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
AMERIGO RESOURCES $0.31 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 173.6 million; Market cap: $55.6 million; No dividends paid) has started processing tailings from the Cauquenes tailings deposit, located near its current operations in Chile. Cauquenes is a big growth project: Amerigo expects it to help double its production in 2016, to 90 million pounds of copper. Phase 1 is now in operation at a rate of 30,000 tonnes per day, and Amerigo expects that to rise to 60,000 by the end of this year, bringing the company’s overall output to over 70 million pounds of copper annually. The Cauquenes expansion will cost $140 million in total. However, Amerigo has used its cash flow to pay off all of its debt over the last few years, and it currently holds cash of $18.3 million. This gave it the flexibility to arrange bank financing in Chile for Cauquenes....
ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed. These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand. This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states....
AGT FOOD & INGREDIENTS $28.27 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (306-525-4490; www.agtfoods.com; Shares outstanding: 23.1 million; Market cap: $651.5 million; Dividend yield: 2.1%) has acquired Mobil Capital Holdings for $57.5 million. This business owns a movable crop-processing plant, short-line railways, bulk-loading facilities and a grain- and pulse-trading operation. Most of Mobil’s assets are in Saskatchewan. This acquisition follows AGT’s $22-million purchase of West Central Road & Rail’s assets in June 2015. That deal included five bulk-loading sites in Saskatchewan. Purchases like these are important because a big part of AGT’s recent success has come from its shift to more profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting, sorting and bagging bulk crops....
DREAM OFFICE REIT $21.36 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.8 million; Market cap: $2.4 billion; Dividend yield: 10.5%) owns and manages 176 properties comprising 24.1 million square feet of office space in major cities across Canada. In Western Canada, the trust has 16% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 17% in suburban Toronto and 24% elsewhere. Its occupancy rate is 92.8%. In the three months ended June 30, 2015, Dream Office’s revenue slipped 1.4%, to $201.4 million from $204.4 million a year earlier. The trust sold four properties to Dream Industrial REIT (symbol DIR.UN on Toronto) for $33.0 million in September 2014. Dream Office owns 24.2% of Dream Industrial....
WAL-MART STORES INC., $58.87, New York symbol WMT, fell 11% this week after warning that higher employee wages, new investments in its online businesses and the negative impact of the high U.S. dollar will slow its earnings growth. The company earned $4.84 a share in its 2015 fiscal year, which ended January 31, 2015, but it expects its profits to dip to between $4.40 and $4.70 a share in fiscal 2016. It also forecasts a further 6% to 12% decline in 2017. That’s much worse than the consensus prediction of a 4% gain. However, Wal-Mart feels its expanded online presence and higher efficiency will increase its earnings per share in 2018 and 2019....
CHIPOTLE MEXICAN GRILL, $722.70, symbol CMG on New York, has hired Curt Garner as its first chief information officer. The company hopes Garner will improve its mobile presence, including the ability to order and pay through smartphones and tablets. Mobile apps have already paid off very successfully for fast-food and fast-casual chains like Domino’s, Panera Bread, Starbucks and Taco Bell. Previously, Garner spent 20 years at Starbucks in various technology roles, including CIO. The coffee chain recently finished rolling out its mobile ordering and payment app at its more than 7,400 U.S. outlets....
MITEL NETWORKS CORP., $10.56, symbol MNW on Toronto, jumped over 16% this week after activist investor Elliott Management Corp. released a letter yesterday disclosing stakes in Mitel and Polycom Inc. (symbol PLCM on Nasdaq). Elliott, founded by hedge-fund manager Paul Singer in 1977, is urging the two companies to merge to increase their combined profits in a very competitive market. Elliott now holds 6.6% of Polycom and 6.3% of Mitel. Mitel develops and markets products centred on business telephone systems, including technology that integrates land lines and mobile phones. The company also offers call centre and videoconferencing products....
YUM! BRANDS INC., $70.28, New York symbol YUM, fell 14% this week after reporting lower-than-expected quarterly results. The company also cut its full-year forecast due to slow sales in China following last year’s food-safety problems at its KFC outlets. In the three months ended September 5, 2015, Yum earned $421 million, up 4.2% from $404 million a year earlier. Per-share profits gained 6.7%, to $0.95 from $0.89, on fewer shares outstanding. Without unusual items, including a writedown of its Mexican real estate holdings, Yum earned $1.00 a share in the latest quarter, missing the consensus estimate of $1.07....
ALCOA INC., $9.52, New York symbol AA, plans to split itself into two separate firms. One will focus on Alcoa’s upstream operations, which include mining bauxite ore and refining it into bulk aluminum products. This business will be the world’s fourth-largest aluminum producer, with $13.2 billion of annual revenue and gross earnings of $2.8 billion. The other company will focus on engineered aluminum products, such as components for cars and jet engines. This firm has $14.5 billion of annual revenue and gross earnings of $2.2 billion....
SIERRA WIRELESS, $28.66, symbol SW on Toronto, makes modules and software that connect products, including vehicles and smart electricity meters, to the Internet. This is known as machine to machine, or more generally as the Internet of Things (IoT). The company continues to sign up clients for its new IoT Acceleration Platform, which combines cloud computing, hardware and telecommunications networks to monitor machines remotely. For example, Veolia Water Technologies UK, which provides water-treatment plants and systems to companies and municipalities around the world, is now using the IoT Acceleration Platform to help its customers monitor critical data such as flow, pressure and temperature. This cuts its clients’ labour costs and lets them respond to problems as they happen....