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
SNAP-ON INC. $55 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.6 million; Market cap: $3.2 billion; WSSF Rating: Average) makes tools and diagnostic equipment for mechanics. The company distributes its products directly to garages through a fleet of dealer vans. Similar to Tupperware’s model, this method keeps Snap-On’s distribution costs down. Mechanics prefer it since it cuts the time to buy new tools. In November 2006, Snap-On paid $527 million for the Business Solutions division of ProQuest Co. This business helps car dealers electronically access information about auto parts, warranties and service bulletins. It also helps them manage their inventory and billing systems....
GENUINE PARTS CO. $50 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.5 million; Market cap: $8.5 billion; WSSF Rating: Average) makes and distributes automotive replacement parts to over 4,800 independent outlets in North America. The company also owns 1,100 stores that operate under the NAPA banner. It also distributes industrial parts, electrical supplies and office equipment. The company earned $2.76 a share in 2006, up 10.4% from $2.50 a share in 2005. Revenue rose 7.1%, to $10.5 billion from $9.8 billion. Auto parts account for roughly half of Genuine Parts’ sales. Higher gas prices forced car owners to drive less in 2006, which hurt demand for parts....
THE TUPPERWARE BRANDS CORP. $26 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 61.1 million; Market cap: $1.6 billion; WSSF Rating: Above average) makes high-quality products for the home and kitchen, including plastic food and beverage containers and children’s educational toys. The company also makes a wide range of beauty products, including cosmetics, bath oils and fragrances. Major brands include Tupperware, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo and Swissgarde. Unlike most manufacturers of consumer products, Tupperware prefers to sell its products through independent dealers instead of traditional stores. These dealers hold “Tupperware parties” in homes, offices and other locations to demonstrate products and take orders for merchandise. Parties also give dealers an opportunity to recruit new dealers, and make it easier to expand sales in less-developed countries with few retail stores or distribution networks. Tupperware parties may seem old-fashioned, but Tupperware’s revenue grew at a compounded annual rate of 11.5%, from $1.1 billion in 2002 to $1.7 billion in 2006. Profits before unusual items fell from $1.30 a share (total $76.2 million) in 2002 to $0.82 a share ($47.9 million) in 2003, as the company ended a relationship with Target Stores. Profits improved steadily to $1.54 a share ($94.2 million) in 2006....
TAHERA DIAMOND CORP. $0.88 (Toronto symbol TAH; SI Rating: Speculative) (1-877- 777-2004; www.tahera.com; Shares outstanding: 209.8 million; Market cap: $184.6 million) has sold 22.5 million units at $1.00 per unit to raise $22.5 million. Each unit is made up of one Tahera share, and one-half of a share purchase warrant. Each whole warrant is exercisable at $1.00 over the next two years. Tahera completed its Jericho mine in Nunavut last year at a cost of $116 million, but production suffered due to operating difficulties and the early melting of the ice road last winter. The road is holding up this year, however, and the company expects to meet its target of shipping 520 loads of fuel, explosives and other supplies. Tahera is also using its technical support agreement with Teck Cominco, which owns 16% of Tahera, to utilize Teck’s mining expertise and boost output. Tiffany & Co. purchases and markets all of the diamond production from Jericho....
STORNOWAY DIAMOND CORP. $1.03 (Toronto symbol SWY; SI Rating: Start-up) (1-888-338-2200; www.sornowaydiamonds.com; Shares outstanding: 200.2 million; Market cap: $206.2 million) recently completed the acquisition of TSE-listed Ashton Mining for $117 million. In a separate transaction, it also acquired all of the outstanding shares of TSE-listed Contact Diamond for $19 million. The new combined diamond-exploration company holds cash of $37 million. It also holds interests in a number of projects, including a 50% interest in the Renard diamond project in Quebec, the Aviat, Qilalugaq, and Churchill areas of Nunavut, the Buffalo Hills area in Alberta and the Timiskaming area of Ontario and Quebec. TSE-listed Agnico-Eagle holds a 14% interest in the combined company. Stornoway is now undertaking advanced exploration work on the Foxtrot kimberlite at the Renard project in Quebec. This project was the key asset acquired in the Ashton Mining purchase. This advanced work to determine the economic potential of the project includes a 10,000-tonne bulk sample that will go through separation and then diamond recovery at Stornoway’s lab in North Vancouver....
DIAMONDS NORTH RESOURCES $0.93 (Toronto symbol DDN; SI Rating: Start-up) (1-866-802- 2010; www.diamondsnorthresources.com; Shares outstanding: 50.9 million; Market cap: $47.3 million) has interests in 12 projects covering over 10 million exploration acres in Nunavut and the Northwest Territories. Its prospects range from early to advanced-stage exploration. Diamonds North’s leading prospect is its 100%- held Amuruk project in Nunavut. To date, the company has discovered five kimberlites, of which drilling on two has produced microdiamonds and some macrodiamonds. Diamonds North is now conducting bulk samples on the property to test for a higher-percentage of more commercially viable macro-diamonds. The company is also at an advanced stage with its Hepburn project in the Northwest Territories, where it has identified over 200 kimberlite drilling targets. Diamonds North’s other active project is on Banks Island in the Northwest Territories, where airborne surveys have identified a number of anomalies that the company believes are kimberlite pipes. De Beers Canada is active in the area....
SHORE GOLD $5.86 (Toronto symbol SGF; SI Rating: Start-up) (306-664-2202; www.shoregold.com; Shares outstanding: 177.2 million; Market cap: $1.0 billion) owns 100% of the Star diamond project in the Fort a la Corne area of northern Saskatchewan, an area that hosts one of the most extensive kimberlite fields in the world. The Star project contains a diamond-bearing kimberlite, estimated in the 500 million tonne range. Bulk sampling has already returned high carat-grades of diamonds. Kimberlites are cone-shaped pipes, comprised of a mixture of magma (molten rock) and rock that is carried by volcanic activity to the surface of the earth from depths greater than 150 kilometers. Diamonds form at those depths, under a mixture of extreme pressure and high temperatures. Kimberlites may also pick up diamonds along the way — and sometimes in quantities large enough to justify a diamond mine. Shore Gold also holds 60% of the Fort a la Corne Joint Venture. Fort a la Corne (which consists of a number of drill-confirmed kimberlite bodies and macrodiamond findings) does not include Shore Gold’s main Star Diamond project. After acquiring 100% of the project last year, Shore Gold sold a 40% interest to Newmont Mining for $170.4 million. Newmont already holds a 9.9% interest in Shore Gold’s common shares....
MCGRAW-HILL COMPANIES LTD. $63 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 351.3 million; Market cap: $22.1 billion; WSSF Rating: Average) has three main operations: school textbooks (40% of sales in 2006, 21% of profit); financial information under the Standard & Poor’s brand (44%, 76%); and the media division which includes BusinessWeek magazine and four TV stations (16%, 3%). McGraw-Hill’s specialized information products and databases are ideally suited for the Internet, and it is rapidly expanding its online services. Electronic distribution speeds up delivery and cuts costs for postage and paper, while its mainly subscription based services gives it predictable revenue streams. In 2006, McGraw-Hill’s profits before one-time items grew 12.3%, to $2.56 a share (total $939.3 million) from $2.28 a share ($872.3 million) in 2005. The company began expensing stock option costs in 2006, which cut its earnings by $0.23 a share. Revenue grew 5%, to $6.3 billion from $6.0 billion....
DOW JONES & CO. INC. $34 (New York symbol DJ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 83.8 million; Market cap: $2.8 billion; WSSF Rating: Above average) publishes The Wall Street Journal, which is the second most widely read newspaper in the United States. It also publishes Barron’s magazine, and over 20 smaller newspapers. Dow Jones recently redesigned The Wall Street Journal to make it easier to read, and added more general interest features to expand its appeal beyond its traditional readership and advertisers. The company also shrank the width of the paper, which cuts its newsprint and delivery costs by roughly $18 million a year. Other cost cutting initiatives will save it $46 million a year. Thanks to these moves, earnings before restructuring costs and other unusual items rose 13.3% in 2006, to $1.11 a share (total $92.6 million) from $0.98 a share ($81.8 million) in 2005. Revenue grew 6.6%, to $1.78 billion from $1.67 billion....
GANNETT CO. INC. $56 (New York symbol GCI; Conservative Growth Portfolio; Shares outstanding: 234.9 million; Market cap: $13.2 billion; WSSF Rating: Above average) publishes 90 daily newspapers in 38 states, including USA Today, the nation’s most widely read newspaper. Other operations include over 1,000 non-daily community newspapers, and 23 TV stations. Gannett also owns 17 daily papers and over 300 non-dailies in the UK. Gannett’s broad array of newspapers gives its Internet operations an edge over other news sites. In fact, its web sites accounted for about 15% of the U.S. Internet audience in January. The company now plans to expand its online content by taking better advantage of the news gathering capabilities of its newspapers and TV stations. It will also look for acquisitions that enhance its web sites, such as last year’s purchase of a company that specializes in mobile phone search services....