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.
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MCKESSON CORP. $963 is a buy for aggressive investors. The company (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 122.5 million; Market cap: $118.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 0.3%; TSINetwork Rating: Above Average; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada.
All three should continue to prosper as leaders in their niche markets. Currently, we see GE HealthCare as your best choice for new buying.
GENERAL ELECTRIC CO. $343 is a hold. The company (New York symbol GE; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 1.05 billion; Market cap: $360.2 billion; Price-to-sales ratio: 7.8; Dividend yield: 0.5%; TSINetwork Rating: Average; www.geaerospace.com) now operates as GE Aerospace. It mainly makes and services jet engines and aircraft electronics. It has 45,000 commercial and 25,000 military aircraft engines in service worldwide.
Understanding our recommendations: Power Buy—These stocks are our top choices for new buying now. We feel each currently offers the best combination of fundamentals (earnings, sales, cash flow and so on) plus external factors (industry trends and the current share price) to give it a chance of above-average gains. Buy—high-quality stocks with strong growth prospects. However, they are likely to grow at a slower rate than our Power Buys. Sell—these are stocks that no longer inspire our confidence. As Power Growth Investor focuses on maximizing profits for aggressive investors, we prefer to sell poorly performing stocks instead of holding them and waiting for a rebound.