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.
Read More
Close
LEON’S FURNITURE LTD. $15.18 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 71.1 million; Market cap: $1.1 billion; Dividend yield: 2.6%) has steadily opened new stores, growing from 27 in 2003 to 80 today.
However, the company more than quadrupled in size overnight with its March 2013 purchase of its main rival, The Brick, for $700 million. The Brick has 220 locations across Canada; the chains continue to operate separately.
In the three months ended March 31, 2015, the company’s sales fell slightly, to $423.0 million from $426.0 million a year earlier. On a same-store basis, sales declined 0.1%.
...
However, the company more than quadrupled in size overnight with its March 2013 purchase of its main rival, The Brick, for $700 million. The Brick has 220 locations across Canada; the chains continue to operate separately.
In the three months ended March 31, 2015, the company’s sales fell slightly, to $423.0 million from $426.0 million a year earlier. On a same-store basis, sales declined 0.1%.
...
We made MITEL NETWORKS $11.29 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 120.0 million; Market cap: $1.4 billion; No dividends paid) a buy in our June 2014 issue at $12.03 after it took over Aastra Technologies, a Stock Picker Digest recommendation, at a big premium....
COMPUTER MODELLING GROUP $12.85 (see at left) is up over 500% for us since we first recommended it in our April 2003 issue at $2.10. We think it still has gains ahead. Computer Modelling is a buy.
PASON SYSTEMS $22.24 (Toronto symbol PSI; TSINetwork Rating: Speculative)(403-301-3400; www.pason.com; Shares outstanding: 83.6 million; Market cap: $1.9 billion; Dividend yield: 3.1%) 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 March 31, 2015, the company’s revenue fell 19.3%, to $99.4 million from $123.2 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 earned $14.2 million, or $0.17 a share, in the latest quarter, down from $20.8 million, or $0.25 a year earlier. The lower revenue was the main reason for the decline. Cash flow per share fell 23.5%, to $0.52 from $0.68.
...
In the three months ended March 31, 2015, the company’s revenue fell 19.3%, to $99.4 million from $123.2 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 earned $14.2 million, or $0.17 a share, in the latest quarter, down from $20.8 million, or $0.25 a year earlier. The lower revenue was the main reason for the decline. Cash flow per share fell 23.5%, to $0.52 from $0.68.
...
COMPUTER MODELLING GROUP $12.85 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.5 million; Market cap: $1.0 billion; Dividend yield: 3.1%) 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 March 31, 2015, the company’s revenue rose 2.0%, to $20.4 million from $20.0 million a year earlier. Software licensing revenue (89% of the total) rose 2.8%, and consulting and professional services revenue (11%) gained 9.6%.
...
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 March 31, 2015, the company’s revenue rose 2.0%, to $20.4 million from $20.0 million a year earlier. Software licensing revenue (89% of the total) rose 2.8%, and consulting and professional services revenue (11%) gained 9.6%.
...
SIERRA WIRELESS $34.10 (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) has entered into a new partnership with France’s PSA Peugeot Citroën.
The carmaker has been a Sierra client since 2001 and has connected more than 1.6 million of its vehicles with the company’s emergency notification system modules.
Now the automaker will use Sierra’s Air- Vantage device-to-cloud technology to add other connected services. The companies didn’t provide specifics, but these new functions could include apps that sync with smartphones and display information about a car’s performance and mileage.
...
The carmaker has been a Sierra client since 2001 and has connected more than 1.6 million of its vehicles with the company’s emergency notification system modules.
Now the automaker will use Sierra’s Air- Vantage device-to-cloud technology to add other connected services. The companies didn’t provide specifics, but these new functions could include apps that sync with smartphones and display information about a car’s performance and mileage.
...
ACI WORLDWIDE $25.19 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative)(402-390-7600; www.tsainc.com; Shares outstanding: 116.7 million; Market cap: $3.0 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud. Clients include leading global retailers, plus two-thirds of the world’s 100 largest banks.
ACI has made a series of acquisitions in recent years. In November 2013, it paid $109 million for Official Payments Holdings, which processes 20 million payments totalling over $9 billion a year. It also added Retail Decisions (ReD) for $205 million in August 2014. ReD is an e-commerce and fraud-prevention firm whose software serves the payments industry.
In the three months ended March 31, 2015, the company’s revenue rose 5.1% to $232.8 million from $221.5 million a year earlier. ACI typically has higher sales and profits in the last half of each year, which is the busiest period in its customers’ purchasing cycle.
...
ACI has made a series of acquisitions in recent years. In November 2013, it paid $109 million for Official Payments Holdings, which processes 20 million payments totalling over $9 billion a year. It also added Retail Decisions (ReD) for $205 million in August 2014. ReD is an e-commerce and fraud-prevention firm whose software serves the payments industry.
In the three months ended March 31, 2015, the company’s revenue rose 5.1% to $232.8 million from $221.5 million a year earlier. ACI typically has higher sales and profits in the last half of each year, which is the busiest period in its customers’ purchasing cycle.
...
MITEL NETWORKS $11.29 (Toronto symbol MNW; TSINetwork Rating: Extra Risk)(613-592-2122; www.mitel.ca; Shares outstanding: 120.0 million; Market cap: $1.4 billion; No dividends paid) develops and markets products centred on business telephone systems, including technology that integrates land lines and mobile phones. The company also offers call centre and videoconferencing products.
In the three months ended March 31, 2015, Mitel’s revenue rose 2.7%, to $248.1 million from $241.5 million a year ago (all figures except share price and market cap in U.S. dollars). Without the effect of the higher U.S. dollar, its revenue was $268.9 million in the latest quarter.
Earnings per share fell 27.3%, to $0.16 from $0.22, as the stronger dollar hurt the contribution from the company’s international sales. However, the latest earnings still beat the consensus estimate of $0.15. Earlier this year, Mitel acquired Mavenir Systems for $560 million U.S.
...
In the three months ended March 31, 2015, Mitel’s revenue rose 2.7%, to $248.1 million from $241.5 million a year ago (all figures except share price and market cap in U.S. dollars). Without the effect of the higher U.S. dollar, its revenue was $268.9 million in the latest quarter.
Earnings per share fell 27.3%, to $0.16 from $0.22, as the stronger dollar hurt the contribution from the company’s international sales. However, the latest earnings still beat the consensus estimate of $0.15. Earlier this year, Mitel acquired Mavenir Systems for $560 million U.S.
...
MENTOR GRAPHICS $26.82 (Nasdaq symbol MENT; TSINetwork Rating: Extra Risk) (503-685- 7000; www.mentor.com; Shares outstanding: 116.1 million; Market cap: $3.1 billion; Dividend yield: 0.8%) is trading at new highs as it sells more hardware and software for improving and speeding up the design of electronic products.
In the three months ended April 30, 2015, the company’s revenue rose 7.9%, to $272.1 million from $252.2 million a year earlier. Earnings per share jumped sharply, to $0.28 from $0.11.
Mentor typically makes about 70% of its profits in its fiscal fourth quarter, which ends January 31. That’s the busiest purchasing period for its customers.
...
In the three months ended April 30, 2015, the company’s revenue rose 7.9%, to $272.1 million from $252.2 million a year earlier. Earnings per share jumped sharply, to $0.28 from $0.11.
Mentor typically makes about 70% of its profits in its fiscal fourth quarter, which ends January 31. That’s the busiest purchasing period for its customers.
...
SYMANTEC CORP. $24.10 (Nasdaq symbol SYMC; TSINetwork Rating: Average)(650-527-8000; www.symantec.com; Shares outstanding: 680.7 million; Market cap: $16.1 billion; Dividend yield: 2.5%) continues to strengthen its fast-growing cybersecurity business while getting set to split off its Veritas Technologies division.
Corporations are spending more on cybersecurity following highprofile attacks on Sony, Home Depot and Target. Symantec is taking advantage of this trend by hiring more programmers. It has also cancelled unprofitable contracts and simplified its product lines.
These moves cut the company’s profits by 10.2% in its fiscal 2015 fourth quarter, which ended April 3, 2015, to $299 million, or $0.43 a share, from $333 million, or $0.48. Sales fell 6.2%, to $1.55 billion from $1.65 billion—though if you disregard the U.S. dollar’s negative impact on Symantec’s overseas sales, its revenue rose 1%.
...
Corporations are spending more on cybersecurity following highprofile attacks on Sony, Home Depot and Target. Symantec is taking advantage of this trend by hiring more programmers. It has also cancelled unprofitable contracts and simplified its product lines.
These moves cut the company’s profits by 10.2% in its fiscal 2015 fourth quarter, which ended April 3, 2015, to $299 million, or $0.43 a share, from $333 million, or $0.48. Sales fell 6.2%, to $1.55 billion from $1.65 billion—though if you disregard the U.S. dollar’s negative impact on Symantec’s overseas sales, its revenue rose 1%.
...