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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APACHE CORP. $110 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 384.0 million; Market cap: $42.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.6%; TSINetwork Rating: Average; www.apachecorp.com) saw its revenue rise 39.7% in 2011, to $16.9 billion from $12.1 billion in 2010, due to higher oil prices and a 13.8% production increase. Earnings jumped 46.6%, to $4.7 billion from $3.2 billion.
Earnings per share rose 32.3%, to $11.83 from $8.94, on more shares outstanding. Apache also raised its dividend by 13.3%. The new annual rate of $0.68 yields 0.6%.
Apache is a buy.
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Earnings per share rose 32.3%, to $11.83 from $8.94, on more shares outstanding. Apache also raised its dividend by 13.3%. The new annual rate of $0.68 yields 0.6%.
Apache is a buy.
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AGILENT TECHNOLOGIES INC. $43 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 347.5 million; Market cap: $14.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.9%; TSINetwork Rating: Average; www.agilent.com) makes testing systems that improve electronic products, such as cellphones. It also makes medical equipment that detects and measures substances in blood and other patient samples.
Agilent was a subsidiary of Hewlett-Packard Co. until 1999, when Hewlett spun it off as a separate company.
In its 2012 first quarter, which ended January 31, 2012, Agilent’s revenue rose 7.6%, to $1.64 billion from $1.5 billion a year earlier. Strong gains from its life sciences division offset weaker demand for testing equipment. Agilent received $1.6 billion of new orders in the quarter, unchanged from a year ago.
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Agilent was a subsidiary of Hewlett-Packard Co. until 1999, when Hewlett spun it off as a separate company.
In its 2012 first quarter, which ended January 31, 2012, Agilent’s revenue rose 7.6%, to $1.64 billion from $1.5 billion a year earlier. Strong gains from its life sciences division offset weaker demand for testing equipment. Agilent received $1.6 billion of new orders in the quarter, unchanged from a year ago.
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MOTOROLA SOLUTIONS INC. $50 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 325.5 million; Market cap: $16.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.8%; TSINetwork Rating: Average; www.motorolasolutions.com) took its current form on January 4, 2011, following the breakup of the old Motorola Inc. The company makes specialized equipment, including bar-code scanners and radios for emergency vehicles. Governments supply 65% of its revenue; the remaining 35% comes from businesses.
In 2011, Motorola Solutions earned $888 million, or $2.61 a share. That’s up 42.5% from $623 million, or $1.84 a share, in 2010. These figures exclude several unusual items, mainly costs related to the spinoff from Motorola Inc. Sales rose 7.7%, to $8.2 billion from $7.6 billion.
The company’s sales will likely rise by just 5% in 2012, due to slowing demand for its current wireless networking equipment and government budget cuts. However, Motorola Solutions continues to devote nearly 13% of its sales to research. This is helping it develop new products that take advantage of faster wireless technologies.
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In 2011, Motorola Solutions earned $888 million, or $2.61 a share. That’s up 42.5% from $623 million, or $1.84 a share, in 2010. These figures exclude several unusual items, mainly costs related to the spinoff from Motorola Inc. Sales rose 7.7%, to $8.2 billion from $7.6 billion.
The company’s sales will likely rise by just 5% in 2012, due to slowing demand for its current wireless networking equipment and government budget cuts. However, Motorola Solutions continues to devote nearly 13% of its sales to research. This is helping it develop new products that take advantage of faster wireless technologies.
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SNAP-ON INC. $61 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.4 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics. That puts the company in a great position to gain from rising car sales. Snap-On sells its products through a fleet of franchised vans that visit garages. It also makes specialized tools for mining companies, electrical power utilities and other industrial customers.
Snap-On’s revenue rose 11.1% in 2011, to $3.0 billion from $2.7 billion in 2010. Earnings rose 42.2%, to $265.2 million, or $4.52 a share, from $186.5 million, or $3.19 a share.
The company will spend $60 million to $70 million to expand and upgrade its operations in 2012. It’s particularly interested in growing in developing countries. Right now, it gets 59% of its revenue from North America.
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Snap-On’s revenue rose 11.1% in 2011, to $3.0 billion from $2.7 billion in 2010. Earnings rose 42.2%, to $265.2 million, or $4.52 a share, from $186.5 million, or $3.19 a share.
The company will spend $60 million to $70 million to expand and upgrade its operations in 2012. It’s particularly interested in growing in developing countries. Right now, it gets 59% of its revenue from North America.
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GENERAL MOTORS CO. $27 (New York symbol GM; Shares outstanding: 1.6 billion; Market cap: $43.2 billion; www.gm.com) completed its initial public offering in November 2011, selling 555 million shares at $33.00 each. The U.S. government still owns 32.3% of General Motors in the wake of the company’s bankruptcy and restructuring.
GM’s profits are rising again: in 2011, it earned $7.6 billion, or $4.58 a share, up 61.7% from $4.7 billion, or $2.89 a share, in 2010. Sales rose 10.8%, to $150.3 billion from $135.6 billion.
However, the company’s European operations continue to lose money: a total of $15.6 billion since 1999. As well, rigid union contracts will make it difficult for GM to restructure this business. That could delay the company’s plan to resume paying dividends.
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GM’s profits are rising again: in 2011, it earned $7.6 billion, or $4.58 a share, up 61.7% from $4.7 billion, or $2.89 a share, in 2010. Sales rose 10.8%, to $150.3 billion from $135.6 billion.
However, the company’s European operations continue to lose money: a total of $15.6 billion since 1999. As well, rigid union contracts will make it difficult for GM to restructure this business. That could delay the company’s plan to resume paying dividends.
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FORD MOTOR CO. $12 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.ford.com) is the second-biggest carmaker in the U.S., and the world’s fifth-largest.
The company continues to benefit from its restructuring plan, which it implemented in 2005 to deal with its falling sales and market share. In the years since, Ford has sold its Jaguar and Land Rover luxury car divisions, closed factories and laid off workers.
In 2011, the company sold 5.7 million vehicles, up 7.2% from 5.3 million in 2010. Sales rose 11.3% in North America, 7.5% in Asia, 3.5% in South America and 1.8% in Europe. Ford now accounts for 16.5% of all car sales in the U.S., up from 16.4% in 2010. It also has 8.3% of the European market, down from 8.4% in 2010.
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The company continues to benefit from its restructuring plan, which it implemented in 2005 to deal with its falling sales and market share. In the years since, Ford has sold its Jaguar and Land Rover luxury car divisions, closed factories and laid off workers.
In 2011, the company sold 5.7 million vehicles, up 7.2% from 5.3 million in 2010. Sales rose 11.3% in North America, 7.5% in Asia, 3.5% in South America and 1.8% in Europe. Ford now accounts for 16.5% of all car sales in the U.S., up from 16.4% in 2010. It also has 8.3% of the European market, down from 8.4% in 2010.
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HONDA MOTOR CO. LTD. ADRs $37 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $66.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.honda.com) is Japan’s second-largest carmaker, and the world’s largest motorcycle manufacturer.
Like Toyota, Honda has suffered setbacks due to the natural disasters in Japan and Thailand. In Honda’s fiscal 2012 third quarter, which ended December 31, 2011, its sales fell 3.5%, to $25.0 billion from $25.9 billion a year earlier. Honda sold 830,000 cars and trucks in the quarter, down 2.9% from 855,000 a year earlier. However, motorcycle sales rose 6.3%, to 3.1 million from 2.9 million.
Earnings fell 38.4%, to $613 million, or $0.34 per ADR, from $995 million, or $0.55 per ADR (each American Depositary Receipt represents one Honda common share).
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Like Toyota, Honda has suffered setbacks due to the natural disasters in Japan and Thailand. In Honda’s fiscal 2012 third quarter, which ended December 31, 2011, its sales fell 3.5%, to $25.0 billion from $25.9 billion a year earlier. Honda sold 830,000 cars and trucks in the quarter, down 2.9% from 855,000 a year earlier. However, motorcycle sales rose 6.3%, to 3.1 million from 2.9 million.
Earnings fell 38.4%, to $613 million, or $0.34 per ADR, from $995 million, or $0.55 per ADR (each American Depositary Receipt represents one Honda common share).
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TOYOTA MOTOR CO. ADRs $84 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $142.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.toyota.com) is Japan’s largest automobile maker and the world’s second-biggest after General Motors. Toyota also makes industrial equipment, such as forklifts and prefabricated housing. Like most carmakers, it offers vehicle loans through its financing division.
The company is starting to recover from the disruptions caused by the March 2011 earthquake and tsunami in Japan and the recent flooding in Thailand. Toyota sold 2.0 million vehicles in its fiscal 2012 third quarter, which ended December 31, 2011, up 9.3% from 1.8 million a year earlier.
As a result, its revenue rose 12.3%, to $63.2 billion from $56.3 billion. However, higher income taxes and unfavourable exchange rates cut its earnings by 6.8%, to $1.05 billion, or $0.61 per ADR, from $1.1 billion, or $0.65 per ADR. (Each American Depositary Receipt represents two Toyota common shares.)
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The company is starting to recover from the disruptions caused by the March 2011 earthquake and tsunami in Japan and the recent flooding in Thailand. Toyota sold 2.0 million vehicles in its fiscal 2012 third quarter, which ended December 31, 2011, up 9.3% from 1.8 million a year earlier.
As a result, its revenue rose 12.3%, to $63.2 billion from $56.3 billion. However, higher income taxes and unfavourable exchange rates cut its earnings by 6.8%, to $1.05 billion, or $0.61 per ADR, from $1.1 billion, or $0.65 per ADR. (Each American Depositary Receipt represents two Toyota common shares.)
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WAL-MART STORES INC. $59 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $200.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) is buying 51% of Yihaodian, a Chinese company that sells groceries, clothing, consumer electronics and other goods over the Internet.
Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year.
This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales.
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Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year.
This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales.
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VISA INC. $116 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 813.3 million; Market cap: $94.3 billion; Price-to-sales ratio: 9.8; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands.
Visa’s credit cards are accepted around the world. Visa/PLUS is one of the largest global automated teller machine networks, offering cash access in more than 200 countries.
The company first sold shares to the public at $44; it began trading on New York in March 2008.
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Visa’s credit cards are accepted around the world. Visa/PLUS is one of the largest global automated teller machine networks, offering cash access in more than 200 countries.
The company first sold shares to the public at $44; it began trading on New York in March 2008.
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