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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HEWLETT-PACKARD CO. $12 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.0 billion; Market cap: $24.0 billion; Price-to-sales ratio: 0.2; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.hp.com) paid $11.1 billion in August 2011 for U.K.-based Autonomy Corp., which makes software that helps businesses organize information in a variety of formats, including email, web pages and documents.
The company now claims that improper accounting policies made Autonomy look more profitable that it really was. As a result, it wrote down the value of this purchase by $8.8 billion. Hewlett will try to recover some of these losses through lawsuits.
However, that could take years. As well, sales of the company’s computers and printers continue to decline as consumers shift to tablet computers.
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The company now claims that improper accounting policies made Autonomy look more profitable that it really was. As a result, it wrote down the value of this purchase by $8.8 billion. Hewlett will try to recover some of these losses through lawsuits.
However, that could take years. As well, sales of the company’s computers and printers continue to decline as consumers shift to tablet computers.
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EBAY INC. $49 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $63.7 billion; Price-to-sales ratio: 4.6; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) aims to profit from rising demand for online shopping in China through a new alliance with Xiu.com, a leading Chinese seller of luxury goods.
Under the deal, the partners will launch a new website, ebay.xiu.com, which will let certain U.S. retailers sell their goods at fixed prices. The sellers will then send the orders they receive from the site to eBay’s Dallas warehouse, which will forward the goods to China. Xiu.com will handle local shipping and customer service.
eBay is a buy.
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Under the deal, the partners will launch a new website, ebay.xiu.com, which will let certain U.S. retailers sell their goods at fixed prices. The sellers will then send the orders they receive from the site to eBay’s Dallas warehouse, which will forward the goods to China. Xiu.com will handle local shipping and customer service.
eBay is a buy.
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FORD MOTOR CO. $11 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.7 billion; Market cap: $40.7 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.8%; TSINetwork Rating: Extra Risk; www.ford.com) is the secondlargest carmaker in the U.S. behind General Motors. In the latest quarter, Ford accounted for14.8% of the U.S. market, down from 16.3% a year earlier.
The company continues to see strong sales and earnings in North America (50% of sales) and Asia (19%). That’s offsetting weaker results in Europe (23%) and South America (8%).
In the three months ended September 30, 2012, Ford’s earnings rose 15.6%, to $1.6 billion from $1.4 billion a year earlier. Earnings per share rose 17.6%, to $0.40 from $0.34, on fewer shares outstanding.
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The company continues to see strong sales and earnings in North America (50% of sales) and Asia (19%). That’s offsetting weaker results in Europe (23%) and South America (8%).
In the three months ended September 30, 2012, Ford’s earnings rose 15.6%, to $1.6 billion from $1.4 billion a year earlier. Earnings per share rose 17.6%, to $0.40 from $0.34, on fewer shares outstanding.
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HONDA MOTOR CO. LTD. ADRs $33 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $59.4 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s secondlargest carmaker and the world’s biggest motorcycle manufacturer.
Like Toyota (see left), Honda’s sales are continuing to recover from the 2011 earthquake and tsunami. In its fiscal 2013 second quarter, which ended September 30, 2012, Honda sold 996,000 cars and trucks. That’s up 46.9% from 678,000 a year earlier. Motorcycle sales increased 1.8%, to 3.9 million from 3.8 million.
As a result, the company’s overall sales rose 19.0%, to $29.3 billion from $24.6 billion a year earlier. Earnings jumped 35.4%, to $1.1 billion, or $0.59 per ADR (each American Depositary Receipt represents one Honda common share). A year earlier, Honda earned $788 million, or $0.44 per ADR.
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Like Toyota (see left), Honda’s sales are continuing to recover from the 2011 earthquake and tsunami. In its fiscal 2013 second quarter, which ended September 30, 2012, Honda sold 996,000 cars and trucks. That’s up 46.9% from 678,000 a year earlier. Motorcycle sales increased 1.8%, to 3.9 million from 3.8 million.
As a result, the company’s overall sales rose 19.0%, to $29.3 billion from $24.6 billion a year earlier. Earnings jumped 35.4%, to $1.1 billion, or $0.59 per ADR (each American Depositary Receipt represents one Honda common share). A year earlier, Honda earned $788 million, or $0.44 per ADR.
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TOYOTA MOTOR CO. ADRs $84 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $142.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s largest carmaker based on sales. Japan is the company’s largest market, accounting for 28% of its revenue, followed by North America (26%), Asia (19%), Europe (9%) and the rest of the world (18%).
Toyota continues to recover from the March 2011 earthquake and tsunami, which cut its production in Japan. In its fiscal 2013 second quarter, which ended September 30, 2012, Toyota sold 2.25 million vehicles, up 24.5% from 1.8 million a year earlier.
The higher car sales pushed up Toyota’s revenue by 32.7%, to $55.2 billion from $41.6 billion a year earlier. Earnings soared 255.7%, to $2.6 billion, or $1.66 per ADR (Each American Depositary Receipt represents two Toyota common shares). A year earlier, it earned $730.9 million, or $0.47 per ADR.
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Toyota continues to recover from the March 2011 earthquake and tsunami, which cut its production in Japan. In its fiscal 2013 second quarter, which ended September 30, 2012, Toyota sold 2.25 million vehicles, up 24.5% from 1.8 million a year earlier.
The higher car sales pushed up Toyota’s revenue by 32.7%, to $55.2 billion from $41.6 billion a year earlier. Earnings soared 255.7%, to $2.6 billion, or $1.66 per ADR (Each American Depositary Receipt represents two Toyota common shares). A year earlier, it earned $730.9 million, or $0.47 per ADR.
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DUN & BRADSTREET CORP. $76 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 44.6 million; Market cap: $3.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; www.dnb.com) shot up to around $84 in August 2012 on speculation that the company may sell itself. However, reports that it has stopped looking for a buyer caused the stock to fall to its current price.
Meanwhile, the slow economy is hurting demand for Dun & Bradstreet’s credit reports. In the third quarter of 2012, its revenue fell 6.0%, to $413.2 million from $439.4 million a year earlier. However, savings from a cost-cutting plan pushed up its earnings by 13.4%, to $79.4 million from $70.0 million. Due to fewer shares outstanding, earnings per share rose 23.9%, to $1.76 from $1.42.
Dun & Bradstreet is still a hold.
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Meanwhile, the slow economy is hurting demand for Dun & Bradstreet’s credit reports. In the third quarter of 2012, its revenue fell 6.0%, to $413.2 million from $439.4 million a year earlier. However, savings from a cost-cutting plan pushed up its earnings by 13.4%, to $79.4 million from $70.0 million. Due to fewer shares outstanding, earnings per share rose 23.9%, to $1.76 from $1.42.
Dun & Bradstreet is still a hold.
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D.E. MASTER BLENDERS 1753 N.V. 8.88 euros (Amsterdam Exchange symbol DE; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 594.9 million; Market cap: 5.3 billion euros (1 euro = $1.28 Canadian); Price-to-sales ratio:1.9; No dividends paid; TSINetwork Rating: Average; www.demasterblenders1753.com) makes coffee and tea under a variety of brands, including Senseo, Pickwick and Douwe Egberts.
In its fiscal 2013 first quarter, which ended September 30, 2012, D.E. Master’s sales rose 1.1%, to 626 million euros from 619 million euros a year earlier. D.E. Master raised its prices to offset rising costs for coffee beans. That offset a 2.7% decline in sales volumes. The company did not report earnings.
D.E. Master recently began a restructuring that includes closing a plant in Denmark and outsourcing its accounting and other administrative functions. This should cut 55 million to 75 million euros from its annual costs by 2015.
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In its fiscal 2013 first quarter, which ended September 30, 2012, D.E. Master’s sales rose 1.1%, to 626 million euros from 619 million euros a year earlier. D.E. Master raised its prices to offset rising costs for coffee beans. That offset a 2.7% decline in sales volumes. The company did not report earnings.
D.E. Master recently began a restructuring that includes closing a plant in Denmark and outsourcing its accounting and other administrative functions. This should cut 55 million to 75 million euros from its annual costs by 2015.
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HILLSHIRE BRANDS CO. $27 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.3 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Its other foods include Sara Lee frozen desserts and Chef Pierre pies.
If you disregard costs related to the breakup and other unusual items, Hillshire would have earned $62 million in its fiscal 2013 first quarter, which ended September 29, 2012. That’s up 65.9% from $38 million a year earlier. Earnings per share rose 59.4%, to $0.51 from $0.32, on more shares outstanding. Sales rose 2.0%, to $1.0 billion from $991 million.
The higher earnings are partly due to savings from plant closures and job cuts. These moves should lower its annual costs by $100 million by the end of fiscal 2015.
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If you disregard costs related to the breakup and other unusual items, Hillshire would have earned $62 million in its fiscal 2013 first quarter, which ended September 29, 2012. That’s up 65.9% from $38 million a year earlier. Earnings per share rose 59.4%, to $0.51 from $0.32, on more shares outstanding. Sales rose 2.0%, to $1.0 billion from $991 million.
The higher earnings are partly due to savings from plant closures and job cuts. These moves should lower its annual costs by $100 million by the end of fiscal 2015.
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NVIDIA CORP. $12 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 624.9 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.5%; TSINetwork Rating: Average; www.nvidia .com) is down 20% in the past year. That’s mainly because slowing sales of traditional computers are hurting demand for its graphic chips, which make computer video run more smoothly and appear more lifelike.
Nvidia continues to invest a high 24% of its revenue in research. That’s helping it expand into new areas, particularly chips for mobile devices. Its new Tegra chips now power Google and Microsoft’s new tablet computers.
As the world’s leading make of video chips, Nvidia will also benefit from several long-term trends. These include new video games with faster, more realistic characters and action. Device makers are also upgrading their smartphones and tablets with higher quality displays.
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Nvidia continues to invest a high 24% of its revenue in research. That’s helping it expand into new areas, particularly chips for mobile devices. Its new Tegra chips now power Google and Microsoft’s new tablet computers.
As the world’s leading make of video chips, Nvidia will also benefit from several long-term trends. These include new video games with faster, more realistic characters and action. Device makers are also upgrading their smartphones and tablets with higher quality displays.
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MONDELEZ INTERNATIONAL INC. $25 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.8 billion; Market cap: $45.0 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.mondelezinternational.com) is one the world’s largest snack food makers. The company’s name means “delicious world” in Latin.
Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident Chiclets, Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for markets outside North America. Cookies and biscuits account for 30% of Mondelez’s sales, followed by chocolate (27%), beverages (17%), gum and candy (16%) and grocery products (10%). It gets 44% of its sales from developing markets, 37% from Europe and 19% from North America.
Mondelez is now restructuring its operations, including shutting down less-profitable plants and sales offices. Severance and other costs will total $925 million. The company also expects to pay $150 million in expenses related to the breakup from Kraft.
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Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident Chiclets, Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for markets outside North America. Cookies and biscuits account for 30% of Mondelez’s sales, followed by chocolate (27%), beverages (17%), gum and candy (16%) and grocery products (10%). It gets 44% of its sales from developing markets, 37% from Europe and 19% from North America.
Mondelez is now restructuring its operations, including shutting down less-profitable plants and sales offices. Severance and other costs will total $925 million. The company also expects to pay $150 million in expenses related to the breakup from Kraft.
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