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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ACI WORLDWIDE $18.83 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-390-7600; www.aciworldwide.com; Shares outstanding: 118.3 million; Market cap: $2.2 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. Its products also help cut fraud. In the three months ended September 30, 2015, ACI’s revenue fell 4.3% to $238.7 million from $249.6 million a year earlier. Earnings declined 6.1%, to $14.8 million, or $0.13 a share, from $15.7 million, or $0.14. The higher U.S. dollar cut revenue and earnings at the company’s international operations. ACI is benefiting from the shift to chip-and-PIN debit and credit cards. That migration is the result of a liability shift for the EMV (EuroPay, MaterCard and VISA) payment networks, which came into effect in October 2015....
FAIR ISAAC CORP. $85.25 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 31.1 million; Market cap: $2.7 billion; Dividend yield: 0.1%) spends around 12% of its revenue on research, which lets it keep ahead of the competition. For example, it recently incorporated new data into its software. Previously, FICO Scores didn’t distinguish between people who carry balances on their credit cards (higher credit risk) and those who’ve never had a credit card but pay their cable, cellphone, electric, water and other bills every month (lower risk). In addition, the company plans to add information people publicly share on social media websites like Facebook. Both moves should make FICO Scores more accurate....
IAMGOLD $1.84 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 391.4 million; Market cap: $660.9 million; No dividends paid) owns 41% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of the Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America. In the three months ended September 30, 2015, IAMGold’s revenue fell 27.6%, to $207.6 million from $286.7 million a year earlier. Cash flow per share dropped to $0.09 from $0.24. Lower gold prices and production caused the declines. IAMGold’s long-term production outlook is positive. Meantime, the company holds a high $730.2 million U.S. in cash and gold bullion. A large part of that cash came from the $500-million sale of its Niobec niobium mine in Quebec’s Saguenay-Lac-Saint-Jean region in early 2015. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld....
YAMANA GOLD $2.13 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www. yamana.com; Shares outstanding: 946.6 million; Market cap: $1.9 billion; Dividend yield: 1.0%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development. In the three months ended September 30, 2015, the company’s gold production fell 1.9%, to 325,897 ounces from 332,344 a year earlier. The decline mainly resulted from lower ore grades at two of its mines. Gold prices fell 12.1% in the latest quarter. That, plus the lower production, cut Yamana’s cash flow by 25.9%, to $133.9 million from $180.7 million. Cash flow per share declined 39.1%, to $0.14 from $0.23, on more shares outstanding....
ALAMOS GOLD $3.40 (Toronto symbol AGI; TSINetwork Rating: Speculative) (604-681- 2802; www.alamosgold.com; Shares outstanding: 255.5 million; Market cap: $921.0 million; No dividends paid) took its current form in July 2015, when Alamos Gold merged with Stock Pickers Digest recommendation AuRico Gold. The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production this year. In the three months ended December 31, 2015, Alamos’s gold production rose 5.7%, to a record 104,734 ounces from 99,083 a year earlier. The company holds cash of $320.8 million U.S., which it will use to complete Young-Davidson and increase its gold output from 380,000 ounces in 2015 to over 400,000 this year....
REITMANS (CANADA) LTD. $3.63 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514- 384-1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $230.3 million; Dividend yield: 5.5%) owns 773 women’s clothing stores across Canada. The chain consists of 332 Reitmans, 135 Penningtons, 107 Addition Elle, 83 RW & Co., 68 Thyme Maternity, 17 Hyba (yoga clothing) and 31 Smart Set outlets. It also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores. In December 2015, the company’s sales fell 2.5% from December 2014. That’s mainly because it closed 65 stores in the past year. Sales rose 4.8% on a samestore basis, while online sales jumped 40.0%....
CAMECO CORP. $15.75 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 395.8 million; Market cap: $6.3 billion; Dividend yield 2.5%) officially opened its Cigar Lake mine in northern Saskatchewan in September 2015 after a series of technical problems, including an underground flood in 2006 that put construction several years behind schedule. The $2.6-billion project is tapping into one of the world’s largest high-grade uranium deposits. The company now expects Cigar Lake to produce 16 million pounds (8 million to Cameco) of uranium in 2016. The mine should reach its full capacity of 18 million pounds a year in 2018. Cameco is still a hold.
GOODYEAR TIRE & RUBBER CO. $27.93 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 268.9 million; Market cap: $7.4 billion; Dividend yield: 1.0%) has just won a contract with the Boeing Co. (symbol BA on New York and a recommendation of Wall Street Stock Forecaster) to supply main nose and landing gear tires for Boeing’s new 777X aircraft, which is scheduled for delivery in 2019. So far, the 777X program has received orders and commitments for 306 planes. The airliner will use Goodyear’s Flight radial tire, which is lighter than earlier models and includes rigid tread belts and enhanced rubber that offer greater stability, a longer life and more resistance to cuts. The deal reinforces Goodyear’s strong position in the growing aircraft-tire market....
SHERRITT INTERNATIONAL $0.65 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 293.9 million; Market cap: $199.8 million; No dividends paid) owns 40% of the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. The $5.3-billion U.S. project started up in 2015. However, nickel prices have fallen sharply, from $12.00 U.S. a pound in January 2011 to $3.87 today. To reflect the lower value of the mine’s reserves, Sherritt will now take a $1.6-billion after-tax writedown on the value of its Ambatovy stake. The charge will show up in its 2015 fourth-quarter results....
DREAM OFFICE REIT $14.31 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.7 million; Market cap: $1.7 billion; Dividend yield: 15.7%) owns and manages 174 properties comprising 23.3 million square feet of office space in major Canadian cities. In Western Canada, the trust has 17% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 18% in suburban Toronto and 22% elsewhere. Its occupancy rate is 91.6%. In the three months ended September 30, 2015, Dream’s revenue rose just slightly, to $202.4 million from $201.7 million a year earlier. Cash flow gained 2.5%, to $69.7 million from $68.1 million, while cash flow per unit fell 3.2%, to $0.61 from $0.64, on more units outstanding....