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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CONAGRA FOODS INC. $40 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 429.2 million; Market cap: $17.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.conagrafoods.com) paid $4.75 billion for Ralcorp Holdings, the largest private-label food maker in the U.S., in January 2013. However, strong competition and higher ingredient costs have hurt Ralcorp’s earnings. In response, ConAgra aims to sell Ralcorp by the end of 2015.
Excluding Ralcorp’s contribution and unusual items, ConAgra’s earnings rose 15.4% in its fiscal 2016 first quarter, which ended August 30, 2015, to $0.45 a share from $0.39 a year earlier. Sales gained 1.1%, to $2.79 billion from $2.76 billion.
Consumer foods, such as Chef Boyardee canned pasta and Hunt’s tomato sauce, now supply 61% of ConAgra’s revenue. These products’sales fell 0.3%, as unfavourable currency rates offset higher selling prices.
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Excluding Ralcorp’s contribution and unusual items, ConAgra’s earnings rose 15.4% in its fiscal 2016 first quarter, which ended August 30, 2015, to $0.45 a share from $0.39 a year earlier. Sales gained 1.1%, to $2.79 billion from $2.76 billion.
Consumer foods, such as Chef Boyardee canned pasta and Hunt’s tomato sauce, now supply 61% of ConAgra’s revenue. These products’sales fell 0.3%, as unfavourable currency rates offset higher selling prices.
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PFIZER INC. $33 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.2 billion; Market cap: $204.6 billion; Price-to-sales ratio: 4.1; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.pfizer.com) started up in 1942 and is now one of the world’s leading makers of prescription drugs. Top-selling brands include Lyrica (epilepsy), Celebrex (arthritis pain), Prevnar (pneumonia) and Enbrel (rheumatoid arthritis).
The company is also the world’s fifth-largest maker of overthe- counter treatments, including| Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).
Pfizer’s revenue fell 19.5%, from $61.6 billion in 2010 to $49.6 billion in 2014. That’s mainly because it sold its nutrition division, which makes formula and other products for children, to Switzerland-based Nestle S.A. for $11.9 billion in 2012. In 2013, Pfizer set up its animalhealth business as a separate firm called Zoetis Inc. (New York symbol ZTS).
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The company is also the world’s fifth-largest maker of overthe- counter treatments, including| Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).
Pfizer’s revenue fell 19.5%, from $61.6 billion in 2010 to $49.6 billion in 2014. That’s mainly because it sold its nutrition division, which makes formula and other products for children, to Switzerland-based Nestle S.A. for $11.9 billion in 2012. In 2013, Pfizer set up its animalhealth business as a separate firm called Zoetis Inc. (New York symbol ZTS).
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A reputation for friendlier service, lower fuel costs and 41 consecutive profitable quarters help make WestJet one of our top value stocks.
An improved U.S. housing market helps Canadian growth stock Hardwood Distribution, but we view this stock as a very aggressive investment.
FAIR ISAAC CORP. $82.43 (New York symbol FICO; TSINetwork Rating: Average)(415-472-2211; www.fairisaac.com; Shares outstanding: 31.1 million; Market cap: $2.6 billion; Dividend yield: 0.1%) makes FICO Scores, the program that dominates the market for software that businesses use to evaluate customer creditworthiness. Fair Isaac also profits by selling programs that help credit card issuers control fraud and analyze cardholders’ spending patterns.
In its fiscal 2015 third quarter, which ended June 30, 2015, Fair Isaac’s revenue rose 5.9%, to $209.3 million from $197.6 million a year earlier. Sales at its applications division (61% of the total) fell 2.1% on weaker demand for marketing and fraud detection software. However, sales of credit-scoring programs (27%) jumped 23.0%, while sales of analytics software (12%) gained 18.1%.
The company earned $32.3 million, up 10.3% from $29.2 million. Earnings per share rose 20.5%, to $1.00 from $0.83, on fewer shares outstanding. Fair Isaac spends around 12% of its revenue on research, which lets it produce innovative products that keep it ahead of the competition.
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In its fiscal 2015 third quarter, which ended June 30, 2015, Fair Isaac’s revenue rose 5.9%, to $209.3 million from $197.6 million a year earlier. Sales at its applications division (61% of the total) fell 2.1% on weaker demand for marketing and fraud detection software. However, sales of credit-scoring programs (27%) jumped 23.0%, while sales of analytics software (12%) gained 18.1%.
The company earned $32.3 million, up 10.3% from $29.2 million. Earnings per share rose 20.5%, to $1.00 from $0.83, on fewer shares outstanding. Fair Isaac spends around 12% of its revenue on research, which lets it produce innovative products that keep it ahead of the competition.
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SYMANTEC CORP. $19.95 (Nasdaq symbol SYMC; TSINetwork Rating: Average)(650-527-8000;www.symantec.com; Shares outstanding: 684.2 million; Marketcap: $13.5 billion; Dividend yield: 3.0%) continues to strengthen its fast-growing cyber security business. It’salso selling off its Veritas Technologies division.
Corporations are spending more on cyber security following high-profile attacks on Sony, Target and Ashley Madison. Symantec is taking advantage of thisby hiring more programmers. It has also cancelled unprofitable contracts and simplified its product lines.
These moves cut the company’s profits by 12.1% in its fiscal 2016 first quarter, which ended July 3, 2015,to $275 million, or $0.40 a share, from $313 million,or $0.45. Sales fell 13.6%, to $1.50 billion from $1.74billion.
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Corporations are spending more on cyber security following high-profile attacks on Sony, Target and Ashley Madison. Symantec is taking advantage of thisby hiring more programmers. It has also cancelled unprofitable contracts and simplified its product lines.
These moves cut the company’s profits by 12.1% in its fiscal 2016 first quarter, which ended July 3, 2015,to $275 million, or $0.40 a share, from $313 million,or $0.45. Sales fell 13.6%, to $1.50 billion from $1.74billion.
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INTACT FINANCIAL $94.32 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $12.2 billion; Dividend yield: 2.3%) has reached a tentative deal to offer insurance to drivers with the Uber ride-sharing service, under which passengers use a smartphone app to hire drivers who use their own personal vehicles.
Intact won’t reveal further details until provincial insurance regulators sign off on the plan, but it did say it would offer the insurance under its two main brands: Intact Insurance and belairdirect.
Uber says its drivers are covered by a commercial policy for up to $5 million worth of injuries and property damage. However, under Canadian law, commercial drivers must have their own insurance to cover claims incurred while transporting a passenger for profit.
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Intact won’t reveal further details until provincial insurance regulators sign off on the plan, but it did say it would offer the insurance under its two main brands: Intact Insurance and belairdirect.
Uber says its drivers are covered by a commercial policy for up to $5 million worth of injuries and property damage. However, under Canadian law, commercial drivers must have their own insurance to cover claims incurred while transporting a passenger for profit.
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WYNDHAM WORLDWIDE $78.71 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 118.1 million; Market cap: $9.2 billion; Dividend yield: 2.1%) now plans to enter Myanmar, where it has signed a franchise agreement for a 26-room hotel in Yangon, the country’s capital.
Owned by Asia Myanmar Shining Star Company, the five-star Wyndham Grand Yangon Royal Lake will be part of the mixed-use Kantharyar Centre Project, at the southern fringe of Yangon’s popular Kandawgyi Lake. The $157-million U.S. complex will include a residential building, serviced apartments, an office tower and a shopping mall. The hotel is scheduled to be completed in 2017.
Wyndham Worldwide is a hold.
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Owned by Asia Myanmar Shining Star Company, the five-star Wyndham Grand Yangon Royal Lake will be part of the mixed-use Kantharyar Centre Project, at the southern fringe of Yangon’s popular Kandawgyi Lake. The $157-million U.S. complex will include a residential building, serviced apartments, an office tower and a shopping mall. The hotel is scheduled to be completed in 2017.
Wyndham Worldwide is a hold.
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FIRSTSERVICE CORP. $42.76 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $1.5 billion; Dividend yield: 1.2%) offers residential property management and property improvement services.
The company recently announced that it is acquiring Custom Property Management, a leading provider of residential property management services in West Palm Beach, Florida, and surrounding areas. FirstService didn’t reveal the deal’s terms.
The transaction will add over 16,000 units to FirstService’s existing property management portfolio, which totals 7,200 buildings comprised of over 1.6 million residential units throughout North America.
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The company recently announced that it is acquiring Custom Property Management, a leading provider of residential property management services in West Palm Beach, Florida, and surrounding areas. FirstService didn’t reveal the deal’s terms.
The transaction will add over 16,000 units to FirstService’s existing property management portfolio, which totals 7,200 buildings comprised of over 1.6 million residential units throughout North America.
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DELPHI ENERGY $0.74 (Toronto symbol DEE; TSINetwork Rating: Speculative)(403- 265-6171; www.delphienergy.ca; Shares outstanding: 155.5 million; Market cap: $115.1 million; No dividends paid) develops, produces and explores for oil and natural gas. About 70% of its output is gas; the remaining 30% is oil.
In the three months ended June 30, 2015, Delphi’s production fell 1.7%, to 10,210 barrels of oil equivalent a day from 10,397 a year earlier. The lower output and a 31.4% average decline in oil and gas prices cut cash flow per share to $0.06 from $0.09. The company will need improved oil and gas prices to move significantly higher, but its long-term outlook is positive.
Delphi Energy is a buy for aggressive investors.
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In the three months ended June 30, 2015, Delphi’s production fell 1.7%, to 10,210 barrels of oil equivalent a day from 10,397 a year earlier. The lower output and a 31.4% average decline in oil and gas prices cut cash flow per share to $0.06 from $0.09. The company will need improved oil and gas prices to move significantly higher, but its long-term outlook is positive.
Delphi Energy is a buy for aggressive investors.
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