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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LEON’S FURNITURE LTD. $14.05 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 71.4 million; Market cap: $1.0 billion; Dividend yield: 2.8%) has steadily opened new stores, growing from 27 in 2003 to 80 today. The company more than quadrupled in size overnight with its March 2013 purchase of its main rival, The Brick, for $700 million. The Brick has 221 locations across Canada; the chains continue to operate separately. In the three months ended September 30, 2015, the company’s sales rose 1.2%, to $538.1 million from $531.7 million a year earlier. On a same-store basis, sales gained 1.1%. Earnings rose just slightly, to $27.34 million, or $0.38 a share, from $27.29 million, or $0.38. The company increased its sales with promotional prices, but that cut into its profit margins....
ENERFLEX LTD. $13.10 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 79.1 million; Market cap: $1.1 billion; Dividend yield: 2.6%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators. On June 30, 2014, Enerflex closed its $431-million U.S. acquisition of two businesses owned by privately held Axip Energy Services: an international contract compression and processing subsidiary and a division that provides aftermarket services. In the three months ended September 30, 2015, the company’s revenue fell 5.7%, to $425.2 million from $451.1 million a year earlier. Earnings per share were unchanged at $0.40....
TOROMONT INDUSTRIES LTD. $31.62 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.9 million; Market cap: $2.4 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division. In the three months ended September 30, 2015, Toromont’s sales rose 8.2%, to $505.6 million from $467.4 million a year earlier. Earnings per share 11.5%, to $0.58 from $0.52. Toromont saw stronger demand from customers in construction and agriculture than a year ago, which offset continued weak mining sales. It also cut costs....
DOMINO’S PIZZA $109.22 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3008; www.dominos.com; Shares outstanding: 54.6 million; Market cap: $6.0 billion; Dividend yield: 1.1%) has opened its first store in Belarus, in the city of Minsk. The outlet’s master franchisee, DPEU Franchising, plans to open more outlets across the country. This new “pizza theatre” store features an openconcept design that lets customers watch their pizzas being made and baked. Belarus is the company’s sixth new market this year. Domino’s now operates in over 80 countries; its international stores supply over half of its sales and about a third of its earnings. The company still has considerable room to grow internationally....
PASON SYSTEMS $19.46 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 83.6 million; Market cap: $1.6 billion; Dividend yield: 3.5%) rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that clients use to remotely collect data from their drilling operations. Pason reduced its capital spending by 46.3% this year, to $65 million from $121 million in 2014. It has also cut its staff by 20%. Meanwhile, the company’s balance sheet remains strong, with cash of $198.1 million, or $2.37 a share, and no debt. The stock yields a high 3.5%, and the dividend appears sustainable....
TEMPUR SEALY $75.57 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempursealy.com; Shares outstanding: 62.2 million; Market cap: $4.6 billion; No dividends paid) completed its $1.3- billion purchase of rival Sealy in 2013. This was a major acquisition for Tempur Sealy (formerly Tempur- Pedic), but it let the company diversify into traditional spring-coil beds. In the three months ended September 30, 2015, Tempur Sealy’s earnings rose 27.6%, to $69.9 million, or $1.11 a share, from $54.8 million, or $0.88 a share, a year earlier. Excluding the effect of a higher U.S. dollar, earnings per share jumped 36.4%. Sales gained 6.4%, to $880.0 million from $827.4 million. North American sales (82% of the total) rose 7.5%, while international sales (18%) fell 2.3%....
WYNDHAM WORLDWIDE $74.20 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 116.1 million; Market cap: $8.5 billion; Dividend yield: 2.3%) is one of the world’s largest hospitality companies, with 7,700 franchised hotels worldwide. Wyndham also manages vacation resorts, rental properties, luxury clubs and time-shares. It currently has around 110,000 vacation-rental properties in 100 countries. In the three months ended September 30, 2015, Wyndham’s revenue rose 3.3%, to $1.56 billion from $1.51 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped increase its occupancy rate by 1.7%....
Home Depot continues to benefit from a boom in home renovations and seeks to maintain its strong growth against stiff competition.
SNC-Lavalin readies for more public works contracts, acquires oil and gas-focused contractor
Our look at Brookfield Property Partners, a growth stock with worldwide properties, a high dividend yield and big plans for more growth.