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:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
  3. 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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CHEMTRADE LOGISTICS INCOME FUND $19.98 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics .com; Units outstanding: 68.6 million; Market cap: $1.4 billion; Dividend yield: 6.0%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products. Chemtrade converts these substances into useful chemicals, like sulphuric acid.

In the three months ended March 31, 2015, the company’s revenue rose 22.5%, to $326.0 million from $266.1 million a year earlier.

Big acquisition working out well

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FIRSTSERVICE CORP. $30.49 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $1.1 billion; Dividend yield: 0.6%) has completed the spinoff of its Colliers International subsidiary after handing out Colliers shares to its investors.

The new FirstService began trading on Tuesday, June 2, 2015, retaining its FSV stock symbol. Colliers International Group, $47.01, symbol CIG on Toronto, began trading on the same day under its new symbol. Shareholders won’t pay capital gains taxes on the transaction until they sell their FirstService or Colliers shares.

Colliers is one of the world’s top three commercial real estate firms, offering a range of services in the U.S., Canada, Europe, Australia, New Zealand, Asia and Latin America. In 2014, it had $1.7 billion U.S. of revenue.

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WYNDHAM WORLDWIDE $84.04 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 120.0 million; Market cap: $10.1 billion; Dividend yield: 2.0%) 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.

The company has just bought Vacation Palm Springs, which manages more than 450 upscale vacation properties, for an undisclosed amount. This is Wyndham’s first acquisition in California.

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RUSSEL METALS $23.29 (Toronto symbol RUS; TSINetwork Rating: Speculative)(905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.4 billion; Dividend yield: 6.5%) has completed its acquisition of Western Fiberglass Pipe Sales for an undisclosed amount.

Western Fiberglass is a leading distributor of fibreglass pipe for the oil and gas industry. It serves Western Canada through offices in Estevan, Saskatchewan, and Red Deer, Alberta.

The acquisition will add just $30 million to Russel’s annual revenue of $3.9 billion. However, it lets it offer oil and gas customers fibreglass pipe as an alternative to steel. The company feels this could help them save on installation costs and maintenance while improving flow capacity and increasing service life.

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AGT FOOD & INGREDIENTS $32.17 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (306-525- 4490; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $755.8 million; Dividend yield: 1.9%) has bought the assets of West Central Road & Rail for $22 million. The acquisition includes five bulk-loading sites in Saskatchewan.

Purchases like this are important because they help ensure that AGT can supply its manufacturing plants and continue its growth.

AGT Food & Ingredients is still a buy.

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RESTAURANT BRANDS INTERNATIONAL $37.46 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 467.0 million; Market cap: $17.5 billion; Dividend yield: 1.0%) has joined McDonald’s and KFC in bringing back old mascots.

The company’s Burger King chain is now using its big-headed “King” mascot in its advertising for the first time since 2011. The move follows KFC’s reintroduction of Colonel Sanders after a 21-year absence, while McDonald’s brought back the Hamburglar after more than a decade.

Burger King recently paid $200,000 to have the King appear live on TV at the Belmont Stakes horse race. In May, the company reportedly paid $1 million to have the King included in Floyd Mayweather’s entourage during his Las Vegas boxing match.

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CHIPOTLE MEXICAN GRILL $606.84 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.0 million; Market cap: $18.7 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 March 31, 2015, Chipotle’s sales jumped 20.4%, to $1.09 billion from $904.2 million a year earlier. Its restaurants attracted more customers during the quarter, which pushed up same-restaurant sales by 10.4%.

Chipotle opened 49 new outlets and now has a total of 1,831. It plans to add 140 to 155 more in 2015. Earnings gained 47.6%, to $122.6 million, or $3.95 a share, from $83.1 million, or $2.67. That’s partly because it raised the prices of some menu items last year, offsetting higher costs for beef and tortillas. The company is a well-established chain with a growing following, especially among health conscious, environmentally aware consumers.

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DOMINO’S PIZZA $110.92 (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%) 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 March 22, 2015, the company’s earnings per share jumped 19.1%, to $0.81 from $0.68 a year earlier.

Sales gained 10.6%, to $502.0 million from $453.9 million. Same-store sales rose 7.8% internationally— but more important, they rose 14.5% in the U.S., home to most of the company’s stores.

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AIMIA INC. $14.01 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-897-6800; www.aimia.com; Shares outstanding: 164.7 million; Market cap: $2.3 billion; Dividend yield: 5.4%) owns and operates Aeroplan, Canada’s largest loyalty program.

The company reports that its revenue rose 8.4% in the three months ended March 31, 2015, to $660.1 million from $608.9 million a year earlier.

Earnings fell to $30.7 million, or $0.15 a share, from $88.2 million, or $0.48. However, the year-ago quarter included a one-time payment of $73.4 million after TD Bank replaced CIBC as Aeroplan’s main credit card issuer on January 1, 2014.

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REITMANS (CANADA) LTD. $6.31 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $398.9 million; Dividend yield: 3.2%) owns 810 women’s clothing stores across Canada.

The chain consists of 337 Reitmans stores, 138 Penningtons, 107 Addition Elle, 78 RW & Co., 68 Thyme Maternity and 82 Smart Set. It also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores.

In the three months ended May 2, 2015, Reitmans’ sales fell 2.3%, to $201.7 million from $206.5 million a year earlier. Sales declined because the company closed 52 less profitable stores. Same-store sales gained 3.0%.

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