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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INTERNATIONAL FLAVORS & FRAGRANCES INC. $70 remains a buy. The maker of compounds that improve the taste of food and the smell of consumer products (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 256.1 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.iff.com) continues to sell its less-important assets under a plan to streamline its operations.
Tariffs are increasing the cost of raw materials for these three makers of industrial equipment. The tariffs are also adding to prices for their final products.
Even so, they are doing a good job offsetting these extra costs with better efficiency. Their high-quality operations will also let them keep winning new orders.
For now, however, we prefer Carrier and Otis over Howmet, which trades at a very high multiple in relation to its earnings.
Even so, they are doing a good job offsetting these extra costs with better efficiency. Their high-quality operations will also let them keep winning new orders.
For now, however, we prefer Carrier and Otis over Howmet, which trades at a very high multiple in relation to its earnings.
ALPHABET INC. is a buy for aggressive investors. The holding company (Nasdaq symbols GOOG $320 [class C: non-voting] and GOOGL $320 [class A: one vote per share]; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 12.1 billion; Market cap: $3.9 trillion; Price-to-sales ratio: 10.3; Dividend yield: 0.3%; TSINetwork Rating: Above Average; www.abc.xyz) is the parent of Google, the world’s leading Internet search engine. It also sells cloud computing services, and invests in emerging technologies such as self-driving cars.
Since its founding in 1975, Microsoft has successfully adapted to rapidly changing technologies such as the spread of the Internet and the shift to cloud computing.
The company is now investing heavily in the latest technology revolution—artificial intelligence.
Concern over the size of Microsoft’s spending on new AI-related datacentres has hurt the stock recently, but we feel these outlays will benefit investors for years to come. That’s partly because many individuals and businesses already use the company’s products, which gives it a big advantage when it comes to launching new services. The company’s alliances with AI pioneers OpenAI and Anthropic also gives it access to their cutting-edge technologies.
The company is now investing heavily in the latest technology revolution—artificial intelligence.
Concern over the size of Microsoft’s spending on new AI-related datacentres has hurt the stock recently, but we feel these outlays will benefit investors for years to come. That’s partly because many individuals and businesses already use the company’s products, which gives it a big advantage when it comes to launching new services. The company’s alliances with AI pioneers OpenAI and Anthropic also gives it access to their cutting-edge technologies.
Long-time readers know that we aim to keep you informed of important news about the stocks we cover. That means highlighting developments and plans that promise to bolster investor gains. Here are two buys that stand out this month:
THERMO FISHER SCIENTIFIC INC., $573.79, is a buy. The company (New York symbol TMO; TSINetwork Rating: Average) (www.thermofisher.com; Shares outstanding: 375.7 million; Market cap: $215.6 billion; Dividend yield: 0.3%) has agreed to acquire Clario Holdings, a leading provider of endpoint data solutions for clinical trials. The purchase price is $8.875 billion in cash at closing plus potential additional earnout and other payments in the future. Those are tied to performance.
THERMO FISHER SCIENTIFIC INC., $573.79, is a buy. The company (New York symbol TMO; TSINetwork Rating: Average) (www.thermofisher.com; Shares outstanding: 375.7 million; Market cap: $215.6 billion; Dividend yield: 0.3%) has agreed to acquire Clario Holdings, a leading provider of endpoint data solutions for clinical trials. The purchase price is $8.875 billion in cash at closing plus potential additional earnout and other payments in the future. Those are tied to performance.
You should remain wary of stocks that attract broker/media attention because of high-profile products or services, and their business models. Here’s a closer look at one stock with risks that prospective investors should take into consideration:
WAYFAIR INC., $97.94, (New York symbol W; TSINetwork Rating: Extra Risk) (www.wayfair.com; Shares outstanding: 130.3 million; Market cap: $12.8 billion; No dividends paid) is one of the world’s largest online destinations for home furnishings. Through its e-commerce platform, the company offers furniture, décor, housewares and home improvement products.
WAYFAIR INC., $97.94, (New York symbol W; TSINetwork Rating: Extra Risk) (www.wayfair.com; Shares outstanding: 130.3 million; Market cap: $12.8 billion; No dividends paid) is one of the world’s largest online destinations for home furnishings. Through its e-commerce platform, the company offers furniture, décor, housewares and home improvement products.
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.
The pandemic presented both of these firms with unique challenges. However, each remained profitable and is well positioned to keep prospering as the economy continues to rebound. Trends now underway—as well as the strong position of these firms in key markets—will power their gains. Both are buys.
RESMED INC., $244.99, is a buy. The company (New York symbol RMD; TSINetwork Rating: Average) (www.resmed.com; Shares outstanding: 146.0 million; Market cap: $35.8 billion; Dividend yield: 1.0%) helps investors tap the growing market for medical devices used to treat sleep apnea. ResMed’s CPAP (nasal continuous positive airway pressure) devices are also used to treat patients with chronic obstructive pulmonary disease as well as other respiratory conditions.
RESMED INC., $244.99, is a buy. The company (New York symbol RMD; TSINetwork Rating: Average) (www.resmed.com; Shares outstanding: 146.0 million; Market cap: $35.8 billion; Dividend yield: 1.0%) helps investors tap the growing market for medical devices used to treat sleep apnea. ResMed’s CPAP (nasal continuous positive airway pressure) devices are also used to treat patients with chronic obstructive pulmonary disease as well as other respiratory conditions.
CALIAN GROUP, $48.57, is a buy. The company (Toronto symbol CGY; TSINetwork Rating: Extra Risk) (calian.com; Shares outstanding: 11.3 million; Market cap: $551.0 million; Dividend yield: 2.3%) now plans to sell parts of its business and also seek new board members.
That’s after it entered into a co-operation agreement with 5%-shareholder Plantro Ltd. Planto has been pressuring Calian to sell its underperforming IT and cyber solutions division, which includes its two U.S. offices.
That’s after it entered into a co-operation agreement with 5%-shareholder Plantro Ltd. Planto has been pressuring Calian to sell its underperforming IT and cyber solutions division, which includes its two U.S. offices.
Garmin is a leader in GPS devices and software for a range of markets. ADT keeps signing up new security customers at the same time it retains more and more of its existing ones. The company’s expanded services help drive that growth. We think both stocks are attractive buys.
GARMIN LTD., $189.62, is a buy. The company (Nasdaq symbol GRMN; TSINetwork Rating: Average) (Shares outstanding: 192.3 million; Market cap: $36.5 billion; Dividend yield: 1.9%) makes GPS devices and software for five different markets: fitness, outdoors, auto, aviation, and marine.
GARMIN LTD., $189.62, is a buy. The company (Nasdaq symbol GRMN; TSINetwork Rating: Average) (Shares outstanding: 192.3 million; Market cap: $36.5 billion; Dividend yield: 1.9%) makes GPS devices and software for five different markets: fitness, outdoors, auto, aviation, and marine.