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
DEL MONTE FOODS CO. $7.65 (New York symbol DLM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 200.7 million; Market cap: $1.5 billion; WSSF Rating: Average) makes canned fruits and vegetables, tuna, sauces and soups under the Del Monte, StarKist and College Inn brands. This business accounts for 60% of its sales. The other 40% comes from its pet food business, whose brands include Meow Mix, 9Lives and Milk-Bone. Del Monte’s stock has moved down from its peak of $13 in July 2007. That’s because the company now expects food costs will rise by $170 million in fiscal 2008, up from its earlier estimate of $145 million. In its second fiscal quarter ended October 28, 2007, Del Monte’s earnings rose 12.7%, to $26.7 million from $23.7 million a year earlier. However, if you disregard restructuring and other costs, per-share earnings fell 22.2%, to $0.14 from $0.18. Sales rose 5.0%, to $938.1 million from $893.5 million....
MCCORMICK & CO. INC. $36 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 115.1 million; Market cap: $4.1 billion; WSSF Rating: Average) is the world’s leading maker of spices, herbs, seasonings, flavorings, sauces and extracts. Top brands include McCormick, Club House, Zatarain’s and Schwartz. McCormick likes to use acquisitions to enhance its product line or expand overseas. For example, it recently agreed to pay $605 million for the Lawry’s and Adolph’s brands of marinades and seasoning. It also agreed to buy Canadian honey producer Billy Bee Honey Products Ltd. for $75 million. These operations generate annual sales of $187 million, and should immediately add to McCormick’s earnings....
CONAGRA FOODS INC. $22 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 487.6 million; Market cap: $10.7 billion; WSSF Rating: Above average) makes a wide variety of packaged foods. Major brands include Chef Boyardee (pasta), Healthy Choice (diet foods), Orville Redenbacher (popcorn), Reddi-wip (whipped cream) and Hunt’s (canned tomatoes and sauces). In the past few years, ConAgra has sold off its fresh food and animal feed operations to focus on its more profitable processed food businesses. An ongoing cost cutting plan continues to help ConAgra cope with higher prices for ingredients and fuel. In its second fiscal quarter ended November 25, 2007, ConAgra earned $0.53 a share, up 35.9% from $0.39 a year earlier. The latest earnings exclude costs related to the recall of contaminated peanut butter and pot pies. The company quickly fixed these problems, and has resumed production. Sales rose 12.9%, to $3.5 billion from $3.1 billion....
H.J. HEINZ CO. $45 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 316.9 million; Market cap: $14.3 billion; WSSF Rating: Above average) makes condiments, sauces, beans, pasta and infant food. Its flagship product, Heinz Ketchup, accounts for 60% of U.S. ketchup sales. Top brands include Lea & Perrins, Ore-Ida, and Weight Watchers. Heinz is starting to realize the benefits of its strategic plan. This includes spending more on new product development and marketing. The company is also targeting developing countries such as China, India and Russia for new growth. Emerging markets now account for 15% of sales (overseas markets as a whole supply 60% of Heinz’s sales). Heinz aims to double sales in emerging markets, as rising prosperity makes its products more affordable. In its third fiscal quarter ended January 30, 2008, Heinz’s earnings slipped to $218.5 million from $219.0 million a year earlier. However, per-share earnings rose 3.0%, to $0.69 from $0.67, on fewer shares outstanding. Sales grew 13.0%, to $2.6 billion from $2.3 billion. If you exclude foreign exchange gains, sales grew 8.6%....
GENERAL MILLS INC. $57 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 336.8 million; Market cap: $19.2 billion; WSSF Rating: Above average) is the second-largest cereal maker in the United States after Kellogg. Top brands include Cheerios, Chex, Total, Kix, and Wheaties. Other products include baking mixes (Betty Crocker), dinner mixes (Hamburger Helper) and yogurt (Yoplait). The company is doing a good job controlling its operating costs, which has helped offset rising grain prices. Hedging contracts and product price increases have also helped shield it from higher input costs. In its second fiscal quarter ended November 25, 2007, General Mills earned $390.5 million, up 1.3% from $385.4 million a year earlier. Per-share earnings rose 5.6%, to $1.14 from $1.08, due to fewer shares outstanding. The latest earnings included a $0.04 a share charge stemming from a recall of frozen pizza. Sales rose 5.7%, to $3.7 billion from $3.5 billion....
KRAFT FOODS INC. $32 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $51.2 billion; WSSF Rating: Above average) is the world’s second-largest food company after Swissbased Nestle. Leading brands include Kraft (cheese), Maxwell House (coffee), Nabisco (biscuits and cookies) and Oscar Meyer (meats). In November 2007, Kraft agreed to merge its Post cereals business with Ralcorp Holdings Inc. (New York symbol RAH). Kraft will receive $2.6 billion in cash and Ralcorp shares. Prior to the closing of the deal in mid-2008, Kraft will hand out the Ralcorp shares to its own stockholders in a way that will let them avoid capital gains taxes. Kraft stockholders will then own 54% of Ralcorp. In 2007, Kraft’s revenue rose 8.1%, to $37.2 billion from $34.4 billion in 2006. These figures include the Post cereal operations. However, earnings before onetime items fell 6.2%, to $1.82 a share (total $2.9 billion) from $1.94 a share ($3.2 billion). Higher raw material costs, particularly milk, offset the gains from its restructuring plan....
J.C. PENNEY CO. INC. $50 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 221.7 million; Market cap: $11.1 billion; WSSF Rating: Average) operates 1,067 department stores throughout the United States and Puerto Rico. About 40% of U.S. households have shopped at a JC Penney store in the past year. Apparel, footwear and jewelry account for about 75% of Penney’s total sales. Home furnishings and services such as services such as hair styling, optical, portrait photography and custom decorating provide the remaining 25%. Sales rose from $17.79 billion in 2004 to $19.90 billion in 2007 (fiscal years end January 31). Sales in 2008 slipped to $19.86 billion. Same-store sales were flat in 2008, compared with a gain of 4.9% in 2007....
LOJACK CORP. $12.51 (Nasdaq symbol LOJN; SI Rating: Speculative) (www.lojack.com; 1-781-326 4700; Shares outstanding: 18.5 million; Market cap: $231.8 million) sells vehicle theft recovery systems. The company has two main products: the LoJack Vehicle Recovery System and the LoJack Early Warning System. LoJack operates in the U.S. and 30 other countries around the world. In Canada, the company operates through its subsidiary, Boomerang Tracking. LoJack’s recovery systems use radio frequency technology to track stolen vehicles. Once a customer realizes a vehicle is stolen, they contact police. Local police cruisers and aircraft equipped with LoJack technology (supplied at no cost by LoJack to law enforcement agencies) are led to the tracking device. In the three months ended December 31, 2007, Lo- Jack’s sales rose 8.2%, to $55.3 million from $51.1 million. Earnings excluding one-time items 2.3%, to $4.5 million or $0.24 a share, from $4.4 million or...
DUNDEEWEALTH INC. $12.63 (Toronto symbol DW; SI Rating: Speculative) (1-800-301-6745; www.dundeewealth.com; Shares outstanding: 144.3 million; Market cap: $1.8 billion) has terminated the special committee set up late last year to study expressions of interest from companies interested in making takeover offers. Dundee Corp. will not sell its interest in DundeeWealth at this time. Dundee Corp. controls 60.8% of DundeeWealth. The Bank of Nova Scotia, Power Financial, Manulife Financial and CI Financial Income Fund were all reportedly considering bids. In September, 2007, Scotiabank purchased an 18% interest in DundeeWealth for $348 million. Scotiabank also has a right of first refusal on any sale of the controlling interest in DundeeWealth. DundeeWealth is still a hold....
MOTOROLA INC. $10 (New York symbol MOT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.3 billion; Market cap: $23.0 billion; WSSF Rating: Above average) plans to introduce several new products to cut its reliance on cellphones, which now account for about half of its sales. For example, it plans to launch a hand-held bar code scanner for retail stores that wirelessly accesses product and inventory information. Motorola is also working on a device that shoppers can use to scan their own purchases inside supermarkets. Billionaire investor Carl Icahn, who owns about 3% of Motorola’s shares, wants the company to unlock value by spinning off its non-cellphone divisions. Promising new products such as these scanners enhance the appeal of these operations....