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
HONDA MOTOR CO. LTD. ADRs $35 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $63.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.honda.com) is spending $61 million to increase capacity at its plant in Tapukara, India, by 50%, to 180,000 cars a year. The company expects to complete these upgrades in 2016. Honda’s other Indian facility makes 120,000 cars a year. The extra capacity will help Honda take advantage of rising car demand in the country: in the 11 months ended February 28, 2015, it sold 166,366 cars in India, up 43.5% from the same period a year earlier. At the same time, Honda plans to produce 39% more motorcycles in India by 2016. This expansion will cost the company $94.3 million....
J.P. MORGAN CHASE & CO. $63 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.7 billion; Market cap: $233.1 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.8%; TSINetwork Rating: Average; www.jpmorganchase.com) earned $5.9 billion in the three months ended March 31, 2015, up 12.2% from $5.3 billion a year earlier. Earnings per share rose 13.2%, to $1.45 from $1.28, on fewer shares outstanding. Without unusual items, Morgan earned $1.58 a share in the latest quarter. Revenue rose 4.1%, to $24.8 billion from $23.9 billion. Most of these gains came from the bank’s securities-trading division, where earnings jumped 19.4% on stronger volumes. It also saw higher fee income from advising firms on mergers. These increases helped offset slower growth in retail banking. Low interest rates continue to spur loan demand, but Morgan is earning less interest on the money it lends. At the same time, it has to pay more to attract depositors....
NEWELL RUBBERMAID INC. $39 (New York symbol NWL; Aggressive Growth and Income Portfolios, Consumer sector; Shares outstanding: 269.0 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.9%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and many other household goods. Newell is up 30.0% since we made it our Stock of the Year for 2014 at $30 in our February 2014 issue. That’s mainly because of its successful multi-year cost-cutting plan, which included closing plants and merging distribution centres.
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Savings sent earnings soaring
L BRANDS INC. $91 (www.lb.com) reported that its sales rose 6.2% in March 2015, to $981.2 million from $923.7 million in March 2014. Overall same-store sales gained 9%, with this year’s earlier Easter holiday accounting for 3% to 4% of this increase. Same-store sales at Victoria’s Secret rose 9%, but this division’s online and catalogue sales fell 2%, as it cut prices to clear out older merchandise. Successful new home fragrances, soaps and sanitizers also spurred a 9% same-store sales gain at the company’s Bath & Body Works stores. Hold. YUM! BRANDS INC. $84 (www.yum.com) is testing a new upscale restaurant in Shanghai, China. Called Atto Primo, this outlet specializes in Italian dishes. If successful, the company may open more of these restaurants in other Chinese cities. That would help offset lower sales at its Chinese KFC outlets, which continue to suffer in the wake of a 2013 food-safety scare. Yum could also sell some of Atto Primo’s foods at its Pizza Hut restaurants. Hold.
CAMECO CORP., $19.70, symbol CCO on Toronto, rose almost 8% this week after Canada and India signed a uranium-supply agreement that will see the company sell 7.1 million pounds of uranium concentrate to India over the next five years. The concentrate is worth around $350 million at today’s uranium price. The deal is the final step in a nuclear co-operation agreement that took effect in September 2013. Canada had previously banned uranium exports to India after the country used Canadian reactor technology to build a nuclear bomb. The agreement is small compared to Cameco’s annual sales of 31 million to 33 million pounds of concentrate. However, it will likely grow over the next couple of decades as India uses more nuclear power....
INTEL CORP., $32.47, Nasdaq symbol INTC, announced first-quarter earnings that matched the consensus estimate this week, though revenue fell short of expectations. Still, the stock rose 2% on signs that Intel is cutting its reliance on personal-computer chips. In the three months ended March 28, 2015, the company’s earnings rose 3.2%, to $2.0 billion from $1.9 billion a year earlier. Intel spent $750.0 million on share buybacks during the quarter, so per-share earnings rose at a faster pace of 7.9%, to $0.41 from $0.38. Overall revenue rose just 0.1%, to $12.78 billion from $12.76 billion, missing the consensus forecast of $12.9 billion. Revenue from personal-computer chips and mobile devices (58% of the total) fell 8.4%. The year-earlier quarter benefited as many businesses bought new machines after Microsoft stopped supporting its older Windows XP operating system....
AGT FOOD & INGREDIENTS $28.09 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (604-231-1100; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $656.1 million; Dividend yield: 2.1%) 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. AGT has grown quickly in the past five years, with revenue rising 111.8%, from $642.1 million in 2010 to $1.36 billion in 2014. Before one-time items, it made $1.76 a share in 2014, up sharply from $1.09 in 2013....
AURICO GOLD $4.15 (Toronto symbol AUQ; TSINetwork Rating: Speculative) (604-681-2802; www.auricogold.com; Shares outstanding: 250.0 million; Market cap: $1.0 billion; Dividend yield: 2.8%) has agreed to merge with Alamos Gold (symbol AGI on Toronto). AuRico owns the Young- Davidson mine in northern Ontario, which holds as much as 5.6 million ounces of gold. The mine 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 owns the Mulatos mine in Mexico, but its main asset is its $358.0 million cash holding. The combined entity, called Alamos Gold, will use that cash to fund Young-Davidson, and boost the company’s gold output from 400,000 ounces this year to 700,000 in 2018....
ALIMENTATION COUCHE-TARD $49.82 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 418.1 million; Market cap: $29.0 billion; Dividend yield: 0.4%) (All amounts except share price and market cap in U.S. dollars) operates 6,314 convenience stores throughout North America. Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia. In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations....
CALIAN TECHNOLOGIES $18.50 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $136.6 million; Dividend yield: 6.1%) has won a $15- million contract with the Royal Canadian Air Force (RCAF) to provide airworthiness engineering and support. The contract starts immediately and will run to March 31, 2017. It includes one additional option year. Calian, through its Amtek subsidiary and in conjunction with subcontractor Valcom Consulting Group, will supply 40 engineers to help the RCAF meet its regulatory requirements for the safe and effective operation of its equipment. This latest deal will add to Calian’s revenue, which should reach $220 million this year. It also demonstrates the company’s ongoing ability to win recurring orders from Canadian federal government departments, including the Department of National Defence....