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
LEON’S FURNITURE $15.50 (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%) reported sales of $649.4 million in the three months ended December 31, 2014. That’s up 2.5% from revenue of $633.8 million a year earlier. Earnings gained 11.4%, to $29.9 million, or $0.38 a share. A year earlier, Leon’s earned $26.3 million, or $0.34 a share. Earnings rose more than sales because the company sold more high-profit-margin furniture rather than appliances and electronics. Leon’s is a buy....
RUSSEL METALS $24.16 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905- 819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.5 billion; Dividend yield: 6.3%) reported stronger results in the latest quarter. In the three months ended December 31, 2014, Russel’s revenue rose 24.9%, to $1.01 billion from $811.1 million a year earlier. Earnings gained 36.4%, to $31.1 million, or $0.50 a share. A year earlier, the company earned $22.8 million, or $0.37. Russel has invested in new plants and processing equipment in the past three years, which has cut its costs and improved its efficiency. That’s paying off with higher profit margins....
WAJAX CORP. $24.10 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.8 million; Market cap: $404.4 million; Dividend yield: 4.2%) 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 December 31, 2014, Wajax’s revenue fell 1.4%, to $386.1 million from $391.7 million a year earlier. The decline was mostly due to lower sales to mining companies and oil and gas customers....
SASOL LTD. (ADR), $32.04, symbol SSL on New York, has developed a technology to convert coal and natural gas into motor fuels. The company is the world’s largest producer of fuel from coal at its Secunda, South Africa, facility. It also makes synthetic fuels from natural gas at plants in Qatar and Nigeria. As well, Sasol produces chemicals, oil and gas in Africa. It’s also South Africa’s third-largest coal producer. In its fiscal 2015 first half, which ended December 31, 2014, Sasol’s revenue rose 1.6%, to 99.8 billion South African rand (1 rand = $0.1099 U.S.) from 98.2 billion rand a year earlier. Earnings per ADR gained 6.0%, to 32.00 rand from 30.19 rand. The U.S. dollar rose against the rand, increasing the value of Sasol’s sales outside South Africa. That offset a 19% decline in realized oil prices....
UNITED TECHNOLOGIES CORP., $118.74, New York symbol UTX, announced this week that it’s considering selling or spinning off its Sikorsky helicopter division. The company expects to make a final decision by the end of 2015. Sikorsky supplied 11% of United Technologies’ 2014 revenue but just 2% of its profits. That’s mainly due to a one-time charge after it renegotiated a contract to build helicopters for the Canadian government. The helicopter business has little in common with United Technologies’ larger divisions (Otis elevators, Carrier heating and air conditioning, Pratt & Whitney jet engines, and aircraft controls), so spinning it off makes sense....
VISA INC., $269.34, New York symbol V, and Citigroup Inc. (New York symbol C) have won a contract with retailer Costco Wholesale Corp. (Nasdaq symbol COST). Under the deal, which takes effect April 1, 2016, Costco will only accept Visa credit cards at its 474 warehouse stores in the U.S. In addition, Citigroup will offer Costco members a new co-branded Visa card with an enhanced loyalty rewards program—though shoppers can also use Visa cards issued by other banks. This deal should increase Visa’s payment volumes and earnings. Moreover, the company’s risk is low, as Citigroup will issue the cards and collect the payments....
MITEL NETWORKS CORP., $12.24, symbol MNW on Toronto, has agreed to buy Mavenir Systems (symbol MVNR on New York) for $560 million U.S. in cash and stock. Right now, Mitel mainly offers communication services to businesses over land-line phones. Mavenir will help Mitel move into the market for voice-over long-term evolution, or VoLTE. This technology repackages voice calls as data and transmits them over wireless networks. It’s quickly becoming the standard for high-speed wireless communications. Users of Mavenir’s networking software include T-Mobile and Verizon Communications. In all, the company serves 130 telecom firms, including 15 of the world’s 20 largest mobile carriers....
3M COMPANY, $168.65, New York symbol MMM, has agreed to buy Polypore International’s (New York symbol PPO) Separations Media division. This business makes membranes and filters for a variety of industrial and health-care uses, including dialysis, purifying drugs and filtering water. 3M will pay $1.0 billion when the deal closes in the next few months. The company held cash of $2.5 billion, or $3.97 a share, as of December 31, 2014, so it can comfortably afford this purchase. Excluding integration costs, Separations Media will add $0.04 a share to 3M’s earnings in the first year. To put that in context, 3M earned $7.49 a share in 2014. However, earnings from this new business should improve over the next few years as 3M uses its extensive distribution network to sell more of its products....
AMERIGO RESOURCES, $0.32, symbol ARG on Toronto, processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest underground copper mine. This includes rock from the mine’s current production and tailings from the nearby Colihues deposit. This contract runs at least through 2037. The company gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum. In the quarter ended December 31, 2014, Amerigo’s copper output fell 7.4%, to 11.35 million pounds from 12.25 million a year earlier. Molybdenum production declined 11.8%, to 160,107 pounds from 181,464....
Wal-Mart opened its first store in Rogers, Arkansas, in 1962. It has since grown to become the world’s biggest retailer, with 11,453 locations in the U.S. and 26 other countries. The company was one of the first to use computerized cash registers. That not only sped up checkout lines but gave Wal-Mart valuable data it could use to identify popular products in its various markets. As a result, it was able to keep top-selling items in stock and cut down on clearance sales. At the same time, Wal-Mart’s continued growth let it negotiate better prices from suppliers. The retail business continues to change, particularly as consumers buy more goods online. As well, many younger shoppers in cities prefer local stores instead of driving to suburban malls....