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:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
  3. 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
UNITED TECHNOLOGIES CORP. $95 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 887.0 million; Market cap: $84.3 billion; Priceto- sales ratio: 1.3; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.utc.com) has announced a new restructuring plan that mainly involves closing high-cost plants in the U.S. and Europe and shifting their operations to other facilities. The company expects these moves to cost $1.5 billion. However, they should cut $900 million from United Technologies’ annual expenses when they’re finished in 2018. The savings will help the company offset weaker demand for its Otis elevators in China, as well as higher-than-expected expenses related to the development of a new jet engine at its Pratt & Whitney division....
MONDELEZ INTERNATIONAL INC. $45 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $72.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone), gum and candy (Trident, Chiclets) and Halls cough drops. In July 2015, Mondelez merged its packaged coffee business with European coffee maker D.E. Master Blenders. Under the deal, Mondelez contributed its coffee brands, including Jacobs, Gevalia and Tassimo, to a new firm called Jacobs Douwe Egberts. In return, it received $4.2 billion in cash and 43.5% of the new company. If you exclude unusual items, such as a $6.9-billion gain on this sale, Mondelez earned $678 million in the three months ended September 30, 2015, down 20.1% from $849 million a year earlier. Earnings per share fell 16.0%, to $0.42 from $0.50, on fewer shares outstanding. The sale of the coffee business cut Mondelez’s sales by 17.8%, to $6.8 billion from $8.3 billion. However, if you adjust for the sale and foreign exchange rates, sales improved 3.7%....
These telecom firms’ recent acquisitions cut their reliance on traditional telephones and let them profit from growing markets, like Latin America, and highdemand services, such as mobile video. AT&T INC. $34 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 6.2 billion; Market cap: $210.8 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) is the largest wireless provider in the U.S., with 126.4 million subscribers. It also sells phone, TV and high-speed Internet access to 64.1 million users. The company recently completed its $48.5-billion purchase (70% stock and 30% cash) of DirecTV, which has 19.6 million satellite TV customers in the U.S. and 12.5 million in Latin America....
HONDA MOTOR CO. LTD. ADRs $33 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $59.4 billion; Priceto- sales ratio: 0.5; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.honda.com) has received approval from U.S. regulators to start selling its new business plane, called the HondaJet. The aircraft’s engines are on top its wings instead of below; it’s 15% more fuel efficient than comparable models; and it has 20% more cargo room. The company has orders for over 100 of these planes, which it is currently building at its North Carolina plant. It should begin delivering them in 2016. Honda is a buy.
MOTOROLA SOLUTIONS INC. $70 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 176.7 million; Market cap: $12.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.3%; TSINetwork Rating: Average; www.motorolasolutions.com) is buying Airwave, which provides two-way radio and other communications services to over 300 emergency and public service agencies in the U.K. The company will pay $1.2 billion for Airwave when it completes the purchase in the first quarter of 2016. The deal will immediately add to Motorola’s earnings and cut its reliance on North America, which currently supplies 65% of its sales. However, big purchases like this add risk. Motorola Solutions is a hold....
WAL-MART STORES INC. $60 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $192.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.walmart.com) has launched Walmart Pay, an app that lets customers pay for their purchases at Wal-Mart stores with their Apple or Android-powered mobile devices. Users can download the app and link it to their credit cards, debit cards or gift cards. They can then scan their device at the checkout, and the system will email a receipt. The company plans to install the service in all of its U.S. stores by the end of 2016. The app will also let Wal-Mart track users’ shopping habits, which it can then use to create unique discounts and other promotions. Moreover, introducing its own mobile payment system means Wal-Mart doesn’t have to share any processing fees with rival services like Apple Pay....
BROADRIDGE FINANCIAL SOLUTIONS INC. $54 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 118.6 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada. Broadridge was a subsidiary of Automatic Data Processing until April 2007, when ADP spun it off as a separate firm. Acquisitions drive profits higher...
HP INC. $12 (www.hp.com) took its current form on November 1, 2015, when the old Hewlett-Packard Co. split into two firms. HP Inc. focuses on personal computers and printers, while Hewlett-Packard Enterprise (see below) sells computing services and products, like servers and analytics software, to businesses and governments. Hewlett-Packard shareholders received one share of HP Inc. and one share of Hewlett-Packard Enterprise for each old share they held. Demand for printers and ink continues to slow as more people share photos on social media instead of printing them. As well, businesses are still evaluating Microsoft’s new Windows 10 operating system before buying new computers. Hold. HEWLETT-PACKARD ENTERPRISE CO. $15 (www.hpe.com) should benefit as more businesses shift to cloud computing systems. However, this new firm faces strong competition from larger, better-established cloud providers like Amazon Web Services and IBM. Hold.
NEWELL RUBBERMAID INC., $45.28, New York symbol NWL, is reportedly negotiating a merger with Jarden Corp. (New York symbol JAH). Jarden makes consumer products, including Sunbeam kitchen appliances, Mr. Coffee coffee makers, Ball jars, Crock-Pot cookers and Rawlings baseball mitts. It would cost around $11.8 billion to buy Jarden, which is almost equal to Newell’s $12.7-billion market cap (the value of all outstanding shares). The combined firm would have $14 billion of annual sales....
REITMANS (CANADA) LTD., $4.02, symbol RET.A on Toronto, owns 775 women’s clothing stores across Canada. The chain consists of 332 Reitmans, 136 Penningtons, 107 Addition Elle, 83 RW & Co., 68 Thyme Maternity, 17 Hyda and 32 Smart Set outlets. It also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores. In the three months ended October 31, 2015, Reitmans’ sales rose slightly, to $240.3 million from $238.3 million a year earlier. Same-store sales gained 7.6%, with brick-and-mortar stores increasing 4.8% and e-commerce jumping 72.2%....