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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At first, the Trans-Pacific trade pact could hinder dairy producer Saputo, a top growth stock for us. But we like its long-term prospects.
Today, a look at how good companies deal with adverse circumstances. Two dominant Japanese carmakers, Toyota and Honda, have had to deal with massive recalls and repairs from faulty airbag inflators. But both continue to benefit from strong international sales and a lower Japanese yen. Faulty airbag inflators made by Takata Corp. have forced Toyota to recall 8.1 million vehicles since 2008, while Honda has had to fix 20 million cars....
Emera is both a high-yielding utility and a growth stock aiming to raise its dividend with the help of new projects: our recommendation.
Profits have soared for Electronic Arts, but the need to keep turning out successful video games makes it a high risk stock in our view.
NVIDIA CORP. $20 (www.nvidia.com) plans to focus on designing high-end graphic chips for computer games, cars and cloud computing applications. As a result, it aims to sell its Icera subsidiary, which designs energy-efficient chips for mobile phones....
RESTAURANT BRANDS INTERNATIONAL INC. $43 (www. rbi.com) earned $0.30 a share in the three months ended June 30, 2015, up 25.0% from $0.24 a year earlier. These figures exclude costs related to Burger King Worldwide’s December 2014 acquisition of Tim Hortons....
GENUINE PARTS CO. $88 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 152.3 million; Market cap: $13.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.8%; TSINetwork Rating: Average; www.genpt.com) gets 53% of its sales and 55% of its earnings by selling replacement auto parts: Genuine operates 1,100 outlets under the NAPA banner, and its distribution business serves 4,900 independent stores in North America, Australia and New Zealand.
The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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The company also distributes industrial parts (31% of sales, 29% of earnings), office products (12%, 11%) and electrical equipment (4%, 5%).
As the economy improved after the 2008/09 recession, the company’s sales rose 36.9% from $11.2 billion in 2010 to $15.3 billion in 2014. Overall earnings jumped 49.6%, from $475.5 million to $711.3 million. Per-share profits gained 53.7%, from $3.00 to $4.61, on fewer shares outstanding.
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CINTAS CORP. $85 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 111.7 million; Market cap: $9.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.0%; TSINetwork Rating: Average; www.cintas.com) designs and makes uniforms, then sells them to over 900,000 businesses, mainly in North America. It also offers related products and services, like office cleaning and first aid kits.
Last year, the company sold its document-shredding operations to Toronto-based Shred-it International. In exchange, it received 42% of the combined firm and $180 million in cash. In May 2015, the company received a $113.4-million dividend from Shred-it.
Shred-it recently accepted a $2.3-billion takeover offer from Stericycle (Nasdaq symbol SRCL). As a result, Cintas will get between $550 million and $600 million for its stake. Stericycle expects to complete the purchase by the end of 2015.
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Last year, the company sold its document-shredding operations to Toronto-based Shred-it International. In exchange, it received 42% of the combined firm and $180 million in cash. In May 2015, the company received a $113.4-million dividend from Shred-it.
Shred-it recently accepted a $2.3-billion takeover offer from Stericycle (Nasdaq symbol SRCL). As a result, Cintas will get between $550 million and $600 million for its stake. Stericycle expects to complete the purchase by the end of 2015.
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DIAGEO PLC ADRs $115 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.8 million; Market cap: $72.2 billion; Price-to-sales ratio: 4.5; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.diageo.com) fell 5% recently on news that U.S. securities regulators were looking into allegations that the company shipped more cases to distributors than they ordered. Liquor producers can record shipments as sales when they ship them to the wholesaler.
The company is co-operating with officials, but the possibility that it may have to restate financial results from prior periods will keep weighing on the stock.
Diageo is a hold.
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The company is co-operating with officials, but the possibility that it may have to restate financial results from prior periods will keep weighing on the stock.
Diageo is a hold.
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WAL-MART STORES INC. $72 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $230.4 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.walmart.com) has paid an undisclosed sum for the 49% of Chinese e-commerce website Yihaodian.com it didn’t already own.
To spur the growth of online retail, the Chinese government recently relaxed foreign ownership restrictions on some Internet businesses. Owning all of Yihaodian.com will make it easier for Wal-Mart to co-ordinate inventory with its physical stores. The purchase will also help the company profit as younger Chinese shoppers buy more goods online.
Wal-Mart is a buy.
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To spur the growth of online retail, the Chinese government recently relaxed foreign ownership restrictions on some Internet businesses. Owning all of Yihaodian.com will make it easier for Wal-Mart to co-ordinate inventory with its physical stores. The purchase will also help the company profit as younger Chinese shoppers buy more goods online.
Wal-Mart is a buy.
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