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.
Read More
Close
MIRANDA GOLD $0.23 (Toronto symbol MAD; SI Rating: Start up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.9 million; Market cap: $10.1 million) is a gold exploration company focused mostly in Nevada. Miranda holds $12 million in cash. That’s enough for four to five years of exploration. The company also has joint ventures with Barrick Gold, Teck Corp, Piedmont Mining, White Bear Resources and Queensgate Resources. These partners pay for high-risk early drilling to earn interests in Miranda’s properties. Miranda is a buy for highly aggressive investors.
NVIDIA CORP. $7.60 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.6 million; Market cap: $4.2 billion; WSSF Rating: Average) designs 3D chips for computers, video game consoles and other devices. Slowing sales of new computers have hurt Nvidia’s shares in the past few months. Restructuring charges and higher warranty costs related to defective chips have also dampened its earnings. In its third fiscal quarter ended October 26, 2008, earnings before one-time items dropped 57.8%, to $111.4 million from $264.2 million a year earlier. Earnings per share fell 54.5%, to $0.20 from $0.44. Revenue declined 19.5%, to $897.7 million from $1.1 billion. That’s partly due to growing price competition among video chip makers....
WAL-MART STORES INC. $57 (New York symbol WMT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 3.9 billion; Market cap: $222.3 billion; WSSF Rating: Above average) is the world’s largest retailer with over 7,400 stores in the United States and 13 other countries. It serves over 175 million customers each week. The company has three main divisions: the Wal-Mart division operates 3,630 discount stores in the U.S. (63% of total sales); the Sam’s Club division operates 595 warehouse club stores (25% of sales); and the International division consists of 3,200 stores outside of the U.S. that Wal-Mart operates directly and through joint ventures (12% of sales). Revenues grew from $256.3 billion in 2004 to $374.5 billion in 2008 (fiscal years end January 31). Earnings rose from $2.03 a share ($8.9 billion) in 2004 to $3.16 a share ($12.9 billion) in 2008....
SYMANTEC CORP. $12 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 836.0 million; Market cap: $10.0 billion; WSSF Rating: Average) makes software that helps protect computers from viruses and electronic attacks. Its best-known product is the top-selling Norton Anti-Virus program. Symantec continues to make acquisitions that strengthen its current products. For example, it recently purchased UK-based MessageLabs, which offers online software that helps users protect their email and instant messaging services from spam and junk emails. To put the $695 million purchase price in context, Symantec earned $311.2 million in its second fiscal quarter ended October 3, 2008, up 18.5% from $262.6 million a year earlier. Per-share earnings grew 27.6%, to $0.37 from $0.29, on fewer shares outstanding. These figures exclude unusual items. Sales grew 7.0%, to $1.5 billion from $1.4 billion....
AUTODESK INC. $17 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 226.2 million; Market cap: $3.8 billion; WSSF Rating: Average) makes Auto- CAD, the world’s leading computer aided design program. AutoCAD helps engineers and architects design machinery and buildings. The company also makes software that filmmakers use to create special effects. Autodesk’s shares have dropped 50% in the past two months. That’s partly because slowing construction activity could hurt demand for its 3D building design software. The company is now cutting costs, which should help it remain profitable if sales weaken. In its third fiscal quarter ended October 31, 2008, Autodesk’s earnings before unusual items rose 11.0%, to $130.0 million from $117.7 million a year earlier. Earnings per share rose 14.3%, to $0.56 from $0.49, on fewer shares outstanding. Revenue grew 12.8%, to $607.1 million from $538.4 million....
ADOBE SYSTEMS INC. $23 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 531.0 million; Market cap: $12.2 billion; WSSF Rating: Average) makes software that lets computer users easily create, edit and share electronic documents in the popular PDF format. It also makes software that graphic designers use to create print publications and web pages. Excluding one-time items, Adobe’s earnings per share in its third fiscal quarter ended August 29, 2008 rose 11.1%, to $0.50 from $0.45 a year earlier. Revenues grew 4.2%, to $887.3 million from $851.7 million. The company spent $170.1 million (19.2% of revenue) on research in the latest quarter, up 4.2% from $163.2 million (19.2% of revenue) in the year earlier quarter. In October, 2008, Adobe launched its new Creative Suite 4 software program. This new version makes it easier for users to design web sites that include features such as animation and live video. Due to the growth of the Internet over the past few years, Creative Suite now accounts for over 55% of Adobe’s total revenues....
VERIGY LTD. $9.00 (Nasdaq symbol VRGY; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 57.8 million; Market cap: $520.2 million; WSSF Rating: Extra risk) designs and makes test systems used in the production of computer chips, flash memory and high-speed memory. The company aims to improve its prospects with new technology that combines several functions onto a single chip. That lets manufacturers use fewer chips, which cuts their costs. However, these new products currently account for just a small portion of Verigy sales. Due to slowing demand for computers, Verigy’s earnings before onetime items in the fiscal year ended October 31, 2008 fell 32.7%, to $72 million from $107 million a year earlier. Earnings per share fell 33.5%, to $1.19 from $1.79. Sales declined 9.2%, to $691 million from $761 million....
AGILENT TECHNOLOGIES INC. $19 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 350.0 million; Market cap: $6.7 billion; WSSF Rating: Average) makes testing systems that help manufacturers improve the quality of electronic products such as cellphones. In the past few years, Agilent has expanded its Bio-Analytical Measurement division, which supplies measurement equipment to medical research labs and drug developers. This business now accounts for 40% of Agilent’s total sales. It’s also much less cyclical than the electronics division, which helps cut Agilent’s risk. In the fiscal year ended October 31, 2008, Agilent’s earnings rose 15.5%, to $729 million from $631 million in the prior year. Earnings per share grew 26.5%, to $1.96 from $1.55, on fewer shares outstanding. These figures exclude restructuring and other unusual items. Revenue rose 6.5%, to $5.8 billion from $5.4 billion....
FEDEX CORP. $58 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 311.2 million; Market cap: $18.0 billion; WSSF Rating: Average) provides door-to-door delivery of packages and documents in the United States and to over 220 other countries. The slowing economy has hurt demand for FedEx’s domestic delivery services. As well, customers are switching from overnight delivery to FedEx’s slower and less expensive ground service. However, international volumes continue to grow. In its first fiscal quarter ended August 31, 2008, FedEx’s revenue rose 8.4%, to $10.0 billion from $9.2 billion a year earlier....
THE STANLEY WORKS $33 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 78.6 million; Market cap: $2.6 billion; WSSF Rating: Average) makes a wide variety of hand and power tools for consumer and industrial users. The tool business exposes Stanley to the cyclical home construction, renovation and automotive repair industries. However, the company is successfully expanding its building security operations, which now account for 35% of its revenue and 45% of earnings. Steady revenue streams from the security business should let Stanley keep paying its $1.28 dividend, which yields 3.9%. In July, 2008, Stanley acquired Canadian-based Xmark Corp. for $48 million. Xmark makes radio frequency tags that help locate people and property. The company also paid $278 million for Sonitrol Corp., which provides security monitoring services to businesses in North America. These purchases should add $140 million to Stanley’s annual revenue....