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
THE BOEING CO. $76 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 764.8 million; Market cap: $58.1 billion; WSSF Rating: Above average) is the world’s second-largest maker of commercial aircraft, behind Europe’s Airbus. Boeing is currently developing its new 787 Dreamliner passenger jet plane, which uses lightweight materials like titanium and carbon fiber. This makes the 787 about 20% more fuel-efficient than older models. The 787 will also use energy-efficient LED lighting inside the cabin, instead of fluorescent tubes. Thanks to its low fuel requirements, demand from cost-conscious airlines for the 787 has been strong. Since its launch in April 2004, Boeing has received nearly 900 orders for the 787, worth over $150 billion....
PHILIPS ELECTRONICS N.V. ADRs $38 (New York symbol PHG; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.1 billion; Market cap: $41.8 billion; WSSF Rating: Average) operates in three main areas: consumer electronics; lighting; and medical equipment. Each American Depository Receipt represents one Philips common share. Philips is a leading maker of LED (light-emitting diode) lighting systems, which use up to 50% less electricity than regular light bulbs. LEDs also last much longer than conventional bulbs. Consequently, many cities are replacing street lamps and traffic signals with LEDs. Construction companies are also installing LED systems in new buildings. Demand for LEDs should continue to grow, as the technology improves and manufacturing costs fall. In 2007, Philips’ earnings jumped to 4.19 Euros a share from 0.76 Euros a share in 2006, mostly due to gains on the sale of assets (1 Euro = $1.54 U.S.). Sales crept up to 26.8 billion Euros from 26.7 billion Euros....
GENERAL ELECTRIC CO. $37 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $370.0 billion; WSSF Rating: Above average) is one of the world’s largest industrial corporations. GE’s products include major appliances; lighting products; medical imaging equipment; power generation and delivery products; and aircraft jet engines. It also owns 80% of media company NBC Universal, which operates the NBC television network, Universal Studios and several cable and Internet properties. GE sells a wide range of environmentally friendly consumer products, including low-wattage light bulbs and energy-efficient appliances. It also supplies wind turbines and solar panels to electrical utilities. As well, its expertise with nuclear power plants should help it profit from the construction of new plants around the world. Nuclear plants generate fewer emissions than gas and coalfired plants. GE earned $2.17 a share (total $22.5 billion) in 2007, up 8.5% from $2.00 ($19.4 billion) in 2006. Revenue rose 13.8%, to $172.7 billion from $151.8 billion. Research and development spending was 2.4% of revenues. Long-term debt of $319.0 billion is a high 86% of its market cap, but won’t likely hinder GE’s ability to expand research or make acquisitions of companies with environmental technologies....
SHORE GOLD $3.80 (Toronto symbol SGF; SI Rating: Start-up) (306-664-2202; www.shoregold.com; Shares outstanding: 182.7 million; Market cap: $694.3 million) owns 100% of the Star diamond project in the Fort a la Corne area of Saskatchewan, which hosts one of the most extensive kimberlite fields in the world. Shore Gold has completed underground bulk sampling at the Star project, which returned high caratgrades of diamonds. By the end of this year, it hopes to complete a bankable feasibility study supporting a diamond mine. The company aims to complete construction of a mine by 2012. Shore Gold also holds 60% of the nearby Fort a la Corne Joint Venture. Newmont Mining holds the other 40%, as well as 9.9% of Shore Gold’s common shares....
STORNOWAY DIAMOND CORP. $0.45 (Toronto symbol SWY; SI Rating: Start-up) (1-888-338-2200; www.sornowaydiamonds.com; Shares outstanding: 198.9 million; Market cap: $89.5 million) holds interests in over 15 diamond exploration properties in Canada and one in Botswana. TSE-listed Agnico Eagle holds a 13.1% interest in the combined company. Global mining giant Rio Tinto Limited holds a 12.9% interest. Stornoway’s projects include a 50% interest in the Renard diamond project in Quebec, which has the potential to become Quebec’ s first diamond mine. Bulk sampling has produced promising carat-grade recoveries The project is now in the pre-feasibility stage to define a total resource estimate. Renard is the company’s most advanced project, but close behind is the Aviat project on the Melville Peninsula in the eastern Arctic (located across from Baffin Island). This project is a joint venture between Stornoway (70%), BHP Billiton (20%) and Hunter Exploration (10%). The partners have discovered eleven kimberlites at Aviat. Early results have shown high sample grades of diamonds....
DOMINO’S PIZZA $13.37 (New York symbol DPZ; SI Rating: Average)(734-930-3030; www.dominos.com; Shares outstanding: 59.6 million; Market cap: $796.9 million) is the world leader in pizza delivery. Through its primarily franchised system, Domino’s operates a network of 8,624 franchised and company-owned stores in the United States and in more than 55 countries. In the three months ended December 30, 2007, Domino’s revenues rose 2.5%, to $445.9 million from $435.3 million. International same-store sales rose 9.5%. That offset 1.1% lower sales at company owned U.S. locations. Despite the higher overall sales, earnings per share excluding one-time items fell 57.1%, to $0.21 from $0.49. The decline came from higher cheese, meat and wheat costs, plus increased transportation costs due to high fuel prices. As well, the company’s higher debt level, which rose to pay for a one time $13.50 a share dividend in early 2007, pushed up interest expense. Long-term debt now stands at a high $1.7 billion, or 213% of market cap....
RUBY TUESDAY, INC. $7.17 (New York symbol RT; SI Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 51.7 million; Market cap: $370.7 million) continues to work at upgrading its image with higher-quality food, improved service, better marketing and re-modelled restaurants. The Ruby Tuesday restaurant chain offers casual American dining. The improved menu now includes 14 different appetizers, handcrafted burgers, a 46-item salad bar, fish, ribs and steaks. Ruby Tuesday owns and operates over 680 restaurants in 20 states. Its United States franchisees operate 199 restaurants in 25 states, and international franchisees operate 54 in the Asia Pacific Region, India, Kuwait, Saudi Arabia, Puerto Rico, Canada, Mexico, Iceland, Eastern Europe, and Central and South America....
CHIPOTLE MEXICAN GRILL $85.65 (New York symbol CMG.B; SI Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 32.9 million; Market cap: $3.1 billion) is a Denver-based chain of Mexican restaurants. Founded in 1993, Chipotle (pronounced chi- POAT-lay) operates in the fast/casual dining segment, offering higher quality food and better decor and service than fast food chains, at slightly higher prices. In the three months ended December 31, 2007, Chipotle’s revenues rose 31.5%, to $288.9 million from $219.7 million a year earlier. Most of the revenue growth came from new restaurant openings, although comparable same store revenues were up 10.6% as well. Same-store growth resulted from an increase in customer visits. The company opened 37 restaurants in the latest quarter. It currently has over 700 restaurants....
T. ROWE PRICE GROUP INC. $54 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 263.8 million; Market cap: $14.2 billion; WSSF Rating: Average) sells and manages over 90 no-load mutual funds. It has over $400 billion in assets under management. The stock got as high as $65.46 in December 2007, but has moved down with the stock market. While the company’s mutual funds have stayed away from low-quality, fixed-income investments such as subprime mortgages, its total fee income rises and falls with the value of the securities in its funds. The company continues to enjoy strong results from its “Retirement Funds”. These funds invest in other T. Rowe Price funds and automatically adjust asset allocation according to an investor’s age. Retirement Funds now account for 12% of the company’s assets under management, up from 4% in 2006....
H&R BLOCK INC. $19 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 325.0 million; Market cap: $6.2 billion; WSSF Rating: Above average) prepares income tax returns through offices in the United States, Canada, Australia and the UK. Other services include investment planning and insurance. In December 2007, the company canceled a deal to sell its Option One mortgage business due to the problems in the mortgage securities market and slumping home prices. Instead, H&R Block will now wind down its mortgage operations. While competition from do-it-yourself software programs have hurt demand for H&R Block’s tax services in the past few years, increasingly complex tax rules should help it attract new clients. The company’s own TaxCut software has also helped it take advantage of growing interest in electronic filing. Washington’s new stimulus plan should also spur demand for tax advice. Most citizens will need to file a 2007 tax return to qualify for a rebate....