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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AEROPOSTALE INC. $1.51 (New York symbol ARO; TSINetwork Rating: Extra Risk)(646-485-5410; www.aeropostale.com; Shares outstanding: 79.5 million; Market cap: $121.7 million; No dividends paid) plans to open licensed stores in India and Indonesia under agreements with Arvind Lifestyle Brands Ltd. in India and PT Mitra Adiperkasa TBK in Indonesia.
In India, the plan includes 50 stand-alone outlets, 150 in-store shops in select locations and the launch of e-commerce operations over the next five years, beginning in March 2016.
In Indonesia, Aeropostale expects to open 10 to 12 stand-alone stores over the next five years, with its first outlet opening in Jakarta in late 2016.
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In India, the plan includes 50 stand-alone outlets, 150 in-store shops in select locations and the launch of e-commerce operations over the next five years, beginning in March 2016.
In Indonesia, Aeropostale expects to open 10 to 12 stand-alone stores over the next five years, with its first outlet opening in Jakarta in late 2016.
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WYNDHAM WORLDWIDE $87.29 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 120.0 million; Market cap: $10.4 billion; Dividend yield: 1.9%) is one of the world’s largest hospitality companies, with 7,670 franchised hotels worldwide.
In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels.
Wyndham has just bought ResortQuest Whistler, which manages nearly 600 vacation properties at the popular ski resort, for an undisclosed amount. ResortQuest’s properties are fully furnished and offer amenities like full kitchens, fireplaces and large living areas. This is Wyndham’s first acquisition in Canada.
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In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels.
Wyndham has just bought ResortQuest Whistler, which manages nearly 600 vacation properties at the popular ski resort, for an undisclosed amount. ResortQuest’s properties are fully furnished and offer amenities like full kitchens, fireplaces and large living areas. This is Wyndham’s first acquisition in Canada.
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p>DOMINO’S PIZZA $112.31 (New York symbol DPZ; TSINetwork Rating: Average)(734-930-3008; www.dominos.com; Shares outstanding: 55.2 million; Market cap: $6.1 billion; Dividend yield: 1.1%) reports that its earnings per share jumped 20.9% in the three months ended June 14, 2015, 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 importantly, they increased 12.8% in the U.S., home to most of the company’s stores.
The company’s outlook is positive, and it continues to profit from its move into online ordering and smartphone apps. However, the stock is up over 52% for us in the past year. Domino’s now trades at a high 32.8 times its forecast 2015 earnings of $3.42 a share.
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The company’s outlook is positive, and it continues to profit from its move into online ordering and smartphone apps. However, the stock is up over 52% for us in the past year. Domino’s now trades at a high 32.8 times its forecast 2015 earnings of $3.42 a share.
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ALARMFORCE INDUSTRIES $10.55 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 11.6 million; Market cap: $122.7 million; Dividend yield: 1.7%) sells twoway voice-alarm systems and monitoring services in Canada and increasingly in the U.S.
In the three months ended April 30, 2015, Alarm- Force’s sales rose 6.5%, to $14.0 million from $13.2 million a year earlier. Earnings per share were unchanged at $0.15. Sales gained along with the company’s subscriber base and higher monthly revenue per subscriber. Earnings were flat because it spent more on product development and marketing.
In August 2014, the company launched AlarmForce Connect, an add-on service that lets subscribers control their home-security systems with a smartphone or tablet. About 40% of its subscribers have since added AlarmForce Connect.
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In the three months ended April 30, 2015, Alarm- Force’s sales rose 6.5%, to $14.0 million from $13.2 million a year earlier. Earnings per share were unchanged at $0.15. Sales gained along with the company’s subscriber base and higher monthly revenue per subscriber. Earnings were flat because it spent more on product development and marketing.
In August 2014, the company launched AlarmForce Connect, an add-on service that lets subscribers control their home-security systems with a smartphone or tablet. About 40% of its subscribers have since added AlarmForce Connect.
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AGT FOOD & INGREDIENTS $32.29 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231- 1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $719.3 million; Dividend yield: 1.9%) buys and processes a range of pulses—which include peas, beans, lentils and chickpeas—as well as other specialty crops.
Saskatchewan-based AGT owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa. In the three months ended March 31, 2015, the company’s revenue gained 23.7%, to $385.2 million from $311.3 million a year earlier. Before one-time items, earnings jumped 162.5%, to $0.42 a share from $0.16. The increases came from recent acquisitions and higher processing activity.
A big part of AGT’s success has come from its shift to more profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting and bagging bulk crops. Food makers use these ingredients in products such as baked goods, soups and beverages, as well as pet food and animal feed. The stock trades at 15.7 times the $2.06 a share AGT is expected to earn in 2015. It yields 1.9%.
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Saskatchewan-based AGT owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa. In the three months ended March 31, 2015, the company’s revenue gained 23.7%, to $385.2 million from $311.3 million a year earlier. Before one-time items, earnings jumped 162.5%, to $0.42 a share from $0.16. The increases came from recent acquisitions and higher processing activity.
A big part of AGT’s success has come from its shift to more profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting and bagging bulk crops. Food makers use these ingredients in products such as baked goods, soups and beverages, as well as pet food and animal feed. The stock trades at 15.7 times the $2.06 a share AGT is expected to earn in 2015. It yields 1.9%.
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CALIAN TECHNOLOGIES $18.79 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $137.1 million; Dividend yield: 6.0%) has won a $10- million contract with the City of Toronto to provide a software system for managing city employees’ hours. Calian will deliver this project over an 18-month period.
To put the deal in context, the company reported revenue of $61.0 million in the three months ended March 31, 2015, up 19.3% from $51.2 million a year earlier. Earnings fell 6.6%, to $2.21 million, or $0.30 a share, from $2.36 million, or $0.32. That was mostly because Calian added workers to fulfill new contracts.
This latest deal will add to the company’s revenue and demonstrates its ongoing ability to win recurring orders from all levels of government.
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To put the deal in context, the company reported revenue of $61.0 million in the three months ended March 31, 2015, up 19.3% from $51.2 million a year earlier. Earnings fell 6.6%, to $2.21 million, or $0.30 a share, from $2.36 million, or $0.32. That was mostly because Calian added workers to fulfill new contracts.
This latest deal will add to the company’s revenue and demonstrates its ongoing ability to win recurring orders from all levels of government.
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SIERRA WIRELESS $31.67 (Toronto symbol SW; TSINetwork Rating: Extra Risk)(604-231-1100; www.sierrawireless.com; Shares outstanding: 32.1 million; Market cap: $1.1 billion; No dividends paid) makes modules that connect products—including smart electricity meters and vehicles—to the Internet. This is known as machine to machine, or more generally as the Internet of Things.
In the three months ended March 31, 2015, the company’s revenue rose 24.1%, to a record $150.4 million from $121.2 million a year earlier (all figures except share price and market cap in U.S. dollars). Sierra continues to add new customers.
Excluding one-time items, the company earned $7.2 million, or $0.22 a share, compared to just $483,000, or $0.02, a year earlier. Sierra sold more high-margin cloud-based services to large customers during the latest quarter. It also cut its costs.
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In the three months ended March 31, 2015, the company’s revenue rose 24.1%, to a record $150.4 million from $121.2 million a year earlier (all figures except share price and market cap in U.S. dollars). Sierra continues to add new customers.
Excluding one-time items, the company earned $7.2 million, or $0.22 a share, compared to just $483,000, or $0.02, a year earlier. Sierra sold more high-margin cloud-based services to large customers during the latest quarter. It also cut its costs.
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ADOBE SYSTEMS INC. $80.73 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 497.6 million; Market cap: $40.4 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. Graphic designers also use its programs to create print publications and web pages.
In its fiscal 2015 second quarter, which ended May 29, 2015, Adobe earned $0.48 a share, up 29.7% from $0.37 a year earlier. Revenue gained 8.8%, to a record $1.2 billion from $1.1 billion.
The company continues to shift away from selling software as a one-time purchase and toward a subscription model. It now gets 72% of its revenue from recurring sources, compared to 55% a year ago.
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In its fiscal 2015 second quarter, which ended May 29, 2015, Adobe earned $0.48 a share, up 29.7% from $0.37 a year earlier. Revenue gained 8.8%, to a record $1.2 billion from $1.1 billion.
The company continues to shift away from selling software as a one-time purchase and toward a subscription model. It now gets 72% of its revenue from recurring sources, compared to 55% a year ago.
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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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