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.
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Growth Stocks Library Archives
Cintas’s shares have soared over 200% in the past five years. That’s mainly due to stronger demand from businesses for its uniforms as the economy rebounded from the COVID-19 lockdowns.
Going forward, the impact of tariffs could slow the hiring of new workers by businesses, which would hurt Cintas’s growth. However, the company continues to add more clients through acquisitions of smaller competitors. It’s also getting those new customers to buy more of its services.
Even after its big jump, we feel Cintas can continue to move higher over the next few years as its strong focus on efficiency further lifts earnings.
Going forward, the impact of tariffs could slow the hiring of new workers by businesses, which would hurt Cintas’s growth. However, the company continues to add more clients through acquisitions of smaller competitors. It’s also getting those new customers to buy more of its services.
Even after its big jump, we feel Cintas can continue to move higher over the next few years as its strong focus on efficiency further lifts earnings.
Both of these firms are profitable and are well positioned to keep prospering. Trends underway as well as the strong position of each firm in its key markets will power future gains. Both of these leaders are buys.
Warner Music is now laying off an unspecified number of employees as part of a restructuring plan to cut costs. It already laid off 600 employees, or 10% of its workforce in 2024. Meanwhile, the company and global private investment firm Bain Capital are launching a joint venture for the purchase of up to $1.2 billion in music catalogues across both recorded music and music publishing.
PagerDuty and Twilio were well positioned to gain during the pandemic, but since early 2021 they have dropped along with many other tech/platform stocks. Still, we think both have room to rebound as they continue to experience strong and growing demand. Both are buys.
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:
Artificial intelligence (AI) is an example of an investment idea that could boost your investment returns, or, more likely, end up costing you money. All in all, we think that the biggest, surest gains from AI will come from investing in established businesses that are already profitable and growing, and that can gain all the more by applying AI to their operations.
Here are two companies that are already profitably taking advantage of AI, and they should be among the leaders in the push to extend AI’s use:
Here are two companies that are already profitably taking advantage of AI, and they should be among the leaders in the push to extend AI’s use:
TRAVEL + LEISURE CO., $56.64, is a buy. The company (New York symbol TNL; TSINetwork Rating: Average) (www.travelandleisureco.com; Shares outstanding: 66.4 million; Market cap: $3.8 billion; Dividend yield: 4.0%) has just announced a long-term marketing partnership with Hornblower Group, a global leader in maritime hospitality and transportation.
ResMed’s sales and profits got a boost during the pandemic with a sharp rise in demand for its ventilators and other respiration devices. Even as the pandemic eased, the gains continued as the company introduced more products and expanded its software offerings. Today, ResMed’s outlook remains attractive—and not just for its CPAP machines. We think this Power Buy is poised to move even higher for you.
Alimentation Couche-Tard has made some major acquisitions over the last decade or so, and has just completed another one. Growth by acquisition adds risk; however, the company has a long record of successfully integrating those businesses. Meanwhile, it’s well-positioned to keep prospering in both its core and new markets. Couche-Tard is a Power Buy.
METRO INC. $106 is a buy. The company (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 222.0 million; Market cap: $23.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.4%; TSINetwork Rating: Average; www.metro.ca) operates 999 grocery stores and 639 drugstores, in Quebec, Ontario and New Brunswick.