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
SIERRA WIRELESS $43.46 (Toronto symbol SW; TSINetwork Rating: Extra Risk) (604-231-1100; www.sierrawireless.com; Shares outstanding: 31.9 million; Market cap: $1.4 billion; No dividends paid) makes modules that connect products to the Internet. This is known as machine-to-machine (M2M), or more generally as the Internet of Things. Web-connected products can be remotely monitored—and potentially fixed—before they cause a breakdown. For example, makers of smart electricity meters, such as Itron, use the company’s modules to connect their products to the web. Sierra’s technology can also warn carmakers of possible defects developing in vehicles. The company has grown quickly over the last five years, with revenue rising 53.2%, from $358.0 million in 2010 to $548.5 million in 2014 (all figures except share price and market cap in U.S. dollars). It made $0.63 a share in 2014, up sharply from $0.23 in 2013....
In the next few weeks, we will unveil a major upgrade to our website, TSI Network (www.tsinetwork.ca). We launched the current website in 2009 to host our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), our Inner Circle service and over 2,000 articles on individual investments. The current site served its purpose, but it’s time to move ahead with an advanced redesign....
AMERIGO RESOURCES $0.34 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 173.7 million; Market cap: $59.0 million; No dividends paid) processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest underground copper mine. This rock comes from the mine’s current production and tailings from the nearby Colihues deposit. This contract runs at least through 2037. Amerigo gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum. In the three months ended December 31, 2014, Amerigo’s copper production fell 7.4%, to 11.35 million pounds from 12.25 million a year earlier. Molybdenum output declined 11.8%, to 160,107 pounds from 181,464....
CIMAREX ENERGY $110.58 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.6 million; Market cap: $9.7 billion; Yield: 0.6%) plans to spend $900 million to $1.1 billion on exploration and development in 2015, down sharply from $1.9 billion in 2014. The company has cut back its spending plans in response to lower oil and gas prices. It aims to fund its 2015 spending from cash flow and the $406 million of cash it holds. That way it can avoid taking on debt, even though its long-term debt of $1.5 billion is a low 15.5% of its market cap. Even with the lower spending, Cimarex expects its production to rise between 3% and 8% over 2014 levels this year. If oil and gas prices rise later in 2015, it has the flexibility to increase its spending, which would also boost its production and cash flow....
ACI WORLDWIDE $21.09 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 114.9 million; Market cap: $2.4 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud. Clients include leading global retailers, plus two-thirds of the world’s 100 largest banks. ACI’s industry-leading products continue to attract prominent clients. For example, the company provides the technology behind Apple Inc.’s new mobile payment system, called Apple Pay. ACI’s revenue rose 17.5% in 2014 to $1.02 billion from $864.9 million in 2013. That was mainly due to contributions from acquisitions, including the purchase in August 2014 of Retail Decisions (ReD) for $205 million....
MAJOR DRILLING $7.07 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 80.1 million; Market cap: $566.6 million; Dividend yield: 0.6%) reports that its revenue fell 2.8% in the three months ended January 31, 2015, to $69.8 million from $71.8 million a year earlier. The company lost $0.24 a share, compared to a year-ago loss of $0.16 a share. In the latest quarter, Major’s profit margins fell sharply because it performed less highpriced specialized exploration drilling and more production-related drilling. To conserve cash until commodity prices start to rebound and its customers increase their drilling, Major is cutting its semi-annual dividend to $0.02 a share from $0.10. That gives the stock a 0.6% yield....
CHEMTRADE LOGISTICS INCOME FUND $21.38 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics .com; Units outstanding: 68.5 million; Market cap: $1.5 billion; Dividend yield: 5.6%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products. Chemtrade converts these substances into useful chemicals, like sulphuric acid. The company’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier. That’s largely due to General Chemical, which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products....
SASOL LTD. (ADR) $33.44 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082- 883-9697; www.sasol.com; ADRs outstanding: 650.9 million; Market cap: $21.6 billion; Dividend yield: 3.4%) is a South Africa-based company that converts coal and natural gas into motor fuels, produces oil and gas and mines coal. In its fiscal 2015 first half, which ended December 31, 2014, Sasol’s sales rose 1.6%, to 99.8 billion South African rand from 98.2 billion rand a year earlier (1 rand = $0.1099 U.S.). Earnings per ADR gained 6.0%, to 32.00 rand from 30.19. The U.S. dollar rose against the rand, increasing the value of Sasol’s foreign sales. That offset a 19% decline in realized oil prices. Despite the improved results, Sasol now plans to bring in an aggressive plan to conserve cash, including layoffs, lower spending on oil and gas exploration and development, and a 12.5% dividend cut. The ADRs yield 3.4%, based on the lower rate....
GOODYEAR TIRE & RUBBER CO. $26.05 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 269.6 million; Market cap: $7.0 billion; Dividend yield: 0.9%) is the world’s largest tire maker, with 52 plants in 22 countries. In the three months ended December 31, 2014, Goodyear’s sales fell 9.1%, to $4.36 billion from $4.80 billion a year earlier. The rising U.S. dollar hurt the contribution of foreign sales, and Europe experienced one of the warmest winters on record, cutting winter tire demand. Excluding one-time items, earnings fell 20.6%, to $166.0 million, or $0.59 a share, but that was still ahead of the consensus estimate of $0.58. A year earlier, Goodyear earned $209.0 million, or $0.74 a share....
WESTJET AIRLINES $30.27 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1- 877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $3.9 billion; Dividend yield: 1.9%) has taken delivery of its first Boeing 767 wide-body aircraft and says the plane will begin flights between Alberta and Hawaii in December 2015. WestJet has ordered three more 767s for delivery later this year. The bigger planes will offer greater range than the company’s current fleet of Boeing 737s and let it compete with Air Canada on international routes. Right now, WestJet flies to Dublin, Ireland, at the maximum range of its 737s. The new 767s will let it serve additional European cities, as well as South America or Asia....