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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TEMPUR-PEDIC $33.39 (New York symbol TPX; TSINetwork Rating: Speculative) (800- 878-8889; www.tempurpedic.com; Shares outstanding: 59.5 million; Market cap: $2.0 billion; No dividends paid) plans to buy rival Sealy Corp. (symbol ZZ on New York) for $1.3 billion.
Sealy, which was founded in 1881, makes a wide range of spring-coil beds under the Sealy, Sealy Posturepedic, Sealy Embody, Stearns & Foster and Bassett brands.
The purchase lets Tempur-Pedic diversify into the market for traditional spring-coil beds. Right now, the company manufactures and distributes therapeutic mattresses and pillows made from its Tempur material. But that’s become a more competitive market because other mattress makers have introduced many new products and supported them with aggressive promotions.
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Sealy, which was founded in 1881, makes a wide range of spring-coil beds under the Sealy, Sealy Posturepedic, Sealy Embody, Stearns & Foster and Bassett brands.
The purchase lets Tempur-Pedic diversify into the market for traditional spring-coil beds. Right now, the company manufactures and distributes therapeutic mattresses and pillows made from its Tempur material. But that’s become a more competitive market because other mattress makers have introduced many new products and supported them with aggressive promotions.
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AMAZON.COM $247.49 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 452.1 million; Market cap: $111.9 billion; No dividends paid) is now launching a new service, called Amazon Lending, which will offer loans to its online sellers.
This new service adds credit risk—the company will make loans of up to $800,000 to selected merchants—but the move should boost Amazon’s sales. That’s because the additional cash will let merchants stock more inventory to sell through the company’s websites, especially heading into the holiday season.
Amazon.com is still a hold.
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This new service adds credit risk—the company will make loans of up to $800,000 to selected merchants—but the move should boost Amazon’s sales. That’s because the additional cash will let merchants stock more inventory to sell through the company’s websites, especially heading into the holiday season.
Amazon.com is still a hold.
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NISSAN MOTOR CO. (ADR) $17.11 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $39.4 billion; No dividends paid) has won a big contract with New York City’s Taxi and Limousine Commission to replace over 13,000 of the city’s taxi cabs that are nearing the end of their useful lives. Nissan beat out Ford (symbol F on New York) for the contract.
The vote went 5 to 2 for Nissan to supply its NV200 “Taxi of Tomorrow” sedan. The commission will put the new fleet into service beginning in October 2013. The cars will last for over a decade.
Powered by a 2.0-litre four-cylinder engine, the NV200s have much lower carbon emissions and better fuel efficiency than the cars they are replacing.
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The vote went 5 to 2 for Nissan to supply its NV200 “Taxi of Tomorrow” sedan. The commission will put the new fleet into service beginning in October 2013. The cars will last for over a decade.
Powered by a 2.0-litre four-cylinder engine, the NV200s have much lower carbon emissions and better fuel efficiency than the cars they are replacing.
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RUBY TUESDAY, INC. $7.65 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 64.0 million; Market cap: $489.6 million; No dividends paid) reports that its sales rose 0.8% in the three months ended September 4, 2012, to $332.9 million from $330.3 million a year earlier. Sales rose even though the company closed 27 less profitable restaurants. Same-restaurant sales rose 1.9%.
Excluding one-time items, the company earned $0.05 a share in the latest quarter, unchanged from a year earlier. That matched the consensus estimate.
Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood estaurants and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now building new restaurants under these banners and converting underperforming outlets.
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Excluding one-time items, the company earned $0.05 a share in the latest quarter, unchanged from a year earlier. That matched the consensus estimate.
Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood estaurants and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now building new restaurants under these banners and converting underperforming outlets.
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IAMGOLD $15.89 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464- 9999; www.iamgold.com; Shares outstanding: 376.1 million; Market cap: $6.0 billion; Dividend yield: 1.6%) owns interests in five mines, but also a number of promising exploration and development properties.
Among its holdings is the Cote Lake gold project, located between Timmins and Sudbury. IAMGold acquired Cote Lake earlier this year, when it bought Trelawney Mining and Exploration for $608 million.
Cote Lake held an estimated 6.9 million ounces of gold when IAMGold bought Trelawney. But IAMGold has just released drilling results that have further defined the deposit, and the estimate has now grown by 18.8%, to 8.2 million ounces. There’s also lots of room for more drilling to further expand the project’s reserves.
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Among its holdings is the Cote Lake gold project, located between Timmins and Sudbury. IAMGold acquired Cote Lake earlier this year, when it bought Trelawney Mining and Exploration for $608 million.
Cote Lake held an estimated 6.9 million ounces of gold when IAMGold bought Trelawney. But IAMGold has just released drilling results that have further defined the deposit, and the estimate has now grown by 18.8%, to 8.2 million ounces. There’s also lots of room for more drilling to further expand the project’s reserves.
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YAMANA GOLD $19.30 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.- yamana.com; Shares outstanding: 751.3 million; Market cap: $14.5 billion; Dividend yield: 1.3%) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has a number of other properties in advanced stages of development.
In the quarter ended June 30, 2012, Yamana’s revenue fell 6.6%, to $535.7 million from $573.3 million a year earlier (all figures except share price and market cap in U.S. dollars). Gold production and prices rose, but prices for copper and silver, which are both significant byproducts of Yamana’s gold mining, dropped. Cash flow per share fell 27.3%, to $0.32 from $0.44.
Yamana held a high cash balance of $698.9 million, or $0.93 a share, on June 30. Its $765.5 million of debt is just 5.5% of its market cap. The shares yield 1.3%.
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In the quarter ended June 30, 2012, Yamana’s revenue fell 6.6%, to $535.7 million from $573.3 million a year earlier (all figures except share price and market cap in U.S. dollars). Gold production and prices rose, but prices for copper and silver, which are both significant byproducts of Yamana’s gold mining, dropped. Cash flow per share fell 27.3%, to $0.32 from $0.44.
Yamana held a high cash balance of $698.9 million, or $0.93 a share, on June 30. Its $765.5 million of debt is just 5.5% of its market cap. The shares yield 1.3%.
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NEW GOLD $11.84 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 462.0 million; Market cap: $5.5 billion; No dividends paid) has four operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico, the Peak mine in Australia and the just-completed New Afton mine in B.C. It also owns 30% of the El Morro copper/gold project in Chile (Goldcorp Inc. owns the other 70%).
El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Gold also owns the Blackwater property in central B.C., which could hold as much as 7.8 million ounces of gold.
The company reported cash flow of $0.12 per share in the three months ended June 30, 2012, up 20.0% from $0.10 a share a year earlier.
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El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Gold also owns the Blackwater property in central B.C., which could hold as much as 7.8 million ounces of gold.
The company reported cash flow of $0.12 per share in the three months ended June 30, 2012, up 20.0% from $0.10 a share a year earlier.
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DOREL INDUSTRIES $35.39 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.9 million; Market cap: $1.1 billion; Dividend yield: 3.4%) has bought majority interests in two distributors of infant and children’s products in Colombia and Central America.
Dorel is buying 70% of Best Brands Group SA in Panama and Baby Universe SAS in Colombia. Best Brands and Baby Universe had combined sales of $14 million last year.
This purchase fits nicely with Dorel’s plan to focus on international expansion. The company will now use Best Brands and Baby Universe to sell more of its products throughout South America.
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Dorel is buying 70% of Best Brands Group SA in Panama and Baby Universe SAS in Colombia. Best Brands and Baby Universe had combined sales of $14 million last year.
This purchase fits nicely with Dorel’s plan to focus on international expansion. The company will now use Best Brands and Baby Universe to sell more of its products throughout South America.
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TIM HORTONS $50.75 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons- .com; Shares outstanding: 154.9 million; Market cap: $7.9 billion; Dividend yield: 1.7%) operates 3,326 coffee-and-donut shops in Canada, 734 in the U.S. and 11 in the Middle East.
The company earned $0.70 a share in the three months ended July 1, 2012. That’s up 20.7% from $0.58 a share a year earlier. Sales rose 11.8%, to $785.6 million from $702.8 million. Tim Hortons opened 19 outlets in Canada, six in the U.S. and seven internationally during the quarter. Same-store sales (which exclude new outlets) rose 4.9% in the U.S. and 1.8% in Canada.
The company held its prices steady, but it benefited from new products, such as espresso drinks, and new hot drink sizes, including a 24-ounce cup. Tim Hortons’ breakfast business was especially strong in the latest quarter.
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The company earned $0.70 a share in the three months ended July 1, 2012. That’s up 20.7% from $0.58 a share a year earlier. Sales rose 11.8%, to $785.6 million from $702.8 million. Tim Hortons opened 19 outlets in Canada, six in the U.S. and seven internationally during the quarter. Same-store sales (which exclude new outlets) rose 4.9% in the U.S. and 1.8% in Canada.
The company held its prices steady, but it benefited from new products, such as espresso drinks, and new hot drink sizes, including a 24-ounce cup. Tim Hortons’ breakfast business was especially strong in the latest quarter.
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CALIAN TECHNOLOGIES $20.50 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.7 million; Market cap: $157.9 million; Dividend yield: 5.5%) 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 June 30, 2012, Calian’s revenue rose 1.4%, to $59.3 million from $58.5 million a year earlier. Earnings rose slightly, to $3.48 million, or $0.45 a share, from $3.45 million, or $0.45 a share.
Earlier this year, Calian bought Primacy Management Inc. of Burlington, Ontario, for $5.2 million. Since 2003, Primacy has been designing, building and managing in-store health clinics for Loblaw Companies (symbol L on Toronto). Primacy now operates 112 such clinics in Loblaw’s stores across Canada.
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In the three months ended June 30, 2012, Calian’s revenue rose 1.4%, to $59.3 million from $58.5 million a year earlier. Earnings rose slightly, to $3.48 million, or $0.45 a share, from $3.45 million, or $0.45 a share.
Earlier this year, Calian bought Primacy Management Inc. of Burlington, Ontario, for $5.2 million. Since 2003, Primacy has been designing, building and managing in-store health clinics for Loblaw Companies (symbol L on Toronto). Primacy now operates 112 such clinics in Loblaw’s stores across Canada.
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