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
STANTEC INC. $67.93 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.8 million; Market cap: $3.1 billion; Dividend yield: 1.1%) sells a range of consulting, project-delivery, design and technology services. Its clients operate in a variety of industries, including oil and gas, transportation and construction. In the quarter ended June 30, 2014, Stantec’s revenue rose 13.0%, to $530.3 million from $469.4 million a year earlier. Earnings gained 22.6%, to $44.3 million, or $0.95 a share, from $36.1 million, or $0.78. Timely move into Quebec...
HEWLETT-PACKARD CO., $33.50, New York symbol HPQ, plans to break itself into two separate companies. The first firm, called Hewlett-Packard Enterprise, will sell computing products, like servers and analytics software, to businesses and governments. It will also offer cloud computing services and financing. Hewlett-Packard Enterprise will have annual revenue of $58.4 billion and $6 billion of gross profits. Meg Whitman, Hewlett’s current chief executive officer, will become its CEO....
SYMANTEC CORP., $21.94, symbol SYMC on Nasdaq, plans to break itself into two publicly traded companies. One will keep the Symantec name and focus on antivirus and security software and services. This business had $4.2 billion of revenue in Symantec’s 2014 fiscal year, which ended March 28, 2014. The other company will consist of Symantec’s information management (IM) operations, which include data backup and recovery software. It had $2.5 billion of revenue in fiscal 2014....
EBAY INC., $54.44, Nasdaq symbol EBAY, plans to spin off its PayPal subsidiary as a separate company. This business processes online transactions, including purchases made through eBay’s auction websites. In the past few years, PayPal has expanded into retail stores and payments through smartphones. It accounts for about 40% of eBay’s revenue. eBay plans to hand out PayPal shares as a special dividend in the second half of 2015. Investors are not liable for capital gains taxes until they sell their new shares....
ATLANTIC TELE-NETWORK, $55.15, symbol ATNI on Nasdaq, is raising its quarterly dividend by 7.4%, to $0.29 a share from $0.27, with the October 10, 2014, payment. The stock now yields 2.1%. Atlantic closed the sale of its Alltel wireless business to AT&T (symbol T on New York) late last year. It now holds cash of $407.6 million, or $24.64 a share, and has paid off its $271.1 million of debt. The company could use its high cash balance to make acquisitions or expand its remaining operations. It could also make further dividend increases or pay special dividends. Meanwhile, the stock trades at a high 26.3 times the $2.10 a share that Atlantic is forecast to earn this year....
WESTJET AIRLINES $27.23 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $3.6 billion; Dividend yield: 1.8%) is now charging a $25 fee for each checked bag on its cheapest flights, effective October 29. The fee will apply to domestic and U.S.- bound routes.
The company believes the fee will affect 20% of its passengers and will generate about $95 million of revenue annually. To put that in context, WestJet’s revenue was $847.4 million in the latest quarter.
After WestJet’s announcement, Air Canada said it will also start charging a $25-a-bag fee on flights within Canada. Air Canada has charged a baggage fee on routes between Canada and the U.S. since 2011.
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The company believes the fee will affect 20% of its passengers and will generate about $95 million of revenue annually. To put that in context, WestJet’s revenue was $847.4 million in the latest quarter.
After WestJet’s announcement, Air Canada said it will also start charging a $25-a-bag fee on flights within Canada. Air Canada has charged a baggage fee on routes between Canada and the U.S. since 2011.
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PHILIPS ELECTRONICS N.V. ADRs, $32.00, New York symbol PHG, plans to break itself into two separate, publicly traded companies by the end of 2015. One firm will consist of Philips’s lighting solutions business, which accounted for 32% of Philips’s 2013 sales of 22 billion euros (1 euro = $1.42 Canadian). These operations design and build light emitting diode (LED) systems for cities, arenas and other large-scale uses. This new company will not include Philips’s LED components and automotive lighting manufacturing operations, which it plans to set up as a separate firm. Philips still intends to sell a portion of this business, either to the public or to private investors....
STANTEC INC., $72.20, symbol STN on Toronto, is buying Montreal-based Dessau, a distressed firm that’s one of a number of companies caught up in a Quebec government inquiry into corruption in the construction industry. The purchase will add 1,300 employees at 20 offices throughout Quebec. Stantec didn’t say how much it’s paying, but the move will add about $130 million to its annual revenue. To put that in perspective, Stantec reported $530.3 million of revenue in the latest quarter. The corruption inquiry is investigating Dessau in connection with illegal financing of political parties. However, under the terms of the deal, Stantec won’t be responsible for any of the millions of dollars in fines or penalties that Dessau may have to pay....
Google first sold shares to the public at $42.50 each (split-adjusted) in August 2004. Since then, the stock has soared by 1,307.1%. We think the company is just getting started. It continues to dominate Internet search, and the web’s ongoing spread into developing countries should keep this business’s profits rising. What’s more, most of these new users will likely use mobile devices powered by Google’s Android software. To top it off, the stock remains attractive in relation to the company’s projected earnings....
TIM HORTONS INC. $80 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 132.8 million; Market cap: $10.6 billion; Price-to-sales ratio: 3.7; Dividend yield: 1.5%; TSINetwork Rating: Average; www.timhortons.com) still plans to go ahead with its deal to merge with Miami-based Burger King Worldwide (New York symbol BKW), even though the U.S. government is now clamping down on “tax inversion” deals like this. The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in U.S. Under the new rules, it is now more difficult for the foreign parent firm to shift funds between subsidiaries....