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.
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MCCOY GLOBAL $1.90 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 27.7 million; Market cap: $54.6 million; No dividends paid) sold its heavy-duty truck-trailer unit in 2014 and is now focused on its Energy Products and Services segment. It sells hydraulic gear, including power tongs, for drilling rigs. (Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.) McCoy has international sales and service centres in Singapore, Dubai and Aberdeen, Scotland. In the three months ended December 31, 2015, McCoy’s revenue fell 57.2%, to $11.6 million from $27.2 million a year earlier. Low oil and gas prices prompted clients to cut back on equipment purchases....
Aecon Group Inc. continued to increase its revenue, earnings and dividend with a steady flow of public infrastructure and private road-building contracts.
ALCOA INC. $8.54 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.1 billion; Market cap: $9.4 billion; Price -to- sales ratio: 0.4; Dividend yield: 1.4%; TSINetwork Rating: Average; www.alcoa.com) continues to cut its bulk aluminum output in response to low prices. It’s also expanding its more profitable businesses, such as making parts for cars and airplanes.
Alcoa’s earnings fell 67.7% in 2012, to $262 million, or $0.24 a share. These figures exclude unusual items, such as gains on asset sales and costs to close plants. In 2011, the company earned $812 million, or $0.72 a share. Revenue fell 5.0%, to $23.7 billion from $25.0 billion. Aluminum shipments rose 3.2%, but average prices fell 11.7%.
The uncertain global economy will probably continue to dampen aluminum prices. However, Alcoa’s long-term outlook remains bright. It owns 25.1% of a joint venture that is building a new smelter in Saudi Arabia; a state-owned mining company owns the remaining 74.9%. This new plant, which should begin operating later this year, will have the lowest operating costs of all of Alcoa’s facilities.
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Alcoa’s earnings fell 67.7% in 2012, to $262 million, or $0.24 a share. These figures exclude unusual items, such as gains on asset sales and costs to close plants. In 2011, the company earned $812 million, or $0.72 a share. Revenue fell 5.0%, to $23.7 billion from $25.0 billion. Aluminum shipments rose 3.2%, but average prices fell 11.7%.
The uncertain global economy will probably continue to dampen aluminum prices. However, Alcoa’s long-term outlook remains bright. It owns 25.1% of a joint venture that is building a new smelter in Saudi Arabia; a state-owned mining company owns the remaining 74.9%. This new plant, which should begin operating later this year, will have the lowest operating costs of all of Alcoa’s facilities.
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Dividend for Russel Metals seems sustainable and it’s managing long-term debt despite slower sales to energy producers.
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NEWELL RUBBERMAID INC. $38 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 267.1 million; Market cap: $10.1 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.0%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, pens and many other household goods. Its main brands include Sharpie markers, Parker and Paper Mate pens, Calphalon cookware, Irwin tools and Graco car seats and strollers. Newell is up 26.7% since we named it our Stock of the Year for 2014 at $30. That’s mainly because of its successful multi-year cost-cutting plan, which included closing plants and merging distribution centres. Since it began the plan in October 2011, these moves have reduced its annual expenses by $360 million. The company is also selling less-important businesses and using the proceeds to buy smaller firms with more-profitable products, such as baby strollers and reusable water bottles....
UNITED TECHNOLOGIES CORP. $94 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 836.4 million; Market cap: $78.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.utc.com) jumped $5 on news that rival Honeywell International (New York symbol HON) seeks to merge the two firms. Anti-trust regulators are unlikely to approve such a merger: the combined company would dominate several markets, including aerospace products (such as jet engines and landing gear) and building equipment (elevators, thermostats). Meanwhile, United Technologies earned $5.6 billion in 2015. That’s down 5.5% from $5.9 billion in 2014. The company used the $9.1 billion it received from last year’s sale of its Sikorsky helicopter operations to buy back $10.0 billion of its shares. As a result, its per-share earnings fell just 2.5%, to $6.30 from $6.46. If you factor out exchange rates, per-share earnings gained 0.5% to $6.49....