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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BROADRIDGE FINANCIAL SOLUTIONS $21.70 (New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.9 million; Market cap: $2.7 billion; Dividend yield: 3.0%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. The company processes 90% of all proxy votes in the U.S.
Broadridge’s earnings rose 11.0% in the three months ended March 31, 2012, to $36.2 million from $32.6 million a year earlier. Earnings per share rose 12.0%, to $0.28 from $0.25, on fewer shares outstanding. Sales rose 3.8%, to $547.0 million from $527.1 million.
Contributions from recently purchased companies helped push up Broadridge’s latest results. As well, the company continues to do a good job of attracting new clients and holding on to existing ones.
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Broadridge’s earnings rose 11.0% in the three months ended March 31, 2012, to $36.2 million from $32.6 million a year earlier. Earnings per share rose 12.0%, to $0.28 from $0.25, on fewer shares outstanding. Sales rose 3.8%, to $547.0 million from $527.1 million.
Contributions from recently purchased companies helped push up Broadridge’s latest results. As well, the company continues to do a good job of attracting new clients and holding on to existing ones.
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STANLEY BLACK & DECKER INC. $62 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $10.6 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.6%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for consumers. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. This business supplied 51% of Stanley’s 2011 sales and 46% of its earnings.
The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings.
The remaining 24% of sales and 27% of earnings comes from selling specialized tools to industrial users, such as auto mechanics and construction firms.
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The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically through closed-circuit audio and TV systems. This division accounts for 25% of Stanley’s sales and 27% of its earnings.
The remaining 24% of sales and 27% of earnings comes from selling specialized tools to industrial users, such as auto mechanics and construction firms.
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CONAGRA FOODS INC. $25 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 415.4 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.conagrafoods.com) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn.
In ConAgra’s 2012 fiscal year, which ended May 27, 2012, sales rose 7.8%, to $13.3 billion from $12.3 billion in fiscal 2011. That’s partly due to several recent acquisitions. The company also raised its prices to offset higher ingredient costs. Earnings per share rose 5.1%, to $1.84 from $1.75. These figures exclude several unusual items, such as losses on commodity-hedging contracts and costs related to changes in the way the company accounts for contributions to employee pension plans.
ConAgra expects its earnings to rise to $1.97 a share in fiscal 2013. The stock trades at 12.7 times that estimate. The annual dividend rate of $0.96 yields 3.8%.
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In ConAgra’s 2012 fiscal year, which ended May 27, 2012, sales rose 7.8%, to $13.3 billion from $12.3 billion in fiscal 2011. That’s partly due to several recent acquisitions. The company also raised its prices to offset higher ingredient costs. Earnings per share rose 5.1%, to $1.84 from $1.75. These figures exclude several unusual items, such as losses on commodity-hedging contracts and costs related to changes in the way the company accounts for contributions to employee pension plans.
ConAgra expects its earnings to rise to $1.97 a share in fiscal 2013. The stock trades at 12.7 times that estimate. The annual dividend rate of $0.96 yields 3.8%.
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MTS SYSTEMS CORP. $38 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 16.1 million; Market cap: $611.8 million; Price-to-sales ratio: 1.2; Dividend yield: 2.6%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that tests materials, machines and structures. This helps manufacturers lower their costs and improve the quality of their products.
In the three months ended March 31, 2012, MTS’s revenue rose 14.1%, to $129.0 million from $113.1 million a year earlier. Even so, earnings fell 5.5%, to $11.2 million from $11.8 million. Earnings per share fell 8.0%, to $0.69 from $0.75, on more shares outstanding.
MTS raised its research spending by 70.5%, to $6.1 million (or 4.7% of revenue) from $3.6 million (or 3.1% of revenue). That was the main reason for the earnings drop. However, this spending helps MTS keep up with rapidly changing technologies. It also helps it develop innovative new products that will spur its sales for years to come.
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In the three months ended March 31, 2012, MTS’s revenue rose 14.1%, to $129.0 million from $113.1 million a year earlier. Even so, earnings fell 5.5%, to $11.2 million from $11.8 million. Earnings per share fell 8.0%, to $0.69 from $0.75, on more shares outstanding.
MTS raised its research spending by 70.5%, to $6.1 million (or 4.7% of revenue) from $3.6 million (or 3.1% of revenue). That was the main reason for the earnings drop. However, this spending helps MTS keep up with rapidly changing technologies. It also helps it develop innovative new products that will spur its sales for years to come.
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PETSMART INC. $66 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 108.4 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petsmart.com) continues to see strong sales growth at its 1,241 pet supply stores in the U.S....
VERIZON COMMUNICATIONS INC. $44 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.8 billion; Market cap: $123.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) continues to upgrade its high-speed wireless networks to Long Term Evolution (LTE) technology, which is up to five times faster than today’s systems. These upgrades will help Verizon profit from rising use of smartphones and new wireless services, such as video calling.
The company recently added 46 cities to its LTE network and expanded coverage in 22 of the cities it already covers. This makes it the largest provider of LTE service in the U.S., serving 304 cities representing two-thirds of the population.
Verizon is a buy.
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The company recently added 46 cities to its LTE network and expanded coverage in 22 of the cities it already covers. This makes it the largest provider of LTE service in the U.S., serving 304 cities representing two-thirds of the population.
Verizon is a buy.
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ALLIANT ENERGY CORP. $45 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 111.0 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.0%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million residential and business customers in Wisconsin, Iowa and Minnesota.
In the three months ended March 31, 2012, Alliant’s earnings fell 27.4%, to $54.5 million, or $0.50 a share. A year earlier, it earned $75.1 million, or $0.68 a share. These figures exclude unusual items, such as extra taxes related to the planned sale of Alliant’s wind- and solar-power subsidiary. Revenue fell 12.7%, to $765.7 million from $877.2 million.
Like Ameren, Alliant saw lower demand for electricity and gas due to the warm winter. However, power sales to industrial customers rose 3.8%.
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In the three months ended March 31, 2012, Alliant’s earnings fell 27.4%, to $54.5 million, or $0.50 a share. A year earlier, it earned $75.1 million, or $0.68 a share. These figures exclude unusual items, such as extra taxes related to the planned sale of Alliant’s wind- and solar-power subsidiary. Revenue fell 12.7%, to $765.7 million from $877.2 million.
Like Ameren, Alliant saw lower demand for electricity and gas due to the warm winter. However, power sales to industrial customers rose 3.8%.
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AMEREN CORP. $33 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average; www.ameren.com) sells power and natural gas to 3.3 million clients in Illinois and Missouri.
In the three months ended March 31, 2012, Ameren’s earnings fell 11.7%, to $53 million, or $0.22 a share. A year earlier, it earned $60 million, or $0.25 a share. These figures exclude unusual items, such as a recent writedown of a coal-fired power plant.
Revenue fell 12.9%, to $1.7 billion from $1.9 billion. That was mainly because warmer-than usual winter weather prompted consumers to use less electricity and natural gas for home heating. As a result, electricity sales (which account for 79% of Ameren’s revenue) fell 10.9%, and gas sales (21% of revenue) fell 19.8%.
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In the three months ended March 31, 2012, Ameren’s earnings fell 11.7%, to $53 million, or $0.22 a share. A year earlier, it earned $60 million, or $0.25 a share. These figures exclude unusual items, such as a recent writedown of a coal-fired power plant.
Revenue fell 12.9%, to $1.7 billion from $1.9 billion. That was mainly because warmer-than usual winter weather prompted consumers to use less electricity and natural gas for home heating. As a result, electricity sales (which account for 79% of Ameren’s revenue) fell 10.9%, and gas sales (21% of revenue) fell 19.8%.
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APACHE CORP. $85 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 390.8 million; Market cap: $33.2 billion; Price-to-sales ratio: 1.8; Dividend yield: 0.8%; TSINetwork Rating: Average; www.apachecorp.com) has announced a major new shale gas discovery in the Horn River region of northeastern British Columbia. This single field could contain 48 trillion cubic feet of natural gas. To put that in context, discoveries in the entire region so far total 78 trillion cubic feet.
Even with today’s low gas prices, this discovery has huge potential. It also makes it more likely that the company will build a facility in Kitimat, B.C., to convert gas to a liquid form. Ships would then deliver the gas to markets in Asia. Apache and its partners will likely make a final decision on this project by the end of 2012.
Apache is a buy.
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Even with today’s low gas prices, this discovery has huge potential. It also makes it more likely that the company will build a facility in Kitimat, B.C., to convert gas to a liquid form. Ships would then deliver the gas to markets in Asia. Apache and its partners will likely make a final decision on this project by the end of 2012.
Apache is a buy.
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MICROSOFT CORP. $30 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $252.0 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.microsoft.com) is buying Yammer Inc. for $1.2 billion. This private company operates an online social network for businesses. Over 200,000 companies now use this service.
Microsoft will probably add Yammer’s features to its Office suite of business programs. That would make it easier for Office users to collaborate on projects. Yammer should also add to Microsoft’s cloud computing expertise.
Microsoft is a buy.
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Microsoft will probably add Yammer’s features to its Office suite of business programs. That would make it easier for Office users to collaborate on projects. Yammer should also add to Microsoft’s cloud computing expertise.
Microsoft is a buy.
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