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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H.J. HEINZ CO. $56 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 320.2 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.heinz.com) makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and baby food. Its flagship product, Heinz ketchup, accounts for about 60% of U.S. ketchup sales.
The company continues to target fast-growing markets like China, Russia and Brazil for new growth. For example, in April 2011 it bought 80% of Brazil’s leading maker of tomato pastes, sauces and condiments for $493.5 million.
Even with these new operations, Heinz’s sales fell 1.5% in its fiscal 2013 first quarter, which ended July 29, 2012, to $2.79 billion from $2.83 billion a year earlier. However, the company gets 60% of its revenue from outside North America, and the higher U.S. dollar is hurting the value of its overseas sales.
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The company continues to target fast-growing markets like China, Russia and Brazil for new growth. For example, in April 2011 it bought 80% of Brazil’s leading maker of tomato pastes, sauces and condiments for $493.5 million.
Even with these new operations, Heinz’s sales fell 1.5% in its fiscal 2013 first quarter, which ended July 29, 2012, to $2.79 billion from $2.83 billion a year earlier. However, the company gets 60% of its revenue from outside North America, and the higher U.S. dollar is hurting the value of its overseas sales.
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GENERAL MILLS INC. $40 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 645.2 million; Market cap: $25.8 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.generalmills.com) is one of the world’s largest food makers. Its top brands include Big G (cereal), Green Giant (canned and frozen vegetables), Pillsbury (baking dough), Old El Paso (tacos) and Progresso (soups and sauces).
In General Mills’ fiscal 2013 first quarter, which ended August 26, 2012, its sales rose 5.3%, to $4.05 billion from $3.8 billion a year earlier. Most of this gain is due to the company’s July 2011 purchase of a 51% stake in the private company that makes Yoplait yogurt; General Mills has made Yoplait products under license in the U.S. since 1977. The company also recently paid $940 million for a privately held maker of snacks and convenience meals in Brazil.
The extra sales from these new businesses helped offset the negative impact of foreign exchange rates; overseas markets supplied 27% of its total sales. As well, General Mills lowered some of its prices to compete with low-cost generic brands.
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In General Mills’ fiscal 2013 first quarter, which ended August 26, 2012, its sales rose 5.3%, to $4.05 billion from $3.8 billion a year earlier. Most of this gain is due to the company’s July 2011 purchase of a 51% stake in the private company that makes Yoplait yogurt; General Mills has made Yoplait products under license in the U.S. since 1977. The company also recently paid $940 million for a privately held maker of snacks and convenience meals in Brazil.
The extra sales from these new businesses helped offset the negative impact of foreign exchange rates; overseas markets supplied 27% of its total sales. As well, General Mills lowered some of its prices to compete with low-cost generic brands.
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GOOGLE INC. $753 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 327.0 million; Market cap: $243.3 billion; Priceto- sales ratio: 5.7; No dividends paid; TSINetwork Rating: Above Average; www.google.com) rose to a new all-time high of $764.89 on September 25, 2012. The stock is now up 17% since the start of the year.
The company’s main Internet search business continues to grow strongly, particularly among mobile users. Google’s Android software now powers around two-thirds of the world’s smartphones. That’s driving more traffic to its websites and letting it charge higher advertising rates.
Google is also benefiting from problems with the new street-mapping application, or app, on Apple’s (Nasdaq symbol AAPL) new iPhone 5. Apple recently replaced the popular Google Maps app with its own version. However, errors with this new app may prompt Apple to switch back.
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The company’s main Internet search business continues to grow strongly, particularly among mobile users. Google’s Android software now powers around two-thirds of the world’s smartphones. That’s driving more traffic to its websites and letting it charge higher advertising rates.
Google is also benefiting from problems with the new street-mapping application, or app, on Apple’s (Nasdaq symbol AAPL) new iPhone 5. Apple recently replaced the popular Google Maps app with its own version. However, errors with this new app may prompt Apple to switch back.
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WYNDHAM WORLDWIDE $53.52 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 142.2 million; Market cap: $7.6 billion; Dividend yield: 1.7%) is one of the world’s largest hospitality companies, with 7,170 franchised hotels worldwide. Aside from Wyndham and Ramada, it owns a variety of other brands, including Days Inn, Super 8, Wingate, Baymont Inn & Suites, Microtel Inns & Suites, Hawthorn Suites, Howard Johnson, Travelodge and AmeriHost Inn.
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. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels.
Vacation travel remains strong
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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. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels.
Vacation travel remains strong
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ATLANTIC TELE-NETWORK $42.74 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million;Market cap: $666.7 million; Yield: 2.3%) sells telecommunications services, mainly in rural areas in the U.S., Bermuda
and the Caribbean region.
In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12.
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and the Caribbean region.
In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12.
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DOMINO’S PIZZA $34.44 (New York symbol DPZ; TSINetwork Rating: Average) (734-930- 3030; www.dominos.com; Shares outstanding: 56.7 million; Market cap: $2.0 billion; No dividends paid) now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings. The company still has considerable room to grow internationally.
For example, Jubilant Foodworks just opened the 500th Domino’s outlet in India. This company, which has the exclusive rights to operate Domino’s restaurants in that country, aims to continue its aggressive expansion by opening 100 new restaurants over the next year.
Jubilant also has franchise rights for Domino’s in Bangladesh, Nepal and Sri Lanka.
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For example, Jubilant Foodworks just opened the 500th Domino’s outlet in India. This company, which has the exclusive rights to operate Domino’s restaurants in that country, aims to continue its aggressive expansion by opening 100 new restaurants over the next year.
Jubilant also has franchise rights for Domino’s in Bangladesh, Nepal and Sri Lanka.
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HECLA MINING COMPANY $6.61 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769-4100; www.hecla-mining.com; Shares outstanding: 285.5 million; Market cap: $1.9 billion) has agreed to pay $3.2 million for a 19.9% stake in Dolly Varden Silver Corp., symbol DV on Toronto. Dolly Varden owns several silver properties in northwestern B.C., including the pastproducing Dolly Varden and Torbit mines.
Hecla’s expertise should help Dolly Varden develop its properties, which are geologically similar to Hecla’s Greens Creek project.
Hecla Mining is a hold.
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Hecla’s expertise should help Dolly Varden develop its properties, which are geologically similar to Hecla’s Greens Creek project.
Hecla Mining is a hold.
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FAIR ISAAC CORP. $44.95 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 33.8 million; Market cap: $1.5 billion; Dividend yield: 0.2%) has been awarded seven patents by the U.S. Patent and Trademark Office. That brings the company’s total number of patent awards to 128.
Two of the new patents relate to Fair Isaac’s FICO Insurance Fraud Manager software, which detects fraud, waste and abuse in health care claims. These patents cover a method for analyzing codes that health care providers enter to represent specific medical procedures. That helps the program catch both potential and ongoing systematic fraud.
Four of the seven patents were for inventions used in FICO’s Blaze Advisor decision-management software. Additionally, FICO was awarded a patent for an invention related to the FICO Score, the standard measure of consumer credit risk in the U.S. This helps determine the conditions in credit scoring in which additional information is needed. FICO spends a high 9% of its revenue on research and development. That lets it stay ahead of the competition—and patent awards like these help reinforce its research efforts.
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Two of the new patents relate to Fair Isaac’s FICO Insurance Fraud Manager software, which detects fraud, waste and abuse in health care claims. These patents cover a method for analyzing codes that health care providers enter to represent specific medical procedures. That helps the program catch both potential and ongoing systematic fraud.
Four of the seven patents were for inventions used in FICO’s Blaze Advisor decision-management software. Additionally, FICO was awarded a patent for an invention related to the FICO Score, the standard measure of consumer credit risk in the U.S. This helps determine the conditions in credit scoring in which additional information is needed. FICO spends a high 9% of its revenue on research and development. That lets it stay ahead of the competition—and patent awards like these help reinforce its research efforts.
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ALIMENTATION COUCHE-TARD $45.20 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $8.1 billion; Dividend yield: 0.7%) has reported sharply higher sales and earnings in its latest quarter. Without one-time costs related to its $2.7-billion purchase of Statoil Fuel & Retail ASA, the company’s earnings per share rose 26.7%, to $0.95 from $0.75 (all figures except share price in U.S. dollars). Sales rose 16.1% to $6.0 billion from $5.2 billion.
The gains came from higher fuel prices, acquisitions and higher merchandise sales. (The company gets about 30% of its sales by selling merchandise.) The results also included 11 days of operations from the Statoil gas station chain.
Alimentation Couche-Tard is still our #1 buy for 2012.
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The gains came from higher fuel prices, acquisitions and higher merchandise sales. (The company gets about 30% of its sales by selling merchandise.) The results also included 11 days of operations from the Statoil gas station chain.
Alimentation Couche-Tard is still our #1 buy for 2012.
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SASOL LTD. (ADR) $46.39 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 645.0 million; Market cap: $29.9 billion; Dividend yield: 3.1%) reports that in its fiscal year ended June 30, 2012, revenue rose 19.0%, to $20.3 billion from $17.1 billion in the previous fiscal year (all figures in U.S. dollars). Earnings per ADR rose 25.8%, to $5.05 from $3.99.
Higher oil prices were the main reason for the gains. The U.S. dollar also rose against the South African rand; that pushed up the value of Sasol’s sales outside South Africa.
The company plans to build an $8-billion to $9-billion gas-to-liquids (GTL) plant in Louisiana. It has also completed a feasibility study for an $8-billion GTL plant in Alberta.
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Higher oil prices were the main reason for the gains. The U.S. dollar also rose against the South African rand; that pushed up the value of Sasol’s sales outside South Africa.
The company plans to build an $8-billion to $9-billion gas-to-liquids (GTL) plant in Louisiana. It has also completed a feasibility study for an $8-billion GTL plant in Alberta.
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