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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NEW GOLD $9.84 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315- 9715; www.newgold.com; Shares outstanding: 461.7 million; Market cap: $4.5 billion; No dividends paid) has started up its fourth mine. The $765- million New Afton gold mine in B.C. processed the first ore through its mill on June 28, 2012. New Gold’s target for commercial production at New Afton, defined as 30 days of operation at 60% capacity (or 6,600 tonnes per day) remains August 2012.
New Afton should produce an average of 85,000 ounces of gold and 75 million pounds of copper annually over its 12-year life.
There is still room to expand the mine’s reserves and increase its production through exploration drilling.
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New Afton should produce an average of 85,000 ounces of gold and 75 million pounds of copper annually over its 12-year life.
There is still room to expand the mine’s reserves and increase its production through exploration drilling.
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IAMGOLD $10.71 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.1 million; Market cap: $4.0 billion; Dividend yield: 2.4%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America.
In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. Niobium is a rare metal that when used as an additive makes steel stronger, more heat resistant and easier to weld.
In the three months ended March 31, 2012, IAMGold’s revenue fell 2.4%, to $404.2 million from $414.0 million a year earlier. Cash flow per share fell 14.0%, to $0.49 from $0.57. The declines came from lower gold sales, partly because some shipments were delayed until after the quarter ended. That was partially offset by higher gold prices and niobium sales.
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In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. Niobium is a rare metal that when used as an additive makes steel stronger, more heat resistant and easier to weld.
In the three months ended March 31, 2012, IAMGold’s revenue fell 2.4%, to $404.2 million from $414.0 million a year earlier. Cash flow per share fell 14.0%, to $0.49 from $0.57. The declines came from lower gold sales, partly because some shipments were delayed until after the quarter ended. That was partially offset by higher gold prices and niobium sales.
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CAMECO CORP. $22.34 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.3 million; Market cap: $8.8 billion; Dividend yield 1.8%) is the world’s largest uranium producer. It supplies roughly 25% of global production and has large, high-grade reserves, low-cost operations, significant market share and a number of uranium mines.
Cameco also holds a 31.6% stake in Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear power complex.
In the three months ended March 31, 2012, Cameco’s revenue rose 22.1%, to $563 million from $461 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share jumped 47.6%, to $0.31 from $0.21.
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Cameco also holds a 31.6% stake in Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear power complex.
In the three months ended March 31, 2012, Cameco’s revenue rose 22.1%, to $563 million from $461 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share jumped 47.6%, to $0.31 from $0.21.
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SASOL LTD. (ADR) $43.01 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082 -883-9697; www.sasol.com; ADRs outstanding: 644.7 million; Market cap: $27.7 billion; Dividend yield: 3.3%) paid $2.2 billion last year for a 50% interest in two major shale gas properties held by Talisman Energy in northeastern B.C.
The partners were investigating whether it would be feasible to build a gas-to-liquids plant that would use this gas. However, Talisman has said that it is not interested in pursuing this project right now. Instead, it will focus on increasing its production.
Talisman and Sasol will continue to develop the two shale gas properties, although they will likely slow work on them while they wait for natural gas prices to recover.
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The partners were investigating whether it would be feasible to build a gas-to-liquids plant that would use this gas. However, Talisman has said that it is not interested in pursuing this project right now. Instead, it will focus on increasing its production.
Talisman and Sasol will continue to develop the two shale gas properties, although they will likely slow work on them while they wait for natural gas prices to recover.
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DEVON ENERGY CORP. $58.73 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 404.4 million; Market cap: $23.8 billion; Dividend yield: 1.4%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 63% gas and 37% oil.
Last year, Devon completed the sale of all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop.
The company is now focused on its North American properties, which include conventional production, shale oil in Texas and oil sands in Alberta.
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Last year, Devon completed the sale of all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop.
The company is now focused on its North American properties, which include conventional production, shale oil in Texas and oil sands in Alberta.
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CIMAREX ENERGY $58.40 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 85.7 million; Market cap: $5.0 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 53% of its output.
Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.
In the three months ended March 31, 2012, Cimarex’s production averaged 603.5 million cubic feet of natural gas equivalent per day (including oil). That’s up 2.5%, from 590 million cubic feet a year earlier.
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Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.
In the three months ended March 31, 2012, Cimarex’s production averaged 603.5 million cubic feet of natural gas equivalent per day (including oil). That’s up 2.5%, from 590 million cubic feet a year earlier.
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MART RESOURCES $1.50 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270 -1841; www.martresources.com; Shares outstanding: 337.0 million; Market cap: $505.5 million; Dividend yield: 13.3%) is up over 40% since late June, when it declared a special dividend of $0.10 a share, payable on August 8. Mart will then pay quarterly dividends of $0.05 a share starting in September.
The stock is now up 328.6% since we first recommended it in our May 2010 issue at $0.35.
Mart produces oil at its 50%- held Umusadege field in the Niger Delta region of southern Nigeria.
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The stock is now up 328.6% since we first recommended it in our May 2010 issue at $0.35.
Mart produces oil at its 50%- held Umusadege field in the Niger Delta region of southern Nigeria.
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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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