stock picks

These two growth stock picks face slowing growth caused by weakness in the economy, but fuel is a key cost for both of them, so these growth stock picks stand to gain from the recent plunge in oil prices. ARKANSAS BEST CORP. $28 (Nasdaq symbol ABFS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 25.3 million; Market cap: $708.4 million; WSSF Rating: Average), provides less-than-truckload shipping services, which combine freight from multiple customers into a single truck. Arkansas Best carries freight that includes food, textiles, apparel and furniture. Higher fuel costs have hurt Arkansas Best’s earnings growth this year. As well, its labour costs increased because of a new deal with its main union....

The Dow’s 11.1% gain on October 13, 2008 was the fifth biggest percentage gain on record. The 9.8% gain on Toronto the next day was the biggest ever. Markets have been volatile since those big moves. But my view is that governments around the world are now taking the kind of steps that will contain the crisis and eventually restore liquidity in the banking system. The upturn could mark the beginning of the end of the 2007/2008 market downturn and open up a number of tempting new hot stock picks. Even so, aggressive investments should still make up no more than, say, 30% of your portfolio. You can cut risk all the more by taking a conservative approach....

INDIGO BOOKS & MUSIC INC. $13 (Toronto symbol IDG; Aggressive Growth Stock Picks, Consumer sector; Shares outstanding: 24.8 million; Market cap: $322.4 million; SI Rating: Extra risk) is Canada’s largest bookseller. It operates 86 superstores under the banners Chapters, Indigo and the World’s Biggest Bookstore, and 159 small format stores, under the banners Coles, Indigo, Indigospirit, SmithBooks and The Book Company. Indigo also sells its products over the Internet. The company continues to add non-book merchandise to its stores, including consumer electronics, yoga mats, storage bins and gift cards. That helps cut Indigo’s reliance on books for growth, particularly since it has to discount top-selling titles to compete with larger retailers such as Wal-Mart. Indigo is now testing a new retailing concept. It recently opened two boutique stores in Toronto under the “Pistachio” banner. These stores feature environmentally friendly gift, paper and beauty products. If successful, the company feels it could open about 200 Pistachio stores in Canada and the United States over the next few years....

FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.7 million; Market cap: $4.1 billion; SI Rating: Above average) is one of the world’s largest dealers of heavy equipment made by Caterpillar Inc. Products include tractors, bulldozers, pavers and trucks. Major customers include the mining, forest products and construction industries. In the three months ended June 30, 2008, Finning earned $67.2 million, down 9.3% from $74.1 million a year earlier. Earnings per share fell 7.1%, to $0.39 from $0.42, on fewer shares outstanding. The lower earnings were largely due to costs related to the integration of Collicutt Energy Services, which Finning acquired earlier this year for $135.3 million. Collicutt makes and services gas compression equipment and power generators for oil and gas well operators in Western Canada. Thanks partly to the new operations, revenue in the quarter grew 2.3%, to $1.53 billion from $1.50 billion....

MAPLE LEAF FOODS INC. $8.89 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 126.9 million; Market cap: $1.1 billion; SI Rating: Average) has traced the source of the recent outbreak of listeria contamination to meat slicing equipment at its Toronto processing plant. The outbreak has forced Maple Leaf to recall all of the products produced at its Toronto plant. There is no evidence of listeria contamination at the company 22 other facilities, which continue to operate normally. The recall will cost Maple Leaf $20 million, or 10% of the $199 million or $0.51 a share it earned in 2007. The company also faces several class action lawsuits. This situation is a good example of why we recommend that investors stick with well-established companies. The bad publicity over the recall would probably have forced a smaller, lesser-known company to go out of business....