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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WAJAX CORP. $49 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.6 million; Market cap: $813.4 million; Dividend yield: 6.6%) 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 December 31, 2011, Wajax’s revenue rose 19.2%, to $377.2 million from $316.4 million a year earlier. Demand remained strong across all of the company’s markets.
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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 December 31, 2011, Wajax’s revenue rose 19.2%, to $377.2 million from $316.4 million a year earlier. Demand remained strong across all of the company’s markets.
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REITMANS (CANADA) LTD. $15.27 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 66.3 million; Market cap: $1.0 billion; Dividend yield: 5.2%) reports that its sales fell 3.3% in the quarter ended January 28, 2012, to $260.0 million from $268.7 million a year earlier. Same-store sales fell 1.7%.
The company earned $4.7 million, or $0.07 a share. That’s down 66.2% from $13.8 million, or $0.21 a share.
Fewer shoppers visited Reitmans’ stores in the quarter, due to weaker consumer confidence. As well, the company spent more on promotions to fend off rising competition.
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The company earned $4.7 million, or $0.07 a share. That’s down 66.2% from $13.8 million, or $0.21 a share.
Fewer shoppers visited Reitmans’ stores in the quarter, due to weaker consumer confidence. As well, the company spent more on promotions to fend off rising competition.
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BMTC GROUP $19.90 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 49.2 million; Market cap: $979.1 million; Dividend yield: 1.2%) is one of Quebec’s largest retailers of furniture, electronics and household appliances. It sells these products through its two affiliates: Brault & Martineau Inc. and Ameublements Tanguay.
The company has 20 large stores in the Montreal, Quebec City, Repentigny, Laval, Saint-Georges, Chicoutimi, Sainte-Therese, Trois-Rivieres, Sherbrooke, Rimouski, Riviere-du-Loup and Gatineau areas. It also has six liquidation centres, six Sleep Gallery stores and two distribution and administration centres in Montreal and Quebec City. It’s now building a new store in Levis that will open shortly.
In the three months ended December 31, 2011, BMTC’s sales fell 10.0%, to $194.2 million from $215.8 million a year earlier. Lower consumer spending hurt BMTC’s sales. Earnings per share fell 10.0%, to $0.45 from $0.50.
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The company has 20 large stores in the Montreal, Quebec City, Repentigny, Laval, Saint-Georges, Chicoutimi, Sainte-Therese, Trois-Rivieres, Sherbrooke, Rimouski, Riviere-du-Loup and Gatineau areas. It also has six liquidation centres, six Sleep Gallery stores and two distribution and administration centres in Montreal and Quebec City. It’s now building a new store in Levis that will open shortly.
In the three months ended December 31, 2011, BMTC’s sales fell 10.0%, to $194.2 million from $215.8 million a year earlier. Lower consumer spending hurt BMTC’s sales. Earnings per share fell 10.0%, to $0.45 from $0.50.
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LEON’S FURNITURE LTD. $12.09 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 69.9 million; Market cap: $845.1 million; Dividend yield: 3.3%) has built its chain of over 72 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.
In the three months ended December 31, 2011, Leon’s sales fell 2.1%, to $193.8 million from $197.9 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales.
Earnings fell 7.0%, to $19.9 million, or $0.28 a share, from $21.4 million, or $0.30 a share. The slower sales were the main reason for the earnings decline. The company also spent more on advertising.
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In the three months ended December 31, 2011, Leon’s sales fell 2.1%, to $193.8 million from $197.9 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales.
Earnings fell 7.0%, to $19.9 million, or $0.28 a share, from $21.4 million, or $0.30 a share. The slower sales were the main reason for the earnings decline. The company also spent more on advertising.
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ALIMENTATION COUCHE-TARD $39.60 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 179.4 million; Market cap: $7.1 billion; Dividend yield: 0.8%) has jumped over $5 since it announced that it is buying Norway’s Statoil Fuel & Retail ASA for $2.8 billion U.S.
Couche-Tard is now up 29% since we made it our #1 stock Pick for 2012 in our February issue at $30.55.
Statoil, Norway’s largest North Sea oil producer, owns 54% of publicly traded Statoil Fuel.
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Couche-Tard is now up 29% since we made it our #1 stock Pick for 2012 in our February issue at $30.55.
Statoil, Norway’s largest North Sea oil producer, owns 54% of publicly traded Statoil Fuel.
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MAJOR DRILLING $15.27 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866-264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $1.2 billion; Dividend yield: 1.2%) is a large contract drilling firm that mainly serves the mining industry.
In its fiscal 2012 third quarter, which ended January 31, 2012, Major’s revenue rose 69.1%, to $182.2 million from $107.7 million a year earlier. Earnings per share jumped to $0.12 from $0.02. Due to seasonal factors, the third quarter is typically the company’s weakest.
Many of Major’s customers increased their drilling during the quarter, especially for gold, copper, coal and iron ore. The company gets 38% of its revenue from Canada and the U.S., 32% from South and Central America, and 30% from Australia, Asia and Africa.
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In its fiscal 2012 third quarter, which ended January 31, 2012, Major’s revenue rose 69.1%, to $182.2 million from $107.7 million a year earlier. Earnings per share jumped to $0.12 from $0.02. Due to seasonal factors, the third quarter is typically the company’s weakest.
Many of Major’s customers increased their drilling during the quarter, especially for gold, copper, coal and iron ore. The company gets 38% of its revenue from Canada and the U.S., 32% from South and Central America, and 30% from Australia, Asia and Africa.
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Yesterday, we discussed U.S. drug store chain Walgreen, a name familiar to many Canadian investors. Today we examine a U.S. drug distributor that has a strong and growing Canadian presence, but is not as well known. We first included this stock in the Aggressive Growth portfolio of Wall Street Stock Forecaster in June, 2002. McKesson Corp. (New York symbol MCK; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor....
Companies take different paths to growth. Over the years, this Canadian company has steadily acquired a series of small firms with specialized expertise and integrated them into a large organization that can undertake a wide range of projects. And this year, it has joined the ranks of Canadian dividend stocks. STANTEC INC. (Toronto symbol STN; www.stantec.com) sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a wide variety of markets, including industry, environment, transportation and construction. Stantec has over 11,000 employees at 170 locations throughout North America. It also has four international offices....
MCKESSON CORP. $87 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 246.1 million; Market cap: $21.4 billion; Price-to-sales ratio: 0.2; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor.
McKesson’s customers include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. The company also supplies surgical tools and health and beauty products.
McKesson’s revenue rose 20.6%, from $93.0 billion in 2007 to $112.1 billion in 2011 (fiscal years end March 31). Earnings jumped 45.2%, from $881 million in 2007 to $1.3 billion in 2011. Because of fewer shares outstanding, earnings per share shot up 68.2%, from $2.89 in 2007 to $4.86 in 2011.
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McKesson’s customers include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. The company also supplies surgical tools and health and beauty products.
McKesson’s revenue rose 20.6%, from $93.0 billion in 2007 to $112.1 billion in 2011 (fiscal years end March 31). Earnings jumped 45.2%, from $881 million in 2007 to $1.3 billion in 2011. Because of fewer shares outstanding, earnings per share shot up 68.2%, from $2.89 in 2007 to $4.86 in 2011.
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MOLSON COORS BREWING CO. $43 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 180.6 million; Market cap: $7.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.0%; TSINetwork Rating: Average; www.molsoncoors.com) earned $701.5 million, or $3.76 a share, in 2011. That’s up 5.2% from $666.9 million, or $3.56 a share, in 2010.
Sales rose 8.0%, to $3.5 billion from $3.3 billion; the company increased its selling prices in response to rising ingredient costs. That helped it offset a 0.7% drop in beer volume.
The company continues to realize big savings from MillerCoors, its joint venture in the U.S. with rival brewer SABMiller. Combined with savings from its own restructuring plan, Molson Coors cut its costs by $106.6 million in 2011.
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Sales rose 8.0%, to $3.5 billion from $3.3 billion; the company increased its selling prices in response to rising ingredient costs. That helped it offset a 0.7% drop in beer volume.
The company continues to realize big savings from MillerCoors, its joint venture in the U.S. with rival brewer SABMiller. Combined with savings from its own restructuring plan, Molson Coors cut its costs by $106.6 million in 2011.
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