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
CALIAN TECHNOLOGIES $18.79 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $137.1 million; Dividend yield: 6.0%) has won a $10- million contract with the City of Toronto to provide a software system for managing city employees’ hours. Calian will deliver this project over an 18-month period. To put the deal in context, the company reported revenue of $61.0 million in the three months ended March 31, 2015, up 19.3% from $51.2 million a year earlier. Earnings fell 6.6%, to $2.21 million, or $0.30 a share, from $2.36 million, or $0.32. That was mostly because Calian added workers to fulfill new contracts. This latest deal will add to the company’s revenue and demonstrates its ongoing ability to win recurring orders from all levels of government....
AGT FOOD & INGREDIENTS $32.29 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231- 1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $719.3 million; Dividend yield: 1.9%) buys and processes a range of pulses—which include peas, beans, lentils and chickpeas—as well as other specialty crops. Saskatchewan-based AGT owns 13 processing plants in Canada, nine in Turkey, four in Australia, two in the U.S., one in China and one in South Africa. In the three months ended March 31, 2015, the company’s revenue gained 23.7%, to $385.2 million from $311.3 million a year earlier. Before one-time items, earnings jumped 162.5%, to $0.42 a share from $0.16. The increases came from recent acquisitions and higher processing activity. A big part of AGT’s success has come from its shift to more profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting and bagging bulk crops. Food makers use these ingredients in products such as baked goods, soups and beverages, as well as pet food and animal feed. The stock trades at 15.7 times the $2.06 a share AGT is expected to earn in 2015. It yields 1.9%....
DOMINO’S PIZZA $112.31 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3008; www.dominos.com; Shares outstanding: 55.2 million; Market cap: $6.1 billion; Dividend yield: 1.1%) reports that its earnings per share jumped 20.9% in the three months ended June 14, 2015, to $0.81 from $0.67 a year earlier. Sales gained 8.5%, to $488.6 million from $450.5 million. Same-store sales rose 6.7% internationally—but more importantly, they increased 12.8% in the U.S., home to most of the company’s stores. The company’s outlook is positive, and it continues to profit from its move into online ordering and smartphone apps. However, the stock is up over 52% for us in the past year. Domino’s now trades at a high 32.8 times its forecast 2015 earnings of $3.42 a share....
WYNDHAM WORLDWIDE $87.29 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973- 753-6000; www.wyndhamworldwide.com; Shares outstanding: 120.0 million; Market cap: $10.4 billion; Dividend yield: 1.9%) is one of the world’s largest hospitality companies, with 7,670 franchised hotels worldwide. In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. This wide range of operations gives it more consistent cash flow than most of its competitors, which mainly focus on hotels. Wyndham has just bought ResortQuest Whistler, which manages nearly 600 vacation properties at the popular ski resort, for an undisclosed amount. ResortQuest’s properties are fully furnished and offer amenities like full kitchens, fireplaces and large living areas. This is Wyndham’s first acquisition in Canada....
ALAMOS GOLD $4.36 (Toronto symbol AGI TSINetwork Rating: Speculative) (604-681- 2802; www.alamosgold.com; Shares outstanding: 127.4 million; Market cap: $1.5 billion; No dividends paid) is the company formed by the merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold. The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which will sharply increase its costs. Alamos Gold holds cash of $358.0 million, which it will use to fund the Young-Davidson mine and boost the combined firm’s gold output from 400,000 ounces this year to 700,000 in 2018....
WAJAX CORP. $20.60 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:20.0 million; Market cap: $414.1 million; Dividend yield: 4.9%) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). The company’s customers are in the natural resource, construction, manufacturing and transportation industries. In the three months ended March 31, 2015, Wajax’s revenue fell 4.3%, to $317.2 million from $331.4 million a year earlier, as mining, oil and gas and oil sands firms made fewer purchases....
GOOGLE INC., Nasdaq symbols GOOG (class C non-voting), $672.93, and GOOGL (class A voting), $699.62, jumped 16% after reporting better-than-expected earnings this week. In the three months ended June 30, 2015, the company’s earnings gained 17.7%, to $4.8 billion from $4.1 billion a year earlier. Per-share profits rose 16.9%, to $6.99 from $5.98, on more shares outstanding. That was well ahead of the consensus estimate of $6.71. Revenue increased 11.1%, to $17.7 billion from $16.0 billion, falling just short of the consensus forecast of $17.8 billion. Excluding the negative impact of currency-exchange rates, revenue gained 18%....
CHIPOTLE MEXICAN GRILL, $661.95, symbol CMG on New York, offers higher-quality food and better decor and service than many fast-food chains, and charges slightly higher prices. Under its Food with Integrity initiative, it uses naturally raised meat wherever possible. The company’s all-natural meat comes from animals that are raised humanely, never given antibiotics or hormones and fed a vegetarian diet. In January 2015, the company halted sales of pork items at one-third of its nearly 1,800 U.S. restaurants after learning that a key supplier had failed to meet its pig-housing standards. Under Chipotle’s requirements, pigs must be housed in humane conditions with access to the outdoors, rather than in pens....
MICROSOFT CORP., $44.61, Nasdaq symbol MSFT, paid $9.5 billion for Nokia’s mobile phone operations in April 2014. If you exclude the cash this business held, the purchase price was $8.0 billion. Nokia is the only major phone maker using Microsoft’s Windows Phone software. Microsoft believed this purchase would help it sell more of its phones and encourage developers to write more apps for the platform. However, sales of Windows Phone devices continue to suffer in the face of intense competition from the iPhone and Android-powered devices. Smartphones running Windows account for just 3% of global sales....
CAMECO CORP., $17.00, symbol CCO on Toronto, has suspended uranium shipments by truck from its Rabbit Lake and Key Lake mines in northern Saskatchewan. The company made the decision in response to forest fires in the region. Cameco is the world’s largest uranium producer. It has large, high-grade reserves, low-cost operations, significant market share and a number of mines. The company halted shipments after travel restrictions were imposed on some northern roads because of low visibility....