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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UNITED TECHNOLOGIES CORP. $83 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 916.5 million; Market cap: $76.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.utc.com) recently purchased Goodrich Corp., a North Carolina-based company that makes aircraft parts, including landing gear, wheels and brakes. United Technologies paid $18.4 billion, including $1.9 billion of assumed debt.
To win regulatory approval, United Technologies agreed to sell some of its smaller businesses. For example, it recently sold three subsidiaries in its aerospace division for a total of $3.5 billion.
United Technologies now expects overall revenue of between $64 billion and $65 billion in 2013, up 10% to 12% from $58 billion in 2012. Goodrich will supply about half of this growth. The rest will come from improving sales at its other businesses, including Pratt & Whitney jet engines and Otis elevators.
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To win regulatory approval, United Technologies agreed to sell some of its smaller businesses. For example, it recently sold three subsidiaries in its aerospace division for a total of $3.5 billion.
United Technologies now expects overall revenue of between $64 billion and $65 billion in 2013, up 10% to 12% from $58 billion in 2012. Goodrich will supply about half of this growth. The rest will come from improving sales at its other businesses, including Pratt & Whitney jet engines and Otis elevators.
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FEDEX CORP. $93 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 314.1 million; Market cap: $29.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.6%; TSI Network Rating: Average; www.fedex.com) reported that its earnings in the three months ended November 30, 2012 fell 11.9%, to $438 million, or $1.39 a share. That’s mainly because Hurricane Sandy forced the company to suspend parcel deliveries on the U.S. eastern seaboard. A year earlier, it earned $497 million, or $1.57 a share.
Revenue in the quarter rose 4.9%, to $11.1 billion from $10.6 billion. Strong demand for its lower-priced ground transportation services offset weaker demand for overnight deliveries.
FedEx continues to restructure its operations, mainly by cutting workers at its international air delivery division. It is also replacing older planes with more fuel-efficient models. These moves should save it $1.7 billion a year starting in 2014.
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Revenue in the quarter rose 4.9%, to $11.1 billion from $10.6 billion. Strong demand for its lower-priced ground transportation services offset weaker demand for overnight deliveries.
FedEx continues to restructure its operations, mainly by cutting workers at its international air delivery division. It is also replacing older planes with more fuel-efficient models. These moves should save it $1.7 billion a year starting in 2014.
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IBM $192.95, symbol IBM on New York, shows that we don’t beat the market every time! It only eked out a 0.5% gain as our #1 pick for 2012 in Wall Street Stock Forecaster at $192.
RioCan REIT $27.85, symbol REI.UN on Toronto, was our #1 pick for 2012 in Canadian Wealth Advisor at $25.79. The trust is up 8.0%, on top of its 5.4% yield.
Canadian Pacific $98.57, symbol CP on Toronto, was our 2012 #1 pick for The Successful Investor at $69. It’s up 42.9%.
Alimentation Couche-Tard $49.82, symbol ATD.B on Toronto, was our #1 pick for 2012 in Stock Pickers Digest at $30.55. Its shares are now up 63.1%.
BMTC GROUP $13.70 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 47.5 million; Market cap: $650.8 million; Dividend yield: 1.8%) is one of Quebec’s largest retailers of furniture, electronics and household appliances. It sells these products through its two affiliates: Brault & Martineau Inc. and Ameublements Tanguay. In July 2012, BMTC opened a new store in Levis to replace the old one. The company is also building a warehouse-style outlet in Saint-Hubert that will offer lower-priced products and operate under BMTC’s new EconoMax banner. In the three months ended September 30, 2012, the company’s sales fell slightly, to $195.6 million from $196.7 million a year earlier. Earnings per share rose 2.6%, to $0.39 from $0.38....
AEROPOSTALE INC. $13.20 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 81.3 million; Market cap: $1.1 billion; No dividends paid) is a mall-based retailer of casual clothing and accessories. It now has 994 stores in the U.S., Canada and Puerto Rico, and mainly targets 14- to 17-year-old women and men. Aeropostale’s 99 P.S. from Aeropostale stores in the U.S. are aimed at seven- to 12-year-old elementary-school children. In the three months ended October 27, 2012, Aeropostale’s sales rose 1.6%, to $605.9 million from $596.5 million a year earlier. Same-store sales fell 2%, compared with a 9% decline a year ago. Sales from the company’s e-commerce business increased 12%, to $51.1 million from $45.7 million. Aeropostale’s earnings rose 3.5%, to $24.9 million from $24.1 million a year earlier. Earnings per share rose 3.3%, to $0.31 from $0.30, on fewer shares outstanding. The latest earnings also beat the consensus estimate of $0.29 a share....
MCCOY CORP. $4.35 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.6 million; Market cap: $115.7 million; Dividend yield: 4.6%) operates through two divisions: Mobile Solutions and Energy Products and Services. Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large, wrench-like tools that tighten and loosen the pipe in the drill hole. Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries....
WAJAX CORP. $39.60 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $661.3 million; Dividend yield: 8.2%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). Wajax operates through 118 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the quarter ended September 30, 2012, Wajax’s revenue fell 1.5%, to $356.4 million from $361.9 million a year earlier. Earnings fell 9.4%, to $16.2 million, or $0.97 a share, from $17.9 million, or $1.08 a share....