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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PASON SYSTEMS $19.73 (Toronto symbol PSI; TSINetwork Rating: Speculative)(403-301-3400; www.pason.com; Shares outstanding: 83.7 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 clients use to remotely collect data from their drilling operations. Pason serves oil and gas firms and drilling contractors throughout Canada, the U.S., Mexico and Argentina.
In the three months ended June 30, 2015, the company’s revenue fell 44.7%, to $57.4 million from $103.9 million a year earlier. A rise in the U.S. dollar only partly offset an industry-wide slowdown in oil and gas drilling.
The company lost $9.4 million, or $0.11 a share, compared to a profit of $17.6 million, or $0.21, a year ago. The lower revenue was the main reason for the decline, and the latest quarter also included $2.6 million of restructuring costs. Cash flow per share was positive, though it was down sharply, to $0.11 from $0.53.
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In the three months ended June 30, 2015, the company’s revenue fell 44.7%, to $57.4 million from $103.9 million a year earlier. A rise in the U.S. dollar only partly offset an industry-wide slowdown in oil and gas drilling.
The company lost $9.4 million, or $0.11 a share, compared to a profit of $17.6 million, or $0.21, a year ago. The lower revenue was the main reason for the decline, and the latest quarter also included $2.6 million of restructuring costs. Cash flow per share was positive, though it was down sharply, to $0.11 from $0.53.
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COMPUTER MODELLING GROUP $12.53 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 79.0 million; Market cap: $976.3 million; Dividend yield: 3.2%) sells software and services that help conventional oil and gas producers create 3-D models of reservoirs. That lets them squeeze more out of those reservoirs using advanced recovery techniques, such as injecting steam or chemicals. Typically, only 25% to 30% of oil and gas is recovered during primary production.
Unconventional producers using hydraulic fracturing, or fracking, of oil and gas-bearing shale can also use Computer Modelling’s software to determine optimal drilling locations and depths.
In the three months ended June 30, 2015, the company’s revenue rose 9.7%, to $21.4 million from $19.6 million a year earlier. Software licensing revenue (90% of the total) rose 10.9%, while consulting and professional services revenue (10%) fell slightly.
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Unconventional producers using hydraulic fracturing, or fracking, of oil and gas-bearing shale can also use Computer Modelling’s software to determine optimal drilling locations and depths.
In the three months ended June 30, 2015, the company’s revenue rose 9.7%, to $21.4 million from $19.6 million a year earlier. Software licensing revenue (90% of the total) rose 10.9%, while consulting and professional services revenue (10%) fell slightly.
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SHERRITT INTERNATIONAL $0.98 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 293.9 million; Market cap: $285.1 million; Dividend yield: 4.1%) reported revenue of $99.6 million in the three months ended June 30, 2015, down 23.5% from $130.2 million a year earlier, mostly due to lower oil and gas prices.
However, cash flow per share doubled, to $0.08 from $0.04, mostly because of lower interest and tax payments. Sherritt has also cut about 10% of its salaried workforce.
The company needs an improving global economy to fuel commodity demand, but it’s well positioned to profit from a rebound.
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However, cash flow per share doubled, to $0.08 from $0.04, mostly because of lower interest and tax payments. Sherritt has also cut about 10% of its salaried workforce.
The company needs an improving global economy to fuel commodity demand, but it’s well positioned to profit from a rebound.
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YAMANA GOLD $2.13 (Toronto symbol YRI; TSINetwork Rating: Speculative)(416-815-0220; www.yamana.com; Shares outstanding: 946.5 million; Market cap: $1.9 billion; Dividend yield: 3.7%) 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 June 30, 2015, the company’s gold production rose 7.1%, to 298,818 ounces from 279,118 a year earlier. That was mainly due to its 50% stake in the Canadian Malartic gold mine in Quebec, which it purchased last year; this mine contributed 68,440 ounces to Yamana’s latest quarterly output.
The higher production helped offset a 7.5% decline in gold prices. As a result, Yamana’s cash flow rose slightly, to $149.3 million from $149.0 million. However, cash flow per share fell 15.8%, to $0.16 from $0.19, on more shares outstanding.
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In the three months ended June 30, 2015, the company’s gold production rose 7.1%, to 298,818 ounces from 279,118 a year earlier. That was mainly due to its 50% stake in the Canadian Malartic gold mine in Quebec, which it purchased last year; this mine contributed 68,440 ounces to Yamana’s latest quarterly output.
The higher production helped offset a 7.5% decline in gold prices. As a result, Yamana’s cash flow rose slightly, to $149.3 million from $149.0 million. However, cash flow per share fell 15.8%, to $0.16 from $0.19, on more shares outstanding.
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NEW GOLD $3.02 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold .com; Shares outstanding: 509.1 million; Market cap: $1.4 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.
New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of the Rainy River project in Ontario.
In the three months ended June 30, 2015, New Gold’s cash flow per share fell 8.3%, to $0.11 from $0.12 a year earlier. That’s because the company’s gold and copper production fell, as did prices.
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New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of the Rainy River project in Ontario.
In the three months ended June 30, 2015, New Gold’s cash flow per share fell 8.3%, to $0.11 from $0.12 a year earlier. That’s because the company’s gold and copper production fell, as did prices.
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TEMPUR SEALY $76.95 (New York symbol TPX; TSINetwork Rating: Speculative)(800- 878-8889; www.tempursealy.com; Shares outstanding: 61.9 million; Market cap: $4.8 billion; No dividends paid) has named a new chief executive officer.
The previous CEO, Marc Sarvaray, resigned earlier this year under pressure from activist investor H Partners Management, which holds 10% of the company’s shares.
Tempur Sealy’s new CEO and chairman is Scott L. Thompson, who led car-rental agency Dollar Thrifty Automotive until Hertz Global Holdings acquired it in 2012.
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The previous CEO, Marc Sarvaray, resigned earlier this year under pressure from activist investor H Partners Management, which holds 10% of the company’s shares.
Tempur Sealy’s new CEO and chairman is Scott L. Thompson, who led car-rental agency Dollar Thrifty Automotive until Hertz Global Holdings acquired it in 2012.
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CHIPOTLE MEXICAN GRILL $730.01 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.1 million; Market cap: $22.8 billion; No dividends paid) is a Denver- based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it offers better quality food, including naturally raised meat, and superior decor and service.
In the three months ended June 30, 2015, Chipotle’s sales jumped 14.1%, to $1.20 billion from $1.05 billion a year earlier. Its restaurants attracted more customers during the quarter, which increased its same-restaurant sales by 4.3%.
Chipotle opened 48 new outlets, bringing its total to 1,878. It aims to add a total of 100 locations this year. Earnings gained 27.1%, to $140.2 million, or $4.51 a share, from $110.3 million, or $3.55. That’s partly because it raised the prices of some menu items last year, offsetting higher beef and packaging costs.
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In the three months ended June 30, 2015, Chipotle’s sales jumped 14.1%, to $1.20 billion from $1.05 billion a year earlier. Its restaurants attracted more customers during the quarter, which increased its same-restaurant sales by 4.3%.
Chipotle opened 48 new outlets, bringing its total to 1,878. It aims to add a total of 100 locations this year. Earnings gained 27.1%, to $140.2 million, or $4.51 a share, from $110.3 million, or $3.55. That’s partly because it raised the prices of some menu items last year, offsetting higher beef and packaging costs.
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DOMINO’S PIZZA $111.62 (New York symbol DPZ; TSINetwork Rating: Average)(734-930-3008; www.dominos.com; Shares outstanding: 54.9 million; Market cap: $6.1 billion; Dividend yield: 1.1%) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 11,700 outlets in the U.S. and 75 other countries. Franchisees run most of these stores.
In the three months ended June 14, 2015, the company’s earnings per share jumped 20.9%, to $0.81 from $0.67 a year earlier.
Sales gained 8.5%, to $488.6 million from $450.5 million. Same-store sales rose 6.7% internationally, but more important, they increased 12.8% in the U.S., home to most of the company’s stores.
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In the three months ended June 14, 2015, the company’s earnings per share jumped 20.9%, to $0.81 from $0.67 a year earlier.
Sales gained 8.5%, to $488.6 million from $450.5 million. Same-store sales rose 6.7% internationally, but more important, they increased 12.8% in the U.S., home to most of the company’s stores.
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WESTJET $24.77 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493- 7853; www.westjet.com; Shares outstanding: 125.8 million; Market cap: $3.0 billion; Div. yield: 2.3%) recently took delivery of the first of its four Boeing 767 extended-range wide-body aircraft.
Over the next several months, this new plane will fly between Toronto and Calgary; the other three aircraft will arrive separately over the next eight months. The next two 767s will fly from Alberta to Hawaii and between Toronto and Montego Bay, Jamaica, beginning in December 2015.
The fourth and final aircraft, which features 262 seats and an 11-hour range, will arrive next spring to launch WestJet’s new service to London, England, in May 2016.
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Over the next several months, this new plane will fly between Toronto and Calgary; the other three aircraft will arrive separately over the next eight months. The next two 767s will fly from Alberta to Hawaii and between Toronto and Montego Bay, Jamaica, beginning in December 2015.
The fourth and final aircraft, which features 262 seats and an 11-hour range, will arrive next spring to launch WestJet’s new service to London, England, in May 2016.
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REITMANS (CANADA) LTD. $4.62 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $303.1 million; Dividend yield: 4.3%) owns 794 women’s clothing stores across Canada.
The chain consists of 333 Reitmans, 135 Penningtons, 107 Addition Elle, 80 RW & Co., 69 Thyme Maternity and 70 Smart Set outlets. It also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores.
In the three months ended August 1, 2015, Reitmans’ sales fell 2.1%, to $253.0 million from $258.3 million a year earlier. That’s because the company closed 51 less profitable locations. Same-store sales gained 1.7%, with brick-and-mortar stores decreasing 0.6% and e-commerce jumping 70.1%.
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The chain consists of 333 Reitmans, 135 Penningtons, 107 Addition Elle, 80 RW & Co., 69 Thyme Maternity and 70 Smart Set outlets. It also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores.
In the three months ended August 1, 2015, Reitmans’ sales fell 2.1%, to $253.0 million from $258.3 million a year earlier. That’s because the company closed 51 less profitable locations. Same-store sales gained 1.7%, with brick-and-mortar stores decreasing 0.6% and e-commerce jumping 70.1%.
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