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
TOROMONT INDUSTRIES LTD. $27.71 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.1 million; Market cap: $2.1 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division. The company completed the spinoff of Enerflex Ltd. (see right) in 2011. Shareholders received shares of both the new Toromont Industries and Enerflex. In the three months ended September 30, 2014, Toromont’s revenue fell 6.2%, to $467.4 million from $498.3 million a year earlier....
J.P. MORGAN CHASE & CO., $55.93, New York symbol JPM, earned $4.9 billion, or $1.19 a share, in the three months ended December 31, 2014. That’s down 6.6% from $5.3 billion, or $1.30, a year earlier. The latest results included $990 million of legal costs as Morgan continues to settle lawsuits related to its role in the 2008 subprime mortgage crisis. Without these expenses, it earned $1.54 a share in the latest quarter, beating the consensus estimate of $1.31. Revenue fell 2.8%, to $22.5 billion from $23.2 billion, missing the consensus estimate of $22.6 billion. Lower interest rates have cut the income Morgan earns on consumer and business loans. But the recent market volatility has raised its fee income from stock and bond trading....
PLEASE NOTE: Next week, Stock Pickers Digest will reveal its #1 pick for 2015. Don’t miss this unique opportunity to profit. CHIPOTLE MEXICAN GRILL, $711.11, symbol CMG on New York, offers higher-quality food and better decor and service than many fast-food chains, and charges slightly higher prices. Under its Food with Integrity initiative, it uses naturally raised meat wherever possible. All of Chipotle’s naturally raised meat comes from animals that are raised in a humane way, never given antibiotics or hormones and fed a pure vegetarian diet....
MONSANTO CO., $119.04, New York symbol MON, sells technology-based agricultural products, such as genetically modified seeds, to farmers, grain processors and food companies. It also sells weed- and pest-control products. In the first quarter of its 2015 fiscal year, which ended November 30, 2014, Monsanto earned $243 million, down 34.0% from $368 million a year earlier. Earnings per share fell 27.5%, to $0.50 from $0.69, on fewer shares outstanding. Without unusual items, earnings per share declined 29.9%, to $0.47 from $0.67, but that still beat the consensus forecast of $0.35. Sales fell 8.7%, to $2.9 billion from $3.1 billion, but that also beat the consensus forecast of $2.8 billion....
ATLANTIC TELE-NETWORK, $64.56, symbol ATNI on Nasdaq, is entering the solar energy market by acquiring 28 solar projects in Massachusetts, California and New Jersey. The company paid $103 million for these assets ($64 million in cash and the assumption of $39 million of debt). Atlantic will now operate these projects, which have a total of 45.7 megawatts of capacity, through its newly created Ahana Renewable subsidiary. Customers include corporations, utilities, schools and municipalities. The projects’ power-purchase agreements range from 10 to 25 years, with a weighted average remaining life of 14.4 years. All of these facilities are generating revenue and have been operating for at least a year....
PLEASE NOTE: This is our last Hotline for 2014. Our next Hotline will go out on Friday, January 9, 2015. CONAGRA FOODS INC., $36.86, New York symbol CAG, bought Ralcorp Holdings, the largest private-label food maker in the U.S., for $4.75 billion in January 2013. However, strong price competition is hurting this business’s sales and earnings. As a result, ConAgra wrote down its value by $247.0 million in its fiscal 2015 second quarter, which ended November 23, 2014. This charge is in addition to an earlier $602.2-million writedown....
PLEASE NOTE: This is our last Hotline for 2014. Our next Hotline will go out on Friday, January 9, 2015. SHERRITT INTERNATIONAL, $3.23, symbol S on Toronto, has jumped over 42% this week after Cuba and the U.S. announced that they will re-establish diplomatic ties. The company has operated in Cuba for over 20 years and gets about 74% of its revenue from the country. Its Cuban operations include 50% of the Moa nickel and cobalt joint venture, as well as power plants and oil and gas projects. Sherritt is Cuba’s largest foreign investor....
In August 2014, Gannett announced it would split into two companies. One will focus on newspapers and their associated websites, and the other will hold its TV stations and stand-alone websites. The stock is down 14% since the spinoff announcement, mainly because investors are worried about falling advertising revenue. Still, studies have shown that after the first few months, spinoffs tend to outperform groups of comparable stocks for several years. That’s mainly because companies will only take on the costs of a spinoff when they have reason to believe it will boost the value of both the new and remaining businesses....
PETSMART INC. $81 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 99.4 million; Market cap: $8.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.petm.com) has accepted an $83.00-a-share takeover offer from a group of private firms. The purchase price works out to a 159.4% gain since we first recommended PetSmart at $32 in our October 2007 issue. The buyers aim to complete the takeover in the first half of 2015. Investors should hold their shares and tender them to avoid paying brokerage fees....
These three companies use oil to maker their products, so they all stand to gain from the 40% drop in crude prices since June 2014. And even when oil rebounds, they will continue to benefit from recent acquisitions and their high market shares. However, not all are buys right now. SHERWIN-WILLIAMS CO. $246 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 96.0 million; Market cap: $23.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.sherwin-williams.com) is North America’s largest paint and varnish producer....