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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TIM HORTONS $48.38 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 160.1 million; Market cap: $7.7 billion; Dividend yield: 1.4%) operates 3,225 coffee-and-donut shops in Canada and 645 in the U.S.
Without one-time items, Tim Hortons earned $0.65 a share in the three months ended October 2, 2011. That’s up 18.2% from $0.55 a share a year earlier.
Sales rose 8.4%, to $726.9 million from $670.5 million. Canadian same-store sales rose 4.7%, because Tim Hortons launched successful new products like real fruit smoothies and specialty bagels. U.S. same-store sales rose 6.3%, as customers spent more per visit. The company also raised its prices to cover higher costs for coffee and other foods.
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Without one-time items, Tim Hortons earned $0.65 a share in the three months ended October 2, 2011. That’s up 18.2% from $0.55 a share a year earlier.
Sales rose 8.4%, to $726.9 million from $670.5 million. Canadian same-store sales rose 4.7%, because Tim Hortons launched successful new products like real fruit smoothies and specialty bagels. U.S. same-store sales rose 6.3%, as customers spent more per visit. The company also raised its prices to cover higher costs for coffee and other foods.
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RUGGEDCOM INC. $25.31 (Toronto symbol RCM; TSINetwork Rating: Speculative) (1-888-264-0006; www.ruggedcom.com; Shares outstanding: 12.6 million; Market cap: $318.9 million; No dividends paid) is still the target of a hostile takeover bid from U.S. cable and networking equipment manufacturer Belden Inc. RuggedCom makes computer-networking equipment that is used in harsh environments.
Belden recently reaffirmed its offer of $22 in cash for each RuggedCom share. RuggedCom feels that Belden’s offer is too low, and has advised shareholders to reject the bid. The company is looking for other buyers.
RuggedCom is now trading at $25.31 a share, or 15.0% above Belden’s bid. This indicates that investors are anticipating a higher offer from Belden or another bidder.
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Belden recently reaffirmed its offer of $22 in cash for each RuggedCom share. RuggedCom feels that Belden’s offer is too low, and has advised shareholders to reject the bid. The company is looking for other buyers.
RuggedCom is now trading at $25.31 a share, or 15.0% above Belden’s bid. This indicates that investors are anticipating a higher offer from Belden or another bidder.
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BROADRIDGE FINANCIAL SOLUTIONS $23.65 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 126.7 million; Market cap: $3.0 billion; Dividend yield: 2.7%) is now working with the Singapore Exchange to build a new service aimed at improving the accuracy, efficiency and transparency of Singapore’s shareholder communication and proxy processes. This system will replace the manual system that is now in use.
The new service will use Broadridge’s shareholder-communications software, but it will be tailored to the specific requirements of the Singapore market and domestic and international investors. The Singapore Exchange will market the service to its listed issuers.
No financial terms were disclosed, but the deal reinforces Broadridge’s leading position in the field of investor communications.
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The new service will use Broadridge’s shareholder-communications software, but it will be tailored to the specific requirements of the Singapore market and domestic and international investors. The Singapore Exchange will market the service to its listed issuers.
No financial terms were disclosed, but the deal reinforces Broadridge’s leading position in the field of investor communications.
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DUNDEE REIT $34.01 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 66.1 million; Market cap: $2.2 billion; Dividend yield: 6.4%) is buying Whiterock REIT (Toronto symbol WRK.UN) for $580 million in cash and units. The purchase will make Dundee Canada’s fourth-largest REIT by market cap, up from sixth.
Whiterock owns 88 office, industrial and retail properties in eight Canadian provinces and two U.S. states. These properties contain over 10.8 million square fee of leasable area. Dundee already owns and manages 18.9 million square feet of office, industrial and retail space.
Dundee’s growth-by-acquisition strategy adds risk, but it is steadily diversifying its holdings outside western Canada by purchasing more properties in eastern Canada. Whiterock has 57% of its assets in Ontario, 14% in Quebec and 6% in the Atlantic provinces.
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Whiterock owns 88 office, industrial and retail properties in eight Canadian provinces and two U.S. states. These properties contain over 10.8 million square fee of leasable area. Dundee already owns and manages 18.9 million square feet of office, industrial and retail space.
Dundee’s growth-by-acquisition strategy adds risk, but it is steadily diversifying its holdings outside western Canada by purchasing more properties in eastern Canada. Whiterock has 57% of its assets in Ontario, 14% in Quebec and 6% in the Atlantic provinces.
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EUROPEAN GOLDFIELDS $11.95 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 183.8 million; Market cap: $2.2 billion; No dividends paid) is now the subject of a friendly takeover bid from Eldorado Gold (symbol ELD on Toronto). The offer is for 0.85 of an Eldorado share and $0.0001 in cash for each European Goldfields share. European Goldfields’ board of directors has approved the takeover.
European Goldfields’ Skouries and Olympias gold projects in Greece and its Certej project in Romania would be good fits for Eldorado, which has mines in Greece and Turkey.
Eldorado Gold is now trading at $14.20, which makes the cash and share portions of its offer worth a combined $12.07 per European Goldfields share. European Goldfields is trading just below that price, which indicates that many investors are not expecting a higher offer. However, European Goldfields says it received proposals from a number of potential buyers earlier this year, so a rival bid could still emerge.
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European Goldfields’ Skouries and Olympias gold projects in Greece and its Certej project in Romania would be good fits for Eldorado, which has mines in Greece and Turkey.
Eldorado Gold is now trading at $14.20, which makes the cash and share portions of its offer worth a combined $12.07 per European Goldfields share. European Goldfields is trading just below that price, which indicates that many investors are not expecting a higher offer. However, European Goldfields says it received proposals from a number of potential buyers earlier this year, so a rival bid could still emerge.
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YAMANA GOLD $15.71 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 746.2 million; Market cap: $11.7 billion; Dividend yield: 1.2%) raised its production by 5% in 2011, to 1.1 million gold-equivalent ounces (including silver and copper) from 2010.
The company now expects to produce 1.2 million to 1.3 million ounces in 2012, up 13% from 2011. Most of the increase will come from Yamana’s Mercedes mine in Mexico, which started up in November 2011.
As the company starts up more new mines, its production will continue to increase: in 2013, production should rise 43% from 2011 levels, to between 1.5 million and 1.7 million ounces. In 2014, that figure should climb to around 1.75 million ounces.
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The company now expects to produce 1.2 million to 1.3 million ounces in 2012, up 13% from 2011. Most of the increase will come from Yamana’s Mercedes mine in Mexico, which started up in November 2011.
As the company starts up more new mines, its production will continue to increase: in 2013, production should rise 43% from 2011 levels, to between 1.5 million and 1.7 million ounces. In 2014, that figure should climb to around 1.75 million ounces.
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ENDEAVOUR SILVER $10.39 (Toronto symbol EDR: TSINetwork Rating: Speculative) (1-877-685-9775; www.edrsilver.com; Shares outstanding: 87.6million; Market cap: $910.2 million; No dividends paid) operates the Guanacevi and Guanajuato silver/gold mines in Mexico.
In the three months ended September 30, 2011, Endeavour’s revenue rose 93.0%, to $38.8 million from $20.1 million a year earlier (all amounts except share prices in U.S. dollars). Cash flow per share more than doubled, to $0.24 from $0.11. Rising production and sharply higher gold and silver prices were the main reasons for the gains.
The company is nearly finished expanding the Guanajuato mine. That will push up its silver production by 12.1%, to 3.7 million ounces from 3.3 million ounces in 2010.
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In the three months ended September 30, 2011, Endeavour’s revenue rose 93.0%, to $38.8 million from $20.1 million a year earlier (all amounts except share prices in U.S. dollars). Cash flow per share more than doubled, to $0.24 from $0.11. Rising production and sharply higher gold and silver prices were the main reasons for the gains.
The company is nearly finished expanding the Guanajuato mine. That will push up its silver production by 12.1%, to 3.7 million ounces from 3.3 million ounces in 2010.
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IAMGOLD $16.38 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.8 million; Market cap: $6.2 billion; Dividend yield: 1.2%) sold its Mupane mine in Botswana for $34.2 million in September 2011 (all figures except share price and market cap in U.S. dollars). Earlier in 2011, IAMGold sold its 18.9% stake in the Tarkwa and Damang gold mines in Ghana to South African mining giant Gold Fields Ltd. for $667 million in cash.
The sales left IAMGold with 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 also 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.
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The sales left IAMGold with 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 also 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.
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DOREL INDUSTRIES $24.97 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com;Shares outstanding: 32.6 million; Market cap: $814.0 million; Dividend yield: 2.4%) has bought Poltrade, a Polish juvenile products distributor and retailer, for an undisclosed sum.
Founded in 1991, Poltrade is growing quickly and will likely report sales of 7.5 million euros ($9.8 million Canadian) this year. The company has the largest share of the Polish child car seat market.
Poltrade has distributed a number of Dorel’s products in Poland since 1996. In addition to its distribution business, Poltrade operates three retail outlets.
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Founded in 1991, Poltrade is growing quickly and will likely report sales of 7.5 million euros ($9.8 million Canadian) this year. The company has the largest share of the Polish child car seat market.
Poltrade has distributed a number of Dorel’s products in Poland since 1996. In addition to its distribution business, Poltrade operates three retail outlets.
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FIRSTSERVICE CORP. $28.40 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 30.5 million; Market cap: $866.2 million; No dividends paid) serves the following areas of the real estate market: commercial real estate, residential property management, and property improvement. FirstService has more than 20,000 employees worldwide.
FirstService’s revenue rose 10.4% in the three months ended September 30, 2011, to $585.4 million from $530.5 million a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, earnings per share were unchanged at $0.61. Cash flow rose 22.6%, to $1.03 a share from $0.84.
Revenue increased at two of FirstService’s three divisions: commercial real estate (up 14%) and residential property management (up 15%).
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FirstService’s revenue rose 10.4% in the three months ended September 30, 2011, to $585.4 million from $530.5 million a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, earnings per share were unchanged at $0.61. Cash flow rose 22.6%, to $1.03 a share from $0.84.
Revenue increased at two of FirstService’s three divisions: commercial real estate (up 14%) and residential property management (up 15%).
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