and 1.77 million ounces.
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The company now forecasts production of 1.44 million to 1.6 million ounces in 2013, up 20% from 2012. Most of the increase will come from the expansion of its Minera Florida mine and production from three new Brazilian projects: Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar.
As the company starts up more mines, its output will keep increasing: in 2014, its production should rise about 33% from 2012, to between 1.6 million and 1.77 million ounces.
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GABRIEL RESOURCES $2.82 (Toronto symbol GBU; TSINetwork Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 380.1 million; Market cap: $91.1 billion; No dividends paid) aims to develop its 80.46%-owned Rosia Montana gold project in Romania. With an estimated 10 million ounces of gold reserves and 500,000 ounces of projected annual output, Rosia Montana could become Europe’s largest producing gold mine.
However, the proposed mine is near the site of ancient Roman mining tunnels. That has triggered protests from environmentalists, historians and other civic groups.
Gabriel recently won a vote related to its bid to build the mine. A regional referendum on the issue was held on December 9, 2012. Of the voters who participated, 62.45% supported the resolution to permit mining. In the community of Rosia Montana itself, support was even higher, at over 78% in favour.
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However, the proposed mine is near the site of ancient Roman mining tunnels. That has triggered protests from environmentalists, historians and other civic groups.
Gabriel recently won a vote related to its bid to build the mine. A regional referendum on the issue was held on December 9, 2012. Of the voters who participated, 62.45% supported the resolution to permit mining. In the community of Rosia Montana itself, support was even higher, at over 78% in favour.
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ENDEAVOUR SILVER $7.86 (Toronto symbol EDR: TSINetwork Rating: Speculative) (1-877-685-9775; www.edrsilver.com; Shares outstanding: 99.5 million; Market cap: $782.1 million; No dividends paid) operates the Guanacevi and Bolanitos silver/gold mines in Mexico, as well as the recently acquired El Cubo project.
In the three months ended December 31, 2012, Endeavour’s revenue jumped 281% from a year earlier, to $66.7 million (all amounts except share prices in U.S. dollars). The company hasn’t yet released its earnings or cash flow for the latest quarter.
The revenue gain was partly due to higher production and an increase in silver and gold prices. The company also held back on selling silver and gold a year ago in response to lower prices at that time.
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In the three months ended December 31, 2012, Endeavour’s revenue jumped 281% from a year earlier, to $66.7 million (all amounts except share prices in U.S. dollars). The company hasn’t yet released its earnings or cash flow for the latest quarter.
The revenue gain was partly due to higher production and an increase in silver and gold prices. The company also held back on selling silver and gold a year ago in response to lower prices at that time.
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THE CHURCHILL CORP. $8.95 (Toronto symbol CUQ; TSINetwork Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.5 million; Market cap: $219.3 million; Dividend yield: 5.4%) reported earnings of $1.8 million, or $0.07 a share, in the three months ended September 30, 2012. That was down sharply from $6.1 million, or $0.24 a share, a year earlier. Revenue fell 20.0%, to $303.2 million from $379.3 million.
Project delays were part of the reason for the declines. Churchill’s earnings also fell because of less-profitable contracts that should be completed by the end of this year.
Even with these setbacks, the company’s long-term prospects are sound. The stock trades at 17.2 times Churchill’s forecast 2013 earnings of $0.52 a share. Its dividend, which yields a high 5.4%, appears safe.
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Project delays were part of the reason for the declines. Churchill’s earnings also fell because of less-profitable contracts that should be completed by the end of this year.
Even with these setbacks, the company’s long-term prospects are sound. The stock trades at 17.2 times Churchill’s forecast 2013 earnings of $0.52 a share. Its dividend, which yields a high 5.4%, appears safe.
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GOODYEAR TIRE & RUBBER CO. $13.85 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 245.0 million; Market cap: $3.4 billion; No dividends paid) is the world’s largest tire maker, with 53 plants in 22 countries.
In the three months ended September 30, 2012, the weak global economy pushed down the company’s sales by 13.2%, to $5.26 billion from $6.06 billion a year earlier.
North American sales fell 6.0%, to $2.40 billion from $2.56 billion. Sales also declined by 20.1% in Latin America; 21.5% in Europe, the Middle East and Africa; and 5.7% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s revenue.
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In the three months ended September 30, 2012, the weak global economy pushed down the company’s sales by 13.2%, to $5.26 billion from $6.06 billion a year earlier.
North American sales fell 6.0%, to $2.40 billion from $2.56 billion. Sales also declined by 20.1% in Latin America; 21.5% in Europe, the Middle East and Africa; and 5.7% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s revenue.
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RUSSEL METALS $29.20 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.2 million; Market cap: $1.8 billion; Dividend yield: 4.8%) is one of North America’s largest metal distributors. The company serves its roughly 33,000 customers through 51 locations in Canada and 12 in the U.S.
In the three months ended September 30, 2012, Russel’s revenue rose 1.0%, to $712.6 million from $705.4 million a year earlier. Revenue at its steel distribution division fell 12%, and sales at the metal services business declined 2%. That’s because the slower economy pushed down steel demand. However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 12% on higher drilling activity.
Earnings fell 12.5%, to $22.5 million, or $0.37 a share. A year earlier, Russel earned $25.7 million, or $0.43 a share. The company’s earnings fell even with the higher revenue because steel prices declined in the latest quarter. That cuts Russel’s profit margins and causes it to suffer losses on its current inventory.
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In the three months ended September 30, 2012, Russel’s revenue rose 1.0%, to $712.6 million from $705.4 million a year earlier. Revenue at its steel distribution division fell 12%, and sales at the metal services business declined 2%. That’s because the slower economy pushed down steel demand. However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 12% on higher drilling activity.
Earnings fell 12.5%, to $22.5 million, or $0.37 a share. A year earlier, Russel earned $25.7 million, or $0.43 a share. The company’s earnings fell even with the higher revenue because steel prices declined in the latest quarter. That cuts Russel’s profit margins and causes it to suffer losses on its current inventory.
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ADOBE SYSTEMS $37.88 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536- 6000; www.adobe.com; Shares outstanding: 495.1 million; Market cap: $18.8 billion; No dividends paid) reports that in the fourth quarter of its 2012 fiscal year, which ended November 30, 2012, its earnings fell 7.4%, to $307.9 million from $332.6 million a year earlier.
Before one-time items, earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding. Revenue was flat at $1.15 billion.
Adobe is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription service instead of a one-time purchase.
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Before one-time items, earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding. Revenue was flat at $1.15 billion.
Adobe is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription service instead of a one-time purchase.
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INTACT FINANCIAL CORP. $65.21 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 133.3 million; Market cap: $8.7 billion; Dividend yield: 2.5%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended September 30, 2012, Intact’s revenue rose 43.4%, to $1.66 billion from $1.16 billion a year earlier. That was mainly due to the contribution from AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion in late 2011.
AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada.
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In the three months ended September 30, 2012, Intact’s revenue rose 43.4%, to $1.66 billion from $1.16 billion a year earlier. That was mainly due to the contribution from AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion in late 2011.
AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada.
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BROADRIDGE FINANCIAL SOLUTIONS $22.97 (New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 122.2 million; Market cap: $2.8 billion; Dividend yield: 3.1%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. The company processes 85% of all proxy votes in the U.S.
Before one-time items, Broadridge’s earnings fell 2.2% in its fiscal first quarter ended September 30, 2012, to $22.3 million from $22.8 million a year earlier. Earnings per share were unchanged at $0.18 on fewer shares outstanding.
Sales rose 4.1%, to $495.8 million from $476.4 million. Broadridge continues to do a good job of attracting new clients and holding on to existing ones.
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Before one-time items, Broadridge’s earnings fell 2.2% in its fiscal first quarter ended September 30, 2012, to $22.3 million from $22.8 million a year earlier. Earnings per share were unchanged at $0.18 on fewer shares outstanding.
Sales rose 4.1%, to $495.8 million from $476.4 million. Broadridge continues to do a good job of attracting new clients and holding on to existing ones.
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LEON’S FURNITURE LTD. $13.40 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.5 million; Market cap: $944.7 million; Dividend yield: 3.0%) has received approval from shareholders of The Brick (symbol BRK on Toronto) for its $700-million takeover of that company.
The Brick operates 230 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.
Growth by acquisition can be risky, especially with a deal this big. But The Brick looks like a good fit with Leon’s.
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The Brick operates 230 stores across Canada, while Leon’s has 76 outlets in every province except B.C. Leon’s and The Brick will continue to operate as separate chains.
Growth by acquisition can be risky, especially with a deal this big. But The Brick looks like a good fit with Leon’s.
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