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.
Read More
Close
Growth Stocks Library Archives
Faulty airbag inflators made by Takata Corp. have forced Toyota to recall 8.1 million vehicles since 2008, while Honda has had to fix 20 million cars. However, these recalls likely won’t damage Toyota and Honda’s reputations or sales, as other big carmakers have also used Takata’s defective equipment. Meanwhile, both companies should keep benefiting from a low Japanese yen, which makes their products cheaper in foreign markets. TOYOTA MOTOR CO. ADRs $135 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $216.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s largest carmaker....
An American depositary receipt (ADR) is an investment unit for foreign companies that trade on a U.S. stock market, like Toyota and Honda. These units can represent fractions of shares, whole shares or multiple shares in the foreign firm. ADRs can help you simplify your international investing by letting you buy foreign shares on U.S. exchanges and avoid the complications of buying or selling on a foreign exchange in a foreign currency. ADRs can also help you cut risk, because they must follow some U.S. Securities and Exchange Commission and New York Stock Exchange rules. However, Canadian investors need to take extra care. Holding ADRs outside of a registered account, like an RRSP, will expose you to dividend withholding taxes. If you hold ADRs inside an RRSP, the withholding tax depends on whether Canada has a tax treaty with the country where the underlying company is based.
INTEL CORP. $32 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.7 billion; Market cap: $150.4 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.intel.com) has purchased Recon Instruments, a privately held Vancouver firm that makes heads-up displays for sports goggles and other specialized eyewear. This is a small acquisition for Intel: the $175-million purchase price is just 9% of the $2.0 billion, or $0.41 a share, the chipmaker earned in the three months ended March 28, 2015. However, Recon’s technology will help Intel profit from rising sales of wearable devices, such as wristwatches that monitor heart rates and other biological data. Intel is a buy....
PEPSICO INC. $95 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $142.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) earned $1.25 billion in the three months ended March 21, 2015, down 1.6% from $1.27 billion a year earlier. The company spent $1.1 billion on share buybacks in the latest quarter. As a result, earnings per share were unchanged at $0.83. Sales declined 3.2%, to $12.2 billion from $12.6 billion. If you exclude businesses PepsiCo bought and sold in the past year, as well as unfavourable currency exchange rates (overseas markets supply 40% of the company’s sales), revenue rose 4.4%. PepsiCo is still seeing strong demand for its snack foods, particularly in developing countries. However, soft drink sales have suffered as increasingly health-conscious consumers drink less soda....
TEXAS INSTRUMENTS INC. $54 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $54.0 billion; Price-to-sales ratio: 4.3; Dividend yield: 2.5%; TSINetwork Rating: Average; www.ti.com) gets 65% of its revenue from analog chips, which convert inputs like touch, sound and pressure into signals computers can understand. Manufacturers use these chips in a variety of products, such as cars, medical devices and appliances. The company gets a further 20% of its revenue by making embedded processor chips, which perform mathematical calculations. Many clients supply their own software for these chips. This gives Texas Instruments an opportunity to form long-term relationships with these users, as it helps them adapt their software to the new chips. That makes these customers less likely to switch to other chipmakers. Handheld calculators, specialized chips and licensing fees provide the remaining 15% of revenue....
BHP BILLITON LTD. ADRs $44 (www.bhpbilliton.com) has completed the spinoff of South32, which holds BHP’s aluminum, manganese, nickel and silver businesses, as well as some of its coal mines. These assets are in Australia, southern Africa and South America....
CONAGRA FOODS INC., $43.37, New York symbol CAG, jumped 11% on Friday on news that activist investment firm Jana Partners now owns 7.2% of the company. Jana will probably push ConAgra to sell or spin off its private-label food business. In January 2013, ConAgra paid $4.75 billion for Ralcorp Holdings, the largest private-label food maker in the U.S. However, strong competition has hurt its sales and earnings. As a result, ConAgra has had to writedown this investment by $2.1 billion. To put these figures in context, ConAgra’s market cap is $17.0 billion....
NISSAN MOTOR CO., $20.02, symbol NSANY on Nasdaq, is now offering airbags as an option on its low-priced Datsun cars in India. The move comes as Indian consumers grow more concerned about vehicle safety. The country’s roads are among the world’s deadliest, with more than 130,000 people killed in accidents a year. Last year, Nissan revived the dormant Datsun brand with the launch of an under-$6,700 U.S. hatchback. The company is using Datsun to compete for sales of lower-cost cars in emerging markets, partly to avoid tarnishing its Nissan brand’s reputation for higher-quality vehicles....
SYMANTEC CORP. $24.10 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (650-527-8000; www.symantec.com; Shares outstanding: 680.7 million; Market cap: $16.1 billion; Dividend yield: 2.5%) continues to strengthen its fast-growing cybersecurity business while getting set to split off its Veritas Technologies division. Corporations are spending more on cybersecurity following highprofile attacks on Sony, Home Depot and Target. Symantec is taking advantage of this trend by hiring more programmers. It has also cancelled unprofitable contracts and simplified its product lines. These moves cut the company’s profits by 10.2% in its fiscal 2015 fourth quarter, which ended April 3, 2015, to $299 million, or $0.43 a share, from $333 million, or $0.48. Sales fell 6.2%, to $1.55 billion from $1.65 billion—though if you disregard the U.S. dollar’s negative impact on Symantec’s overseas sales, its revenue rose 1%....
MENTOR GRAPHICS $26.82 (Nasdaq symbol MENT; TSINetwork Rating: Extra Risk) (503-685- 7000; www.mentor.com; Shares outstanding: 116.1 million; Market cap: $3.1 billion; Dividend yield: 0.8%) is trading at new highs as it sells more hardware and software for improving and speeding up the design of electronic products. In the three months ended April 30, 2015, the company’s revenue rose 7.9%, to $272.1 million from $252.2 million a year earlier. Earnings per share jumped sharply, to $0.28 from $0.11. Mentor typically makes about 70% of its profits in its fiscal fourth quarter, which ends January 31. That’s the busiest purchasing period for its customers....