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
AUTODESK INC. $47 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 231.7 million; Market cap: $10.9 billion; WSSF Rating: Average) makes AutoCAD, the world’s leading computer aided design program. AutoCAD helps engineers and architects design machinery and buildings, and supplies 90% of Autodesk’s revenue. The remaining 10% comes from software that filmmakers use to create special effects. Autodesk spends over 20% of its revenue on research. This helps it maintain its dominance in its niche markets. Heavy research spending is also helping Autodesk transform its software, from the traditional 2D models to 3D. That speeds up the design process and improves the quality of the final product or structure. Autodesk is also using acquisitions to strengthen its 3D expertise. In June 2007, it paid $29.1 million for UK-based 3D specialist NavisWorks....
SYMANTEC CORP. $18 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 867.3 million; Market cap: $15.6 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 cut its reliance on sales to consumers by increasing its corporate operations. Security products and services for businesses also give it steadier revenue streams than consumer software sales. As part of this strategy, Symantec recently acquired Altiris Inc. for $1.05 billion. Altiris’s products let computer administrators easily install and manage software across a wide variety of computers attached to a network....
ADOBE SYSTEMS INC. $42 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 573.8 million; Market cap; $24.1 billion; WSSF Rating: Average) is best known for its Acrobat program, which lets users create electronic documents in the popular PDF format. However, Adobe gets nearly two-thirds of revenue from its Creative Solutions division, which help graphic designers create print publications and web pages. Adobe is starting to realize some of the benefits of its 2005 acquisition of Macromedia Inc., the developer of Flash. This program lets web page creators add animation and other features that make their sites easier to use. Popular sites such as YouTube use Flash to play videos and other content. Cellphones and other wireless devices that connect to the Internet represent a growing market for Flash. Adobe has licensed its mobile Flash technology to major cellphone makers such as Motorola and Samsung....
MICROSOFT CORP. $34 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 9.4 billion; Market cap: $319.6 billion; WSSF Rating: Above average) is the world’s largest maker of computer software. Its flagship products, the Windows operating system and the Office suite of business programs, dominate their markets. Microsoft released its new Windows Vista operating system in early 2007. While initial sales were slow, strong sales of new computers (with pre-loaded copies of Vista) have helped spur demand. A planned upgrade to the Vista operating system should also convince more business users to switch. In its first fiscal quarter ended September 30, 2007, Microsoft’s sales rose 27.8%, to $13.8 billion from $10.8 billion a year earlier. Earnings grew 28.6%, to $0.45 a share (total $4.3 billion) from $0.35 a share ($3.5 billion). The company spends around 13% of its revenue on research....
THE STANLEY WORKS $51 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 82.2 million; Market cap: $4.2 billion; WSSF Rating: Average) makes a wide variety of hand and power tools for consumers and industrial users. In addition to the Stanley brand, the company’s best-known trademarks include Bostitch, Husky, Monarch, and Mac Tools. It sells its products through home improvement chains such as Home Depot and Lowe’s, and independent distributors. In the past few years, Stanley has spent $2 billion on acquisitions to shift its focus from consumer products to industrial products and building security systems, which have steadier revenue streams....
TEXAS INSTRUMENTS INC. $32 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.4 billion; Market cap: $44.8 billion; WSSF Rating: Average) is more versatile than Intel or Nvidia. That’s because it makes chips for a wider variety of electronic devices, including mobile phones, digital cameras and DVD players. It has over 50,000 customers, although mobile phone maker Nokia Corp. accounts for about 15% of its total revenue. Strong competition in the chip industry continues to drive down prices. To help keep its profit margins high, Texas Instruments is now working on ways to cut its manufacturing costs. For example, it now outsources about half of its advanced digital chip manufacturing to outside firms. Texas Instruments feels these moves, plus closing older plants, will save it $200 million a year. Texas Instruments earned $0.52 a share (total $758 million) in the third quarter of 2007, up 15.6% from $0.45 a share ($686 million) a year earlier....
NVIDIA CORP. $38 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 548.8 million; Market cap; $20.9 billion; WSSF Rating: Average) is the most specialized of these three chipmakers. It develops 3D graphics chips and related technology for computers, gaming consoles and other electronic devices. The company focuses on design, and outsources production to other chipmakers. Nvidia’s stock has nearly doubled in the past six months, despite concerns over the recent acquisition of chief rival ATI Technologies by Advanced Micro Devices (AMD). Although AMD-powered computers will probably only use ATI graphic chips in the future, Nvidia is doing a good job expanding into new fields such as graphics chips for cellphones and handheld video game players. Nvidia now has roughly 33% of the graphics market, up from 20% a year earlier....
INTEL CORP. $26 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.8 billion; Market cap: $150.8 billion; WSSF Rating: Above average) is the world’s largest maker of electronic chips. Microprocessors for personal computers and servers account for two-thirds of its revenues. Intel ran into trouble a few years ago as new chips from its main competitor, Advanced Micro Devices Inc. (AMD), cut into its market share. But Intel has done a good job cutting costs, which will help it survive future price wars with AMD. The company has also shifted its research focus, from raw chip speed to chips that use less energy and run cooler. In the high-margin server market, AMD recently started selling its new “Barcelona” chip, which has four processors (quad-core) compared with just two on competing Intel chips. Multi-core chips let computers perform several tasks simultaneously....
THE BOEING CO. $94 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 777.2 million; Market cap: $73.1 billion; WSSF Rating: Above average) is the world’s second-largest maker of commercial aircraft, behind Europe’s Airbus. This business accounts for 50% of its revenue and 60% of its profits. Boeing’s other main business is its defense and space operations, which make advanced military fighters and helicopters, missiles and communication satellites. Sales to the U.S. Defense Department account for roughly 85% of this division’s revenue. The stock fell below $25 in 2003, as 9/11 and the Iraq war cut air travel volumes plus demand for new aircraft. At that time, Boeing decided to go ahead with a new plane called the 787 Dreamliner....
NEWELL RUBBERMAID INC. $28 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 279.3 million; Market cap; $7.8 billion; WSSF Rating: Average) makes a wide variety of household goods, including plastic storage containers, tools, window blinds and writing instruments. The company is currently in the middle of a threeyear restructuring aimed at cutting its annual expenses by $150 million. This involves selling less profitable operations, and shifting production overseas. In the three months ended June 30, 2007, Newell’s profits before restructuring costs rose 19.6%, to $0.55 a share (total $154.6 million) from $0.46 a share ($131.6 million) a year earlier. Sales grew 3.7%, to $1.69 billion from $1.63 billion....