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.
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WEYERHAEUSER CO. $65 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 217.8 million; Market cap: $14.2 billion; WSSF Rating: Average) is a leading forest products company, with 6.4 million acres of timberland in the United States. It also has 30 million acres of leased timberland in Canada. The company recently agreed to sell its European engineered wood products operations for an undisclosed sum. The sale is part of Weyerhaeuser’s plan to focus on its core North American residential wood products business. It’s now exploring various options for its containerboard and packaging operations. Weyerhaeuser earned $0.55 a share (total $118 million) before unusual items in the three months ended September 30, 2007, down 42.1% from $0.95 a share ($236 million) a year earlier. The slowdown in the housing market has hurt demand for construction products. However, productivity gains improved earnings at its packaging business. Sales fell 8.8%, to $4.15 billion from $4.55 billion....
NEWMONT MINING CORP. $51 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 434.7 million; Market cap: $22.2 billion; WSSF Rating: Average) is one of the world’s largest producers of gold. It also mines copper, silver and zinc. Newmont aims to increase its exposure to gold. Its Canadian subsidiary Franco-Nevada Corp. recently sold shares to the public, and used the proceeds to pay Newmont $1.3 billion in cash for certain mining and oil and gas royalty assets. Newmont will use the cash to fund its $1.5 billion acquisition of Canadian gold mining company Miramar Mining Corp. Miramar’s Hope Bay Project in northern Canada is one of the largest undeveloped gold deposits in North America....
APACHE CORP. $91 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 332.7 million; Market cap: $30.3 billion; WSSF Rating: Average) explores for and produces oil and natural gas, mostly in North America. It also has operations in the North Sea, Egypt, Australia and Argentina. The company’s reserves are roughly half oil and half natural gas. Apache recently agreed to sell some of its smaller properties in the United States for $194.3 million. That will help the company fund a new investment in South America. Apache recently won the right to explore for oil on the Chilean side of the Tierra del Fuego chain of islands at the southern tip of South America. Apache plans to spend $18.3 million on the initial phase. The company owns 70% of a similar project on the Argentinian side of these islands, so its familiarity with this region helps lower the risk of this investment....
CHEVRON CORP. $81 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.1 billion; Market cap: $170.1 billion; WSSF Rating: Above average) is the secondlargest oil company in the United States after ExxonMobil Corp. Internationally, it has operations in over 175 countries. Chevron hasn’t fully benefited from the recent rise in oil prices. Its refineries have had to pay more for crude oil, which has hurt profits at this division. Shutdowns for maintenance at some of its operations, as well as the partial nationalization of its assets in Venezuela, have also cut total output. As well, many countries have increased drilling and other taxes on foreign oil companies. In the three months ended September 30, 2007, earnings fell 23.6%, to $1.75 a share (total $3.7 billion) from $2.29 a share ($5.0 billion) a year earlier. However, revenue rose 1.8%, to $55.2 billion from $54.2 billion....
ENCANA CORP. $61 (New York symbol ECA; Conservative Growth Portfolio, Resource sector; Shares outstanding: 749.5 million; Market cap: $45.7 billion; WSSF Rating: Average) is a leading North American producer of natural gas (80% of production) and oil (20%). The company prefers to focus on unconventional properties such as early-stage gas developments and oil sands. These assets cost more to develop, at least initially, but should last much longer than conventional properties. EnCana recently paid $2.6 billion for the 50% of the Amoruso natural gas field in East Texas that it does not already own. It also plans to spend $2.1 billion to develop the field. The purchase is a good fit with En- Cana’s other properties in the region, and will increase its North American gas reserves by 10%....
INTERNATIONAL BUSINESS MACHINES CORP. $106 (New York symbol IBM; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.4 billion; Market cap: $148.4 billion; WSSF Rating: Above average) is the world’s largest supplier of computers and information services. It operates in over 170 countries. IBM has long been a leader in large, mainframe computers for corporations and governments. As well, in the past five years, IBM has expanded its services and software operations through the purchase of over 60 companies for $20 billion. The company is now the world’s second-largest software company after Microsoft Corp. IBM now gets over 50% of its revenue from services, which include designing and maintaining computer systems for its customers. Services also give IBM steady, long-term revenue streams, which helps cut the risk of these acquisitions....
YAMANA GOLD $15.33 (Toronto symbol YRI; SI Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 619.9 million; Market cap: $9.5 billion) recently completed the acquisition of Meridian Gold and Northern Orion for $4.5 billion in cash and stock. Yamana now has nine operating mines in Latin America, along with six development stage properties. It also holds exploration properties and land positions in all major mineral areas in the region. Yamana’s cash flow jumped in the three months ended September 30, 2007, to $105 million or $0.30 a share, from $14.6 million or $0.05 a share. (All figures except share price in U.S. dollars.) Revenues rose to $199.7 million from $50.3 million. The increases came from the start-up of new mines, including the Chapada mine in Brazil....
EUROPEAN GOLDFIELDS $6.35 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 178.6 million; Market cap: $1.1 billion) owns properties in Greece and Romania. The company is headquartered in the UK. European Goldfields holds a 95% interest in Hellas Gold, after its recent purchase of an additional 30% interest. Hellas owns three gold and base metal deposits in Northern Greece. The deposits are the Stratoni zinc/lead/silver property, the Olympias gold/zinc/lead/ silver project and the Skouries copper/gold property. European Goldfields also owns 80% of the Certej gold/silver project in Romania, where it has completed a positive feasibility study, and applied for a mining permit....
CENTERRA GOLD $13.85 (Toronto symbol CG; SI Rating: Speculative) (416-204-1953; www.centerragold.com; Shares outstanding: 216.3 million; Market cap: $3.0 billion) owns 100% of the large Kumtor gold mine in Central Asia and 95% of the Boroo gold mine in Mongolia. The two mines have proven reserves of over 7 million ounces. Centerra expects to report production from the two mines for 2007 of around 550,000 ounces. Cameco Corp. owns 40.5% of Centerra. Centerra’s main exploration prospect is the 62%-owned REN project in Nevada. Its partner there is Barrick Gold, which operates mines nearby. Its other prospect is the 100%-held Gatsuurt property in Mongolia. In the three months ended September 30, 2007, Centerra’s revenues rose 28.5%, to $98 million from $76.3 million. (All figures except share price in U.S. dollars.) Earnings were $0.02 a share, down from $0.05 a year earlier, mostly due to higher costs and an increased tax rate. Cash flow was $0.07 a share in the latest quarter, down from $0.10 a share....
IAMGOLD $9.19 (Toronto symbol IMG; SI Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 293.8 million; Market cap: $2.7 billion) has interests in eight operating gold mines: 100% of the Mupane gold mine in Botswana, 38% of the Sadiola gold mine and 40% of the Yatela gold mine, both located in Mali, 18.9% interests in both the Tarkwa and Damang gold mines in Ghana, 100% of the Doyon mine and the sleeping Giant mine, both in Quebec, and 100% of the Rosebel mine in Suriname, South America. IAMGold also a 1% royalty interest in the Diavik diamond mine in northern Canada and 100% of the Niobec niobium mine in Quebec. IAMGold also has development projects and exploration activities in Africa, as well as in North and South America....