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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BAXTER INTERNATIONAL INC. $52 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 579.4 million; Market cap: $30.1 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) has two divisions: Medical Products (which accounted for 56% of Baxter’s 2010 sales) makes intravenous pumps, syringes and kidney-dialysis equipment; and BioScience (44%), makes vaccines and drugs. The company makes a wide range of products, and overseas markets account for 60% of its sales. That cuts its risk. As well, Baxter gets about half of its sales from single-use medical products that continually need to be reordered. Baxter’s sales rose 2.2% in 2010, to $12.8 billion from $12.6 billion in 2009. However, earnings fell 35.6%, to $1.4 billion from $2.2 billion. Earnings per share fell 33.4%, to $2.39 from $3.59, on fewer shares outstanding....
C.R. BARD INC. $96 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 85.0 million; Market cap: $8.2 billion; Price-to-sales ratio: 3.1; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.crbard.com) makes medical devices in four main areas: vascular products, such as stents and catheters (28% of 2010 sales); oncology products that detect and treat various types of cancer (27%); urology products, such as drainage and incontinence devices (26%); and surgical tools (16%). Other medical products supply the remaining 3%. The company has several plans to spur its growth. For example, it aims to increase its international sales, which now account for 30% of its total sales. As well, Bard wants to launch more new products. It spent 6.8% of its sales on research in 2010. It aims to raise that to 7.5% in 2011....
INVACARE CORP. $30 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.4 million; Market cap: $972.0 million; Price-to-sales ratio: 0.6; Dividend yield: 0.2%; TSINetwork Rating: Average; www.invacare.com) makes home-care and mobility products, including wheelchairs and motorized scooters. Many of Invacare’s customers rely on certain Medicare and Medicaid programs to help them pay for motorized wheelchairs and other equipment. However, the future of this funding is uncertain in light of high government deficits. That uncertainty has weighed on Invacare’s sales in the past few years....
AGILENT TECHNOLOGIES INC. $44 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 345.1 million; Market cap: $15.2 billion; Price-to-sales ratio: 2.6; No dividends paid; TSINetwork Rating: Average; www.agilent.com) makes testing systems that help improve electronic products, such as cellphones and computer-networking equipment. Agilent was a unit of Hewlett-Packard Co. until 1999, when Hewlett spun it off as a separate company. The company has gone through a lot of changes since. In 2005, it sold its struggling chip-making operations. In 2006, it spun off Verigy Ltd., its computer-chip-testing business. Agilent has also aggressively cut its costs in the past few years, mainly by closing plants and cutting jobs....
Stantec Inc., symbol STN on Toronto, sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a number of markets, including industry, environment, transportation and construction. Stantec has over 9,400 employees in 150 locations throughout North America. In the three months ended December 31, 2010, the growth stock’s revenue rose 11.9%, to $383.7 million from $342.8 million a year earlier. Acquisitions were the main reason for the revenue increase. The growth stock’s earnings rose 9.6%, to $22.9 million, or $0.55 a share, from $25.1 million, or $0.50 a share. The company continues to grow through acquistions. In October 2010, it acquired Street Smarts, a Georgia company that specializes in roadway engineering. In December it bought Burt Hill, a 600-employee Pennsylvania architectural and engineering firm that focuses on health care and higher education. In February 2011, Stantec acquired QuadraTech, Inc., an engineering-services firm in Newfoundland and Labrador....
Mosaid Technologies, symbol MSD on Toronto, mainly licenses patented semiconductor (computer chip) and telecommunications technology, including patents for technology used in smartphones and laptops. The company complements this business by developing its own memory and other technologies. In total, Mosaid holds 2,647 patents and applications. The company licenses patents based on its own innovations. It also buys patents, and has secured licensing rights to others....
Hidden value is one of the key factors we look for when we choose stocks to recommend in our newsletters and investment services, including Stock Pickers Digest, our newsletter for aggressive investing. (In the latest Stock Pickers Digest, we’ve updated our buy/sell/hold advice on a niche technology firm with an important hidden asset. Read on for further details.) By hidden value, we mean valuable assets that are not getting the attention they deserve from investors. When a company’s assets are wholly or partially hidden, the stock trades for less than it’s really worth, so you get to buy at a bargain price....
Zhongpin Inc., symbol HOGS on Nasdaq, is a China-based company that processes meat and other foods. Zhongpin is one of the world stock market investments we analyze in our Stock Pickers Digest newsletter. Zhongpin specializes in pork and pork products, as well as fruit and vegetables. It sells 358 meat products, including chilled pork, frozen pork and prepared meats, as well as 34 fruit and vegetable products. Zhongpin focuses on prepared meat, with its higher profit margins, rather than bulk pork....
The Canadian retail sector is highly competitive. Aside from other domestic retailers, Canadian consumer stocks are facing increasing competition from large U.S. discount retailers, like Wal-Mart and Costco. In addition, popular U.S. retailer Target is set to enter the Canadian market. As the competition between retailers continues to heat up, it’s more important than ever for investors to focus on Canadian retail growth stocks with a proven ability to adapt and prosper in the fast-changing retail landscape. In a just-published issue of The Successful Investor, we take a close look at Canadian Tire Corp. (symbol CTC.A on Toronto). The company has been improving the layout of its stores over the last 15 years, and adding new items to the merchandise they carry. It has also acquired and launched a number of new businesses....
The seeming attraction of wind power stocks is obvious — these companies operate (or make parts for) wind turbines, which offer a source of clean, renewable energy that can replace fossil fuels like oil and coal. However, like many alternative-energy stocks, wind power’s potential has risk to match. For example, the government of Ontario’s recent decision to put a moratorium on offshore wind farms illustrates the mounting political opposition to new wind developments. (Our Special Report, “3 Little-Known Alternative Energy Companies that Could Double or Triple During the Obama Administration,” covers all you need to know to find the profit-making opportunities in wind power stocks. You get this Special Report at no cost when you take a one-month free trial to our Wall Street Stock Forecaster newsletter. Read on for further details. If you’re already a Wall Street Stock Forecaster subscriber or Inner Circle member, click here to access this report right away.)...