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.
Read More
Close
GOOGLE INC. $677 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 327.0 million; Market cap: $221.4 billion; Priceto- sales ratio: 5.1; No dividends paid; TSINetwork Rating: Above Average; www.google.com) is the world’s top Internet search engine, with about two-thirds of this market. The company has held on to its lead because its well-developed search technology gives it a big advantage over its competitors.
Google does not charge for its searches. Instead, it makes money by selling advertising on its websites. It mainly does this through its AdWords program, which lets advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads. Google gets around 97% of its revenue from advertising.
The company also offers free access to all or part of its other services, including Gmail (email), YouTube (videos), Google Books (electronic books), Google Talk (Internet-based phone calls), Google+ (social networking) and Google Chrome (an Internet browser). These services help draw more users to Google’s sites, which lets the company sell more ads and charge higher ad rates.
...
Google does not charge for its searches. Instead, it makes money by selling advertising on its websites. It mainly does this through its AdWords program, which lets advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads. Google gets around 97% of its revenue from advertising.
The company also offers free access to all or part of its other services, including Gmail (email), YouTube (videos), Google Books (electronic books), Google Talk (Internet-based phone calls), Google+ (social networking) and Google Chrome (an Internet browser). These services help draw more users to Google’s sites, which lets the company sell more ads and charge higher ad rates.
...
MCCOY CORP. $3.59 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.5 million; Market cap: $95.1 million; Dividend yield: 5.5%) 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 Canadian and U.S. clients in the oil and gas, wind energy, infrastructure and construction industries.
...
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 Canadian and U.S. clients in the oil and gas, wind energy, infrastructure and construction industries.
...
WAJAX CORP. $45.65 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $762.3 million; Dividend yield: 7.1%) 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 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.
In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers.
...
Wajax operates through 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.
In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers.
...
BROADRIDGE FINANCIAL SOLUTIONS $22.88 New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.9 million; Market cap: $2.9 billion; Dividend yield: 3.2%) reports that its earnings rose 12.6% in its 2012 fiscal year, which ended June 30, 2012, to $198.0 million from $175.8 million in 2011. Earnings per share climbed 13.1%, to $1.55 from $1.37, on fewer shares outstanding.
Revenue rose 6.3%, to $2.3 billion from $2.2 billion.
The company continues to do a good job of attracting new clients and holding on to existing ones. Acquisitions also contributed to the gains. Moreover, Broadridge has finished moving its data centre to IBM under an outsourcing contract that expires in June 2022. This deal should save the company roughly $25 million a year.
...
Revenue rose 6.3%, to $2.3 billion from $2.2 billion.
The company continues to do a good job of attracting new clients and holding on to existing ones. Acquisitions also contributed to the gains. Moreover, Broadridge has finished moving its data centre to IBM under an outsourcing contract that expires in June 2022. This deal should save the company roughly $25 million a year.
...
ALIMENTATION COUCHE-TARD $50.95 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $9.1 billion; Dividend yield: 0.6%) has agreed to buy 27 Sun Mart convenience stores in Washington State from Sun Pacific Energy for an undisclosed amount.
All but one of these outlets sell fuel. Nineteen of the stores’ gas stations operate under the Shell banner, and seven use the Exxon label. Couche-Tard will convert all 27 stores to its Circle K banner, although they will still sell Shell and Exxon fuel.
Alimentation Couche-Tard is still our #1 buy for 2012.
...
All but one of these outlets sell fuel. Nineteen of the stores’ gas stations operate under the Shell banner, and seven use the Exxon label. Couche-Tard will convert all 27 stores to its Circle K banner, although they will still sell Shell and Exxon fuel.
Alimentation Couche-Tard is still our #1 buy for 2012.
...
FAIRFAX FINANCIAL HOLDINGS $377.50 (Toronto symbol FFH: TSINetwork Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $8.1 billion; Dividend yield: 2.7%) has increased its stake in Research in Motion, symbol RIM on Toronto. The company now owns 9.9% of RIM, up from 5.12%. RIM is a recommendation of our Successful Investor newsletter.
Fairfax is now RIM’s largest shareholder. The company’s chairman and founder, Prem Watsa, is also on RIM’s board of directors.
Fairfax’s large interest gives Watsa more sway over RIM. He now feels that RIM shares are at or near bottom. But either way, he says he’s taking a three- to five-year time horizon on getting a significant return on his investment.
...
Fairfax is now RIM’s largest shareholder. The company’s chairman and founder, Prem Watsa, is also on RIM’s board of directors.
Fairfax’s large interest gives Watsa more sway over RIM. He now feels that RIM shares are at or near bottom. But either way, he says he’s taking a three- to five-year time horizon on getting a significant return on his investment.
...
DOREL INDUSTRIES $29.65 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.9 million; Market cap: $945.8 million; Dividend yield: 4.0%) has just doubled its quarterly dividend, to $0.30 from $0.15. The shares now yield a high 4.0%. The increase follows the company’s strong 2012 second-quarter results.
In the three months ended June 30, 2012, Dorel’s sales rose 2.4%, to $633.7 million from $619.0 million a year earlier (all figures except share price in U.S. dollars). Revenue increased at all three of the company’s divisions. Earnings per share rose 35.7%, to $0.95 from $0.70 a year earlier. The gain resulted from the higher revenue and increased sales of more profitable products.
The company holds cash of $45.1 million, or $1.44 a share. Its long-term debt of $316.8 million is a reasonable 33.5% of its $945.8-million market cap.
...
In the three months ended June 30, 2012, Dorel’s sales rose 2.4%, to $633.7 million from $619.0 million a year earlier (all figures except share price in U.S. dollars). Revenue increased at all three of the company’s divisions. Earnings per share rose 35.7%, to $0.95 from $0.70 a year earlier. The gain resulted from the higher revenue and increased sales of more profitable products.
The company holds cash of $45.1 million, or $1.44 a share. Its long-term debt of $316.8 million is a reasonable 33.5% of its $945.8-million market cap.
...
WYNDHAM WORLDWIDE $50.86 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 142.2 million; Market cap: $7.2 billion; Dividend yield: 1.8%) saw its revenue rise 4.5% in the three months ended June 30, 2012, to $1.14 billion from $1.1 billion a year earlier. Its occupancy rate rose 3.6%.
Before one-time items, earnings rose 35.9%, to $0.87 a share from $0.64. To further boost its results, Wyndham is expanding in fast-growing markets like Asia and Latin America.
The company’s outlook is positive, but the shares now trade at a high 19.1 times its latest 12 months of earnings.
...
Before one-time items, earnings rose 35.9%, to $0.87 a share from $0.64. To further boost its results, Wyndham is expanding in fast-growing markets like Asia and Latin America.
The company’s outlook is positive, but the shares now trade at a high 19.1 times its latest 12 months of earnings.
...
RUBY TUESDAY, INC. $6.76 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 63.8 million; Market cap: $429.3 million; No dividends paid) owns 714 casual dining restaurants in the U.S. Franchisees operate 36 outlets in the U.S. and 43 overseas.
In the three months ended June 5, 2012, Ruby Tuesday’s sales rose 2.9%, to $363.2 million from $353.0 million a year earlier. However, same-restaurant sales fell 4.6%, mostly due to stiff competition from other chains.
Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood restaurants; Truffles, an upscale cafe; and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now converting underperforming stores to these banners, and building new ones.
...
In the three months ended June 5, 2012, Ruby Tuesday’s sales rose 2.9%, to $363.2 million from $353.0 million a year earlier. However, same-restaurant sales fell 4.6%, mostly due to stiff competition from other chains.
Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood restaurants; Truffles, an upscale cafe; and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now converting underperforming stores to these banners, and building new ones.
...
DOMINO’S PIZZA $34.22 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 56.7 million; Market cap: $1.9 billion; No dividends paid) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 9,924 outlets in the U.S. and over 70 in other countries. Franchisees run most of these stores.
In the quarter ended June 17, 2012, the company’s earnings per share rose 17.5%, to $0.47 from $0.40 a year earlier. Costs fell, including a 12% drop in cheese prices.
Sales declined 2.3%, to $376.1 million from $384.9 million. That’s mainly because of lower sales of ingredients, including cheese, to franchisees. Same-store sales rose 5.7% internationally and 1.7% in the U.S.
...
In the quarter ended June 17, 2012, the company’s earnings per share rose 17.5%, to $0.47 from $0.40 a year earlier. Costs fell, including a 12% drop in cheese prices.
Sales declined 2.3%, to $376.1 million from $384.9 million. That’s mainly because of lower sales of ingredients, including cheese, to franchisees. Same-store sales rose 5.7% internationally and 1.7% in the U.S.
...