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 $10.11 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 456.5 million; Market cap: $4.6 billion; No dividends paid) has three operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico and the Peak mine in Australia. It also owns 30% of the El Morro copper/gold project in Chile (Goldcorp owns the other 70%) and 100% of the New Afton gold/copper/silver project in B.C.
El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Afton holds 2.7 million ounces of gold, 2.5 billion pounds of copper and 8.3 million ounces of silver.
In June 2010, New Gold bought Richfield Ventures (symbol RVC on Toronto) for $550 million of New Gold shares (all figures except share price and market cap in U.S. dollars).
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El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Afton holds 2.7 million ounces of gold, 2.5 billion pounds of copper and 8.3 million ounces of silver.
In June 2010, New Gold bought Richfield Ventures (symbol RVC on Toronto) for $550 million of New Gold shares (all figures except share price and market cap in U.S. dollars).
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YAMANA GOLD $14.52 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 746.2 million; Market cap: $10.8 billion; Dividend yield: 1.3%) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has three other properties in advanced stages of development.
In the three months ended September 30, 2011, Yamana’s revenue rose 22.3%, to $555.2 million from $454.0 million a year earlier (all figures except share price and market cap in U.S. dollars). Cash flow per share rose 57.1%, to $0.44 from $0.28.
The company raised its production by 4.4% during the quarter, to 279,274 ounces of gold from 267,409 a year earlier. As well, record-high gold prices pushed up Yamana’s selling price for gold by 37.4%.
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In the three months ended September 30, 2011, Yamana’s revenue rose 22.3%, to $555.2 million from $454.0 million a year earlier (all figures except share price and market cap in U.S. dollars). Cash flow per share rose 57.1%, to $0.44 from $0.28.
The company raised its production by 4.4% during the quarter, to 279,274 ounces of gold from 267,409 a year earlier. As well, record-high gold prices pushed up Yamana’s selling price for gold by 37.4%.
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MART RESOURCES $0.76 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 340.3 million; Market cap: $258.6 million; No dividends paid) trades at a low multiple to cash flow. That reflects investor concern about unstable Nigeria.
Right now, Mart is producing oil from its 50%-held Umusadege field in southern Nigeria.
In the three months ended September 30, 2011, Mart’s revenue jumped 237.2%, to $46.8 million from $13.9 million a year earlier. Cash flow per share rose sharply, to $0.125 from $0.028. Mart’s production rose 126.5%, to 446,981 barrels, and oil prices rose.
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Right now, Mart is producing oil from its 50%-held Umusadege field in southern Nigeria.
In the three months ended September 30, 2011, Mart’s revenue jumped 237.2%, to $46.8 million from $13.9 million a year earlier. Cash flow per share rose sharply, to $0.125 from $0.028. Mart’s production rose 126.5%, to 446,981 barrels, and oil prices rose.
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ENERFLEX LTD., $12.12 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.2 million; Market cap: 935.7 million; Dividend yield: 2.0%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators. In July 2011, Toromont completed its spinoff of Enerflex. Shareholders received shares of Enerflex and the new Toromont.
In the three months ended September 30, 2011, Enerflex’s revenue rose 4.2%, to $282.3 million from $270.9 million a year earlier. The company gets about 28% of its revenue from stable, recurring sales of parts and services. Without one-time items, earnings per share jumped to $0.22 from $0.06, thanks to the higher revenue and improved profit margins. Enerflex’s long-term debt of $132.9 million is a low 14.2% of its market cap
Enerflex’s order backlog continues to grow. It added $314.6 million of orders in the latest quarter, to bring its total backlog to $833.2 million on September 30, 2011, up 62.9% from $511.4 million a year earlier. Enerflex benefited from rising shale gas production in the southern U.S., including the Eagle Ford and Marcellus shale areas.
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In the three months ended September 30, 2011, Enerflex’s revenue rose 4.2%, to $282.3 million from $270.9 million a year earlier. The company gets about 28% of its revenue from stable, recurring sales of parts and services. Without one-time items, earnings per share jumped to $0.22 from $0.06, thanks to the higher revenue and improved profit margins. Enerflex’s long-term debt of $132.9 million is a low 14.2% of its market cap
Enerflex’s order backlog continues to grow. It added $314.6 million of orders in the latest quarter, to bring its total backlog to $833.2 million on September 30, 2011, up 62.9% from $511.4 million a year earlier. Enerflex benefited from rising shale gas production in the southern U.S., including the Eagle Ford and Marcellus shale areas.
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Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. A question this week touched on the well-established trend of overseas outsourcing. Specifically, an Inner Circle member asked about a leading specialist in the field with rising sales and profits and a large store of cash. ...
This week, there was a question about the world’s largest maker of generic drugs. While an aging population is good for drug stocks, there are still a number of thorny issues to consider
The fast food industry is notoriously competitive. It can give rise to some powerful growth stocks—but it is not always easy for companies to keep growing. Today we examine the world’s largest pizza takeout chain to see whether it can sustain the success it has had in 2011. DOMINO’S PIZZA $32.21 (New York symbol DPZ; www.dominos.com) is the world’s largest chain of pizza stores that offer takeout and delivery. The company operates 9,541 stores in the U.S. and over 70 other countries. Franchisees run most of these outlets....
On Friday, in response to a question from a member of my Inner Circle, I talked about Cisco Systems and the challenges technology stocks face in a highly competitive industry. (View the article: Technology stocks: Cisco Systems strives to maintain its leadership in cutting-edge technology.) Today I’d like to follow up by discussing the risks and rewards investors can expect with tech stocks in general. Fast-changing technology offers huge opportunities in these stocks. However, fast change can also bring danger....
Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. An intriguing question this week concerned one of the world’s best-known technology stocks. Cisco Systems offers leading-edge products in a highly competitive industry. Pat examined just how it plans to maintain its position in the face of rapid change and overseas competition....
J.P. MORGAN CHASE & CO. $34 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.9 billion; Market cap: $132.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.9%; TSINetwork Rating: Average; www.jpmorganchase.com) is one of the world’s largest financial-services companies, with 5,400 retail bank branches in the U.S. It also offers credit cards, wealth-management and investment-banking services. In the three months ended September 30, 2011, Morgan earned $4.3 billion, down 3.5% from $4.4 billion a year earlier. However, earnings per share rose 1.0%, to $1.02 from $1.01, on fewer shares outstanding. If you exclude unusual items, such as costs to settle lawsuits related to subprime mortgages, Morgan would have earned $0.97 a share in the latest quarter. Revenue fell 0.3%, to $23.76 billion from $23.82 billion. Loan-loss provisions fell 25.2%, to $2.4 billion from $3.2 billion. However, the latest figure is up from $1.8 billion in the second quarter of 2011....