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.
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Growth Stocks Library Archives
MITEL NETWORKS $11.29 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 120.0 million; Market cap: $1.4 billion; No dividends paid) 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. In the three months ended March 31, 2015, Mitel’s revenue rose 2.7%, to $248.1 million from $241.5 million a year ago (all figures except share price and market cap in U.S. dollars). Without the effect of the higher U.S. dollar, its revenue was $268.9 million in the latest quarter. Earnings per share fell 27.3%, to $0.16 from $0.22, as the stronger dollar hurt the contribution from the company’s international sales. However, the latest earnings still beat the consensus estimate of $0.15. Earlier this year, Mitel acquired Mavenir Systems for $560 million U.S....
SIERRA WIRELESS $34.10 (Toronto symbol SW; TSINetwork Rating: Extra Risk) (604- 231-1100; www.sierrawireless.com; Shares outstanding: 32.1 million; Market cap: $1.1 billion; No dividends paid) has entered into a new partnership with France’s PSA Peugeot Citroën. The carmaker has been a Sierra client since 2001 and has connected more than 1.6 million of its vehicles with the company’s emergency notification system modules. Now the automaker will use Sierra’s Air- Vantage device-to-cloud technology to add other connected services. The companies didn’t provide specifics, but these new functions could include apps that sync with smartphones and display information about a car’s performance and mileage....
COMPUTER MODELLING GROUP $12.85 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.5 million; Market cap: $1.0 billion; Dividend yield: 3.1%) sells software and services that help conventional oil and gas producers create 3-D models of reservoirs. That lets them squeeze more out of those reservoirs using advanced recovery techniques, such as injecting steam or chemicals. Typically, only 25% to 30% of oil and gas is recovered during primary production. Unconventional producers using hydraulic fracturing, or fracking, of oil and gas-bearing shale can also use Computer Modelling’s software to determine optimal drilling locations and depths. In the three months ended March 31, 2015, the company’s revenue rose 2.0%, to $20.4 million from $20.0 million a year earlier. Software licensing revenue (89% of the total) rose 2.8%, and consulting and professional services revenue (11%) gained 9.6%....
We’re happy to see that two of our stocks were chosen for addition to the S&P/TSX Composite Index on June 19, 2015. COMPUTER MODELLING GROUP $12.85 (see at left) is up over 500% for us since we first recommended it in our April 2003 issue at $2.10. We think it still has gains ahead. Computer Modelling is a buy....
LEON’S FURNITURE LTD. $15.18 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 71.1 million; Market cap: $1.1 billion; Dividend yield: 2.6%) has steadily opened new stores, growing from 27 in 2003 to 80 today. However, the company more than quadrupled in size overnight with its March 2013 purchase of its main rival, The Brick, for $700 million. The Brick has 220 locations across Canada; the chains continue to operate separately. In the three months ended March 31, 2015, the company’s sales fell slightly, to $423.0 million from $426.0 million a year earlier. On a same-store basis, sales declined 0.1%....
AIMIA INC. $14.01 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-897-6800; www.aimia.com; Shares outstanding: 164.7 million; Market cap: $2.3 billion; Dividend yield: 5.4%) owns and operates Aeroplan, Canada’s largest loyalty program. The company reports that its revenue rose 8.4% in the three months ended March 31, 2015, to $660.1 million from $608.9 million a year earlier. Earnings fell to $30.7 million, or $0.15 a share, from $88.2 million, or $0.48. However, the year-ago quarter included a one-time payment of $73.4 million after TD Bank replaced CIBC as Aeroplan’s main credit card issuer on January 1, 2014....
DOMINO’S PIZZA $110.92 (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%) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 11,700 outlets in the U.S. and 75 other countries. Franchisees run most of these stores. In the three months ended March 22, 2015, the company’s earnings per share jumped 19.1%, to $0.81 from $0.68 a year earlier. Sales gained 10.6%, to $502.0 million from $453.9 million. Same-store sales rose 7.8% internationally— but more important, they rose 14.5% in the U.S., home to most of the company’s stores....
RESTAURANT BRANDS INTERNATIONAL $37.46 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 467.0 million; Market cap: $17.5 billion; Dividend yield: 1.0%) has joined McDonald’s and KFC in bringing back old mascots. The company’s Burger King chain is now using its big-headed “King” mascot in its advertising for the first time since 2011. The move follows KFC’s reintroduction of Colonel Sanders after a 21-year absence, while McDonald’s brought back the Hamburglar after more than a decade. Burger King recently paid $200,000 to have the King appear live on TV at the Belmont Stakes horse race. In May, the company reportedly paid $1 million to have the King included in Floyd Mayweather’s entourage during his Las Vegas boxing match....
AGT FOOD & INGREDIENTS $32.17 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (306-525- 4490; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $755.8 million; Dividend yield: 1.9%) has bought the assets of West Central Road & Rail for $22 million. The acquisition includes five bulk-loading sites in Saskatchewan. Purchases like this are important because they help ensure that AGT can supply its manufacturing plants and continue its growth. AGT Food & Ingredients is still a buy....
FIRSTSERVICE CORP. $30.49 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $1.1 billion; Dividend yield: 0.6%) has completed the spinoff of its Colliers International subsidiary after handing out Colliers shares to its investors. The new FirstService began trading on Tuesday, June 2, 2015, retaining its FSV stock symbol. Colliers International Group, $47.01, symbol CIG on Toronto, began trading on the same day under its new symbol. Shareholders won’t pay capital gains taxes on the transaction until they sell their FirstService or Colliers shares. Colliers is one of the world’s top three commercial real estate firms, offering a range of services in the U.S., Canada, Europe, Australia, New Zealand, Asia and Latin America. In 2014, it had $1.7 billion U.S. of revenue....