Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

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

Growth Stocks

Updating Genuine Parts Co., Ameren Corp. and T. Rowe Price Group Inc.

GENUINE PARTS CO. $102 (www.genpt.com) earned $1.24 a share in the quarter ended September 30, 2014, up 10.7% from $1.12 a year earlier. Sales rose 8.2%, to a record $4.0 billion from $3.7 billion. Sales at its auto parts business (52% of the total) rose 4.1%. Thanks mainly to acquisitions, sales at its other businesses (industrial parts, office products and electrical materials) gained 13.5%. The stock has jumped 16% in the past three months and now trades at a high 20.1 times the $5.07 a share Genuine will likely earn for all of 2014. Hold. AMEREN CORP. $43 (www.ameren.com) has raised its quarterly dividend by 2.5%, to $0.41 a share from $0.40. The new annual rate of $1.64 yields 3.8%. Ameren should benefit from recent rate increases at its gas-distribution operations. However, most of its power plants burn coal, so it will have to convert them to gas and other fuels to comply with tougher environmental regulations. Hold. T. ROWE PRICE GROUP INC. $83 (www.troweprice.com) earned $1.12 a share in the third quarter of 2014, up 12.0% from $1.00 a year earlier. Revenue rose 15.4%, to $1.0 billion from $884.4 million. Assets under management have risen 5.6% since the start of 2014, to $731.2 billion. The company’s fee income varies with the value of the mutual funds and other securities it manages, so it’s benefiting from rising stock markets. Buy....

1 min read

Pat McKeough

Growth Stocks

Stock Pickers Digest Hotline – Friday, November 21, 2014

BMTC GROUP, $16.00, symbol GBT.A on Toronto, is one of Quebec’s largest retailers of furniture, electronic goods and household appliances, with 36 stores. In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that had been Brault & Martineau liquidation centres. In 2013, BMTC opened four more EconoMax stores. It added another, in Joliette, in March 2014, and an additional one, in LaSalle, on October 24, 2014. BMTC is now considering purchasing land in Drummondville for a new store that would open in late 2015....

6 min read

Pat McKeough

Growth Stocks

Wall Street Stock Forecaster Hotline – Friday, November 21, 2014

PETSMART INC., $78.70, Nasdaq symbol PETM, operates 1,387 pet stores in the U.S. and Canada. It also has 201 in-store PetsHotel boarding facilities for dogs and cats. In its fiscal 2015 third quarter, which ended November 2, 2014, PetSmart’s earnings declined 0.1%, to $92.16 million from $92.22 million a year earlier. However, earnings per share rose 4.5%, to $0.92 from $0.88, on fewer shares outstanding. Activist investment firms Jana Partners and Longview Asset Management each own about 9% of the company’s stock. Under pressure from these investors, PetSmart is now lowering its overhead and other costs, with the goal of cutting $200 million from its annual expenses by the end of fiscal 2016....

5 min read

Pat McKeough

Growth Stocks

Here’s our Pick of the Month

DREAM OFFICE REIT $26.65 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 108.1 million; Market cap: $2.9 billion; Dividend yield: 8.4%) (formerly Dundee REIT) owns and manages 24.2 million square feet of office and retail space in major cities across Canada. In Western Canada, the REIT has 17% of its total square footage in Calgary and 21% elsewhere. In Eastern Canada, it holds 30% of its square footage in downtown Toronto, 14% in suburban Toronto and 18% elsewhere. Its occupancy rate is 93.0%. In the quarter ended September 30, 2014, Dream’s revenue fell 1.3%, to $201.7 million from $204.3 million a year earlier. The trust sold five non-essential properties for $44.9 million in the latest quarter. That offset the expiring leases that it renewed at higher rates. Cash flow per unit was unchanged at $0.63. Dream pays a monthly distribution of $0.1866 a unit, for an 8.4% yield....

1 min read

Pat McKeough

Growth Stocks

Nissan’s stimulus boost

NISSAN MOTOR (ADR) $18.30 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310- 771-3111; www.nissan-global.com; Shares outstanding: 2.3 billion; Market cap: $41.2 billion; No dividends paid) has risen over 9% since mid-October, after the Japanese government and the country’s central bank said they would make huge investments in Japanese stocks. They will also expand the money supply by making major government bond purchases. These moves have pushed the yen down to a seven-year low. This makes exports—like Nissan’s vehicles—much more attractive to foreign buyers. Just-released figures show the Japanese economy shrank by 1.6% in the latest quarter, erasing any doubt that the stimulus is needed....

1 min read

Pat McKeough

Growth Stocks

Buy Sheritt, hold on to Hecla

SHERRITT INTERNATIONAL $2.62 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.5 million; Market cap: $779.5 million; Dividend yield: 1.5%) sold off all of its coal interests for $793 million in cash in April 2014. The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba. In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12....

2 min read

Pat McKeough

Growth Stocks

Labour peace at WestJet

WESTJET AIRLINES $31.05 (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: 1.6%) has just reached a tentative labour agreement with its 1,200 pilots. This deal follows a tentative agreement with a group representing its 2,600 flight attendants. The company has a great hidden asset in its workforce, which continues to refrain from unionizing in favour of cooperating directly with management. Many flyers find that WestJet provides friendlier service than they get from unionized airlines. WestJet also benefits from the fact that most of its employees are also shareholders....

1 min read

Pat McKeough

Growth Stocks

Mitel is the better bargain right now

MITEL NETWORKS $11.35 (Toronto symbol MNW; TSINetwork Rating: Extra Risk) (613-592-2122; www.mitel.ca; Shares outstanding: 99.9 million; Market cap: $1.1 billion; No dividends paid) has reported its third quarter of results that include Aastra Technologies, a Stock Pickers Digest recommendation that Mitel acquired in a friendly takeover on January 31, 2014. In the latest quarter, Mitel’s revenue jumped 101.2%, to $272.4 million from $135.0 million a year ago (all figures except share price in U.S. dollars). Most of the increase came from Aastra. Without one-time items, earnings gained 134.6%, to $19.0 million from $8.1 million. However, earnings per share rose just 28.6%, to $0.18 from $0.14, as the company issued new shares to pay for Aastra....

2 min read

Pat McKeough

Growth Stocks

Big acquisition fitting in well

LEON’S FURNITURE $15.20 (Toronto symbol LNF; TSINetwork Rating: Average) (416- 243-7880; www.leons.ca; Shares outstanding: 71.0 million; Market cap: $1.1 billion; Dividend yield: 2.6%) reported sales of $629.2 million in the three months ended September 30, 2014, up slightly from $628.6 million a year earlier. Earnings gained 25.4%, to $27.3 million, or $0.38 a share. A year earlier, Leon’s earned $21.8 million, or $0.31 a share. Growth by acquisition can be risky, especially with a deal as big as The Brick purchase. However, Leon’s is doing a good job of integrating The Brick. It’s also finding savings by combining both companies’ distribution networks and computer systems....

1 min read

Pat McKeough

Growth Stocks

Two gold buys with rising production

NEW GOLD $4.71 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 504.0 million; Market cap: $2.4 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C. New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project. In the three months ended September 30, 2014, New Gold’s cash flow per share rose 60.0%, to $0.16 from $0.10 a year earlier. Gold production fell slightly, to 93,367 ounces from 94,038. But an 8.2% rise in copper output from New Afton and lower overall costs increased New Gold’s cash flow....

2 min read

Pat McKeough

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Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.