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
WAL-MART STORES INC. $64 (New York symbol WMT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 3.2 billion; Market cap: $204.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.walmart.com) is the world’s largest retailer, with 11,600 stores in 27 countries....
The lower Canadian dollar has made it more expensive to buy U.S. stocks. However, the American market gives you access to the world’s leading companies. What’s more, U.S. dollar investments give you foreign currency diversification. We feel it’s more important than ever to build a varied portfolio of high-quality stocks. For 2016, we’ve chosen one from each of our portfolios (Aggressive, Conservative and Income). We think all three could post strong gains in the next two to five years. ALPHABET INC. (Nasdaq symbols GOOG $700 [class C: nonvoting] and GOOGL $718 [class A: one vote per share]; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 687.7 million; Market cap: $493.5 billion; Priceto- sales ratio: 7.0; No dividends paid; TSINetwork Rating: Above Average; www.abc.xyz) is the new parent company of Google’s Internet search business (still called Google) and other operations. Each of these subsidiaries functions independently....
SYMANTEC CORP. $19 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 680.0 million; Market cap: $12.9 billion; Priceto- sales ratio: 2.1; Dividend yield: 3.2%; TSINetwork Rating: Average; www.symantec.com) said in 2014 that it would split into two publicly traded firms. One would keep the Symantec name and focus on antivirus and security software. The other, called Veritas Technologies, would focus on Symantec’s information-management business, which makes products for data backup and recovery. However, the company instead decided to sell Veritas to the Carlyle Group (Nasdaq symbol CG) for $8.0 billion. Now Carlyle seems to be having trouble raising the funds to buy Veritas. As a result, Symantec and Carlyle have altered the deal’s terms. Symantec will now receive $7.0 billion, including $6.6 billion in cash and $400 million in Veritas stock. It plans to complete the sale by the end of January 2016....
ADOBE SYSTEMS INC. $85 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 498.3 million; Market cap: $42.4 billion; Price-to-sales ratio: 9.0; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) makes software for publishing companies and website developers. Its main products include Adobe Acrobat, which lets users create and edit electronic documents in the widely used PDF format, and its Creative Suite package of photo editing and desktop publishing programs. In 2012, Adobe started selling its Creative Suite software as a cloud-based service called Creative Cloud. The company now gets 74% of its revenue from recurring sources....
TEXAS INSTRUMENTS INC. $51 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $51.0 billion; Price- to-sales ratio: 3.9; Dividend yield: 3.0%; TSINetwork Rating: Average; www.ti.com) specializes in analog chips, which convert inputs like touch, sound and pressure into electronic signals that computers can understand. Manufacturers use these chips in a variety of products, including cars, cameras, medical devices and appliances. In 2015, Texas Instruments’ earnings rose 5.8%, to $3.0 billion from $2.8 billion in 2014. It spent $2.7 billion on share buybacks during the year, so earnings per share gained 9.7%, to $2.82 from $2.57. Overall revenue fell 0.3%, to $13.00 billion from $13.05 billion. Sales of analog chips (64% of the total) rose 2.9%. Revenue from embedded processor chips (21%), which perform mathematical calculations, gained 1.7%. However, revenue from other chips and calculators (15%) fell 14.9%....
APPLE INC. $93 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.5 billion; Market cap: $511.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.apple.com) gets about two-thirds of its revenue from its iPhone smartphone. The remaining third comes from its Mac computers, iPad tablets, iPod music players and sales of software, movies and music through its iTunes online store. In its fiscal 2016 first quarter, which ended December 26, 2015, Apple sold 74.8 million iPhones, up just 0.4% from 74.5 million a year earlier. That’s mainly due to slowing demand in China. Users are also waiting for the company to launch a new model later this year....
Computer technology continues to change— and spread— rapidly. We feel the best way to profit from this growth is by investing in well-established companies that lead their markets, like the four we analyze below. All of them have strong earnings and balance sheets. That lets them spend heavily on product development and buy smaller firms with attractive technologies. We have a high opinion of all four, but we see only two as buys right now....
INTERNATIONAL BUSINESS MACHINES CORP. $121 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 970.1 million; Market cap: $117.4 billion; Price-to-sales ratio: 1.5; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.ibm.com) recently paid $130 million for Ustream, a private firm specializing in cloud-based videostreaming services. Its clients include NASA, Samsung, Facebook, Nike and the Discovery Channel. The purchase will help IBM with its plan to bring its analyticssoftware expertise to online video content. This will help its clients make better use of their video libraries and protect their copyrighted material. The company expects the market for cloud-based video services and software to total $105 billion by 2019. IBM is a buy....
BHP BILLITON LTD. ADRs $21 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 1.6 billion; Market cap: $33.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 11.8%; TSINetwork Rating: Average; www.bhpbilliton.com) will write down its U.S. onshore oil holdings by $4.9 billion (after taxes) in response to the decline in oil prices. In 2011, it spent $20.6 billion on acquisitions of U.S. shale oil and gas properties. The company is also seeing sharply lower prices for its other commodities, including iron ore, metallurgical coal and copper. The resulting decline in BHP’s cash flow will probably prompt it to cut its $2.48 dividend, which yields a high 11.8%. BHP Billiton is still a hold.
AMERICAN EXPRESS CO. $55 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 969.0 million; Market cap: $53.3 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.americanexpress.com) is one of the world’s largest issuers of payment cards, with 117.8 million cards outstanding in over 130 countries. Amex issues two types of cards: charge cards, which have no preset spending limit and must be paid in full each month; and traditional credit cards, which let users carry a balance. The company is also a bank that accepts deposits and makes loans. It cuts its credit risk by mainly catering to clients with above-average incomes and good credit histories. Amex wrote off just 1.9% of its U.S. loans in 2015, up slightly from 1.8% in 2014. Its international write-off rate crept up to 2.2% from 2.1%....