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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Growth Stocks Library Archives
BUCKEYE PARTNERS L.P. $60 (www.buckeye.com) operates 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. The partnership also owns oil and gas storage terminals. Buckeye continues to benefit from oil producers that opt to store their crude instead of selling it at today’s low prices. In 2015, its oil-storage terminals operated at 96% of their capacity, compared to 85% in 2014. That’s mainly why its earnings in 2015 jumped 22.7%, to $3.41 a unit from $2.78. Buckeye also raised its quarterly distribution by 4.4%. The new annual rate of $4.75 a unit yields 7.9%. Buy. CEDAR FAIR L.P. $57 (www.cedarfair.com) has increased its quarterly distribution by 10.0%, to $0.825 a unit from $0.75. The new annual rate of $3.30 yields 5.8%. Buy. AMEREN CORP. $47 (www.ameren.com) provides power and natural gas to 3.3 million clients in Illinois and Missouri. The company’s revenue rose just 0.7% in 2015, to $6.10 billion from $6.05 billion in 2014. That’s mainly because warmer-than-usual weather hurt gas demand. Earnings per share rose 6.7%, to $2.56 from $2.40. Ameren expects its 2016 earnings will decline to $2.50 a share due to the bankruptcy of Noranda Aluminum, its biggest power customer in Missouri. Hold....
WAL-MART STORES INC., $64.67, New York symbol WMT, reported better-than-expected earnings this week. However, the retailer cut its sales forecast for the current year. That caused the stock to fall 3%. In the fourth quarter of its 2016 fiscal year, which ended January 31, 2016, Wal-Mart earned $1.49 a share, down 7.5% from $1.61 a year earlier. These figures exclude costs related to the company’s recently announced plan to close 269 of its less-profitable stores and other unusual items. On that basis, the latest earnings beat the consensus forecast of $1.43. The company’s decision to invest more in its e-commerce businesses and increase worker pay contributed to the decline. Still, those moves should reduce turnover and improve efficiency. On the revenue side, Wal-Mart also plans to expand its selection of fresh fruits and vegetables....
MART RESOURCES, $0.18, symbol MMT on Toronto, has entered into a definitive agreement to sell all shares in the company for $0.25 each to a consortium—Midwestern Oil and Gas Company Ltd., San Leon Energy plc and 1038221 B.C. Ltd. Apart from regulatory and shareholder approvals, the deal is contingent on the consortium arranging financing. This includes $89.2 million, due February 24, 2016, to cover the purchase price. The buyers need another $200.5 million U.S. in financing to pay off Mart’s bank debt. If the group fails to win financing by February 24, the consortium can back out of the agreement (although Mart may extend the deadline). If it does back out, the consortium will be required to pay a break fee to Mart of $2.2 million U.S....
NORTH WEST CO. $30.64 (Toronto symbol NWC; TSINetwork Rating: Extra Risk) (604-231-1100; www.northwest.ca; Shares outstanding: 48.5 million; Market cap: $1.5 billion; Dividend yield: 4.1%) sells food and everyday products and services through 225 stores, mainly in northern communities across Canada and Alaska. It also operates stores in remote regions of Hawaii, the South Pacific and the Caribbean. North West is new to Stock Pickers Digest. Ottawa-based Giant Tiger signed a 30-year deal in 2002 that granted North West the exclusive right to open and operate Giant Tiger stores in Western Canada. Giant Tiger operates 200 general merchandise discount stores. In Canada’s north, North West operates the majority of its stores (122) under the Northern banner, followed by Giant Tiger (33), Quickstop (12) and NorthMart (6)....
FAIR ISAAC CORP. $94.35 (New York symbol FICO; TSINetwork Rating: Average) (415-472- 2211; www.fairisaac.com; Shares outstanding: 31.4 million; Market cap: $3.0 billion; Dividend yield: 0.1%) jumped to a new all-time high of $98.96 in early February 2016 after reporting much higher earnings in the latest quarter. In its fiscal 2016 first quarter, which ended December 31, 2015, revenue for the credit-score provider rose 5.6%, to $200.1 million from $189.6 million a year earlier. Sales at its applications division (60% of total sales) rose 4.0% on higher demand for marketing and fraud-detection software. Sales of credit-scoring programs (28%) jumped 27%; analytics software (12%) fell 21%....
RUSSEL METALS $18.27 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $987.9 million; Dividend yield: 8.3%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S. In the three months ended December 31, 2015, Russel’s revenue fell 33.6%, to $673.0 million from $1.01 billion a year earlier. Sales mainly declined because revenue fell 43% at the company’s energy products division. That unit sells pipes to oil and natural gas drillers. Earnings, excluding one-time items, dropped sharply, to $10.0 million, or $0.16 a share, from $38.0 million, or $0.62. Russel’s earnings fell faster than revenue because steel prices moved down in the latest quarter. That hurts its profit margins and causes it to suffer losses on its inventory....
FIRSTSERVICE CORP. $53.00 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $1.9 billion; Dividend yield: 1.1%) provides residential property management and property improvement services. In the three months ended December 31, 2015, the company’s revenue gained 12.0%, to $316.1 million from $282.2 million a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, earnings per share more than doubled, to $0.28 from $0.13. The higher earnings came from the increased revenue, cost cuts and a focus on more profitable business units. FirstService is raising its quarterly dividend by 10.0% with the April 2016 payment, to $0.11 U.S. from $0.10 U.S. The stock now yields 1.1%....
CALIAN TECHNOLOGIES $18.60 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $137.6 million; Dividend yield: 6.0%) has two main divisions: Business and Technology Services (which supplies 70% of the company’s revenue) provides engineers, health care workers and other skilled professionals on a contract basis; Systems Engineering (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems. In the three months ended December 31, 2015, the company’s revenue rose 15.2%, to a record $64.5 million from $56.0 million a year earlier. Excluding onetime items, Calian earned $3.3 million, or $0.45 a share. That’s up 22.2% from $2.7 million, or $0.37 a share, a year earlier. The Business and Technology Services division continues to benefit from recurring orders from Canadian federal government departments, including the Department of National Defence. This segment’s revenue rose 9.0% in the latest quarter....
ALARMFORCE INDUSTRIES $10.20 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce. com; Shares outstanding: 11.6 million; Market cap: $118.0 million; Dividend yield: 1.8%) sells two-way voice-alarm systems and monitoring services in Canada and in the U.S. The company’s sales were $14,4 million in the three months ended October 31, 2015. That’s an 8.7% jump from $13.3 million a year earlier. However, earnings per share fell 29.4%, to $0.12 from $0.17 as it spent more to develop and market its products. AlarmForce’s long-term outlook is positive, and the high U.S. dollar is boosting the amount its U.S. operations contribute to its earnings. However, it will have to keep spending heavily to sell its services in a competitive market and continue its U.S. expansion....
RESTAURANT BRANDS INTERNATIONAL $34.51 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 467.0 million; Market cap: $16.1 billion; Dividend yield: 1.6%) took its current form on December 12, 2014, after Burger King Worldwide acquired Tim Hortons. The company is the world’s third-largest fast-food operator, after McDonald’s and Yum Brands, with 15,004 Burger King outlets and 4,413 Tim Hortons stores in 100 countries. In the three months ended December 31, 2015, Restaurant Brands earned $165.7 million, up 31.7% from $125.8 million a year earlier. Earnings per share gained 34.6%, to $0.35 from $0.26, on fewer shares outstanding....