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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NISSAN MOTOR (ADR) $19.78 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissan-global.com; ADRs outstanding 2.3 billion; Market cap: $44.5 billion; Dividend yield: 3.0%) continues to sell record numbers of its Rogue crossovers in the U.S.
In response, the company will export the model from Japan to North America beginning next spring. This will supplement current Rogue production from plants in Tennessee and South Korea.
Crossovers look like sport utility vehicles but have a car rather than a truck chassis. They’re among the top-selling vehicles in the U.S. right now. What’s more, the weak yen will let Nissan realize higher profits from Rogues it makes in Japan and sells in the U.S., compared to vehicles it makes and sells in the U.S.
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In response, the company will export the model from Japan to North America beginning next spring. This will supplement current Rogue production from plants in Tennessee and South Korea.
Crossovers look like sport utility vehicles but have a car rather than a truck chassis. They’re among the top-selling vehicles in the U.S. right now. What’s more, the weak yen will let Nissan realize higher profits from Rogues it makes in Japan and sells in the U.S., compared to vehicles it makes and sells in the U.S.
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STUART OLSON INC. $6.11 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 26.2 million; Market cap: $161.9 million; Dividend yield: 7.9%) provides building construction, commercial and industrial electrical contracting, earth moving and industrial insulation services to government and private sector clients. It mainly operates in Western Canada.
An increase in construction work in Western Canada pushed up the company’s revenue by 5.4% in the three months ended March 31, 2015, to $282.9 million from $268.5 million a year earlier. Stuart Olson earned $1.0 million, or $0.04 a share, compared to $1.3 million, or $0.05.
The company ended the quarter with a backlog of $2.1 billion, up 5.4% from $2.0 billion a year earlier. Stuart Olson has now worked through most of the lowprofit- margin contracts it took on through acquisitions or agreed to when its markets were more competitive in 2009 and 2010.
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An increase in construction work in Western Canada pushed up the company’s revenue by 5.4% in the three months ended March 31, 2015, to $282.9 million from $268.5 million a year earlier. Stuart Olson earned $1.0 million, or $0.04 a share, compared to $1.3 million, or $0.05.
The company ended the quarter with a backlog of $2.1 billion, up 5.4% from $2.0 billion a year earlier. Stuart Olson has now worked through most of the lowprofit- margin contracts it took on through acquisitions or agreed to when its markets were more competitive in 2009 and 2010.
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RUSSEL METALS $21.58 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.3 billion; Dividend yield: 7.0%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S.
In the three months ended March 31, 2015, Russel’s revenue fell 2.2%, to $903.9 million from $924.0 million a year earlier. The company’s metal-services business saw its sales rise slightly, but the energyproducts division, which supplies pipes for oil and gas drillers, reported a 14% sales decline.
Earnings fell 36.2%, to $18.5 million, or $0.30 a share, from $29.0 million, or $0.47. Russel’s earnings fell faster than revenue because steel prices declined in the latest quarter. That cuts the company’s profit margins and causes it to suffer losses on its inventory.
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In the three months ended March 31, 2015, Russel’s revenue fell 2.2%, to $903.9 million from $924.0 million a year earlier. The company’s metal-services business saw its sales rise slightly, but the energyproducts division, which supplies pipes for oil and gas drillers, reported a 14% sales decline.
Earnings fell 36.2%, to $18.5 million, or $0.30 a share, from $29.0 million, or $0.47. Russel’s earnings fell faster than revenue because steel prices declined in the latest quarter. That cuts the company’s profit margins and causes it to suffer losses on its inventory.
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IAMGOLD $1.65 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 391.3 million; Market cap: $688.8 million; No dividends paid) believes Burkina Faso’s upcoming parliamentary vote on an updated mining code will have no effect on its Essakane mine’s profits.
Burkina Faso, a landlocked nation in West Africa, is that continent’s fourth-largest gold producer; the precious metal accounts for about 20% of its gross domestic product.
The new code is expected to abolish a 10% tax break on miners’ profits. However, Burkina Faso will honour clauses in existing deals. As well, the new code should also end uncertainty surrounding the current 12-yearold mining regulations.
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Burkina Faso, a landlocked nation in West Africa, is that continent’s fourth-largest gold producer; the precious metal accounts for about 20% of its gross domestic product.
The new code is expected to abolish a 10% tax break on miners’ profits. However, Burkina Faso will honour clauses in existing deals. As well, the new code should also end uncertainty surrounding the current 12-yearold mining regulations.
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AMERIGO RESOURCES $0.27 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 173.6 million; Market cap: $48.6 million; No dividends paid) processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest underground copper mine. The rock comes from the mine’s current production and tailings from the nearby Colihues deposit. This contract runs at least through 2037.
Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
In the three months ended March 31, 2015, Amerigo’s copper production fell 12.7%, to 8.9 million pounds from 10.2 million a year earlier. Molybdenum output declined 21.7%, to 97,883 pounds from 125,016.
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Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum.
In the three months ended March 31, 2015, Amerigo’s copper production fell 12.7%, to 8.9 million pounds from 10.2 million a year earlier. Molybdenum output declined 21.7%, to 97,883 pounds from 125,016.
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SHERRITT INTERNATIONAL $1.62 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 293.6 million; Market cap: $472.6 million; Dividend yield: 2.5%) sold all of its coal interests for $793 million in cash in April 2014.
The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended March 31, 2015, the company’s revenue fell 31.4%, to $82.9 million from $120.9 million a year earlier, mostly due to lower oil and gas prices. Cash flow per share declined 32.0%, to $0.17 from $0.25.
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The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
In the three months ended March 31, 2015, the company’s revenue fell 31.4%, to $82.9 million from $120.9 million a year earlier, mostly due to lower oil and gas prices. Cash flow per share declined 32.0%, to $0.17 from $0.25.
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AMAZON.COM $488.27 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk)(206-266-1000; www.amazon.com; Shares outstanding: 465.7 million; Market cap: $227.3 billion; No dividends paid) continues to excel in a range of businesses; its shares are now at all-time highs.
The company is a major online retailer that’s growing quickly in new areas. For example, Amazon Web Services offers cloud services through 11 data centres worldwide. It accounts for just 7% of Amazon’s sales, but that’s growing at over 50% a year. However, when Amazon enters a new line of business, it’s happy to make little profit, or even lose money.
This is an appropriate growth strategy. Eventually, competitors will catch up with its technology and business practices. In the meantime, it focuses on building a large and loyal clientele.
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The company is a major online retailer that’s growing quickly in new areas. For example, Amazon Web Services offers cloud services through 11 data centres worldwide. It accounts for just 7% of Amazon’s sales, but that’s growing at over 50% a year. However, when Amazon enters a new line of business, it’s happy to make little profit, or even lose money.
This is an appropriate growth strategy. Eventually, competitors will catch up with its technology and business practices. In the meantime, it focuses on building a large and loyal clientele.
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Thanks to the essential service it provides for pipelines, we rate this Canadian growth stock highly even with low oil prices.
Our view on a Canadian solar stock that has new power plants and long-term contracts but remains dependent on government subsidies.
The 2014 purchase of Shoppers Drug has increased the value of Loblaw’s stock and confirms it as one of our top Canadian stocks.