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
MOLSON COORS BREWING CO. $95 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 214.4 million; Market cap: $20.4 billion; Price-tosales ratio: 5.6; Dividend yield: 1.7%; TSINetwork Rating: Average; www.molsoncoors.com) is buying the 58% stake of MillerCoors it doesn’t already own. This business took its current form in 2008 when Molson and SABMiller combined their U.S. brewing operations. SABMiller is now merging with rival Anheuser- Busch InBev to create the world’s largest brewer. To satisfy competition regulators, SABMiller will sell its stake in MillerCoors to Molson for $12.0 billion. Paying for this business will add to Molson’s longterm debt of $2.9 billion, which is equal to 14% of its market cap. However, the deal will add $4.7 billion to its annual revenue. It totaled $3.6 billion in 2015....
QUAKER CHEMICAL CORP. $85 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.2 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.5%; TSINetwork Rating: Average; www.quakerchem.com) make lubricants that keep mechanical parts from rusting. Sales in 2015 fell 3.7%, to $737.6 million from $765.9 million in 2014. That’s mainly due to unfavourable exchange rates and lower demand from steel producers. However, a cost-cutting plan lifted its earnings per share by 4.0%, to $4.43 from $4.26. Quaker needs oil to make its products, so lower crude prices are cutting its costs. Its earnings should improve to $4.58 a share in 2016. The stock trades at a reasonable 18.6 times that forecast....
HP INC. $12 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $20.4 billion; Price-to-sales ratio: 0.2; Dividend yield: 4.2%; TSINetwork Rating: Average; www.hp.com) earned $645 million in its fiscal 2016 first quarter, which ended January 31, 2016. That’s down 15.7% from $765 million a year earlier. Earnings per share fell 12.2%, to $0.36 from $0.41, on fewer shares outstanding. Sales declined 11.6%, to $12.2 billion from $13.9 billion. Personal computer sales (62% of the total) fell 12.8%. Weak demand for new machines forced HP to cut its selling prices. Sales of printers (38%) dropped 17.0%. HP holds cash of $3.7 billion, or $2.12 a share. Its long-term debt of $6.7 billion is a manageable 33% of its market cap....
HEWLETT-PACKARD ENTERPRISE CO. $18 (New York symbol HPE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $30.6 billion; Priceto- sales ratio: 0.6; Dividend yield: 1.2%; TSINetwork Rating: Average; www.hpe.com) sells computer servers and analytics software to businesses. It saw its earnings fall 14.9% in the quarter ended January 31, 2016, to $731 million from $859 million a year earlier. Per-share earnings declined 12.8%, to $0.41 from $0.47 on fewer shares outstanding. Revenue dipped 2.5%, to $12.7 billion from $13.1 billion. However, excluding currency rates, revenue rose 4%. The company’s long-term debt of $15.2 billion is a high 50% of its market cap. It also holds cash of $8.5 billion, or $4.91 a share. This new firm is in a strong position to profit as more businesses expand their e-commerce activities and buy cloud-based data storage services. The stock trades at 9.6 times the $1.88 a share it will probably earn in 2016. That low p/e reflects uncertainty over the growth of business spending on new technology this year. The $0.22 dividend yields 1.2%....
ADOBE SYSTEMS INC. $93 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 497.8 million; Market cap: $46.3 billion; Price-to-sales ratio: 9.6; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) continues to see strong demand for its subscription services, particularly the Creative Cloud package of photoediting and desktop-publishing programs. In the quarter ended February 29, 2016, the company added 798,000 Creative Cloud subscribers (net of cancellations). This service now has around 7 million users. However, the stock trades at an expensive 33.2 times the $2.80 a share Adobe will likely earn in the year ending November 30, 2016. Moreover, Adobe gets 40% of its revenue from outside the U.S., and the high U.S. dollar is hurting the contribution of its overseas businesses. Adobe is still a hold.
GENERAL MILLS INC. $61 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 593.4 million; Market cap: $36.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.generalmills.com) plans to change the labels on its packaged food products to indicate if they contain genetically modified organisms (GMOs). That’s mainly to comply with new GMO-labelling rules in Vermont. They take effect in July 2016. The change will also help the company prepare for the likelihood of new national labelling standards. General Mills is currently phasing out GMO versions of oats in its cereals. However, it will continue to use GMO crops for other products. That’s because they use corn and wheat, and finding sufficient supplies of non-GMO versions would be difficult....
SYMANTEC CORP. $19 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 652.2 million; Market cap: $12.4 billion; Priceto- sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Average; www.symantec.com) has launched a new service that aims to improve the security of Internet websites. Called “Encryption Everywhere,” this software makes it easier for web hosting firms to embed encryption when they create new websites. This will help protect users from cybercriminals and online intruders. Symantec is giving away this software for free. It feels this approach will encourage hosting firms to adopt the technology and eventually buy more security services and software. Just 3% of the world’s websites use encryption technology, so there’s plenty of room to grow. Symantec is a buy.
NEWMONT MINING CORP. $27 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 529.2 million; Market cap: $14.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 0.6%; TSINetwork Rating: Average; www.newmont.com) has sold its 19.45% stake in Australian gold mining firm Regis Resources for $182 million. This sale is part of Newmont’s plan to sell less important assets, and use the proceeds to pay down its debt. Since 2013, it has sold $1.9 billion of assets. Newmont cut its long-term debt in 2015 by 6.1%, to $6.1 billion. That’s still a high 43% of its market cap. Newmont is a hold.
STATE STREET CORP. $59 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 400.0 million; Market cap: $23.6 billion; Price-to-sales ratio: 2.9; Dividend yield: 2.3%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans. State Street’s fee income rises and falls with the value of the mutual funds and other securities it manages. Recent stock market weakness reduced the value of its assets under custody and administration. In addition, low interest rates are hurting the interest income it gets from its loan portfolio. It’s also paying more to comply with tougher securities and banking regulations....
CINTAS CORP. $90 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 108.1 million; Market cap: $9.7 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.2%; TSINetwork Rating: Average; www.cintas.com) started out by offering laundry services to businesses in 1929. The company is now North America’s largest provider of corporate uniforms, with over 1 million customers. In addition to renting and cleaning uniforms, Cintas also rents out a variety of related products, such as mats, towels, mops and cleaning supplies. In all, these services account for 77% of its revenue. It gets a further 10% selling uniforms. The remaining 13% of its revenue come from selling first aid kits, fire extinguishers, sprinklers and emergency-exit lights. Big gain from Shred-it sale...