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 McDonald’s Corp., ABB Ltd., and Fair Isaac Corp.

MCDONALD’S CORP. $95 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 981.9 million; Market cap: $93.3 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.mcdonalds.com) reports that same-store sales at its U.S. outlets fell 3.2% in July 2014 from the same month a year earlier. That’s partly because younger diners are switching to fast-casual dining chains that offer fresher foods. In response, McDonald’s continues to upgrade its menu with healthier options, such as vegetable tortilla wraps. The company hopes these new menu items are as successful as its improved coffee lineup— since 2009, its coffee sales have jumped 70%. The company now plans to start selling its coffee in supermarkets under the McCafe brand. It will offer a variety of blends and flavours, in bags as well as single-serve pods for home brewing machines. McDonald’s is a buy....

2 min read

Pat McKeough

Growth Stocks

Procter shrinks to grow

PROCTER & GAMBLE CO. $83 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $224.1 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.pg.comtarget="_blank”) plans to sell just over half of its brands over the next two years. That will let the company focus on its 70 to 80 most popular products, which together account for over 90% of its sales. These include 25 global brands, such as Head & Shoulders shampoo, Gillette razors, Tide detergent and Pampers diapers, that each generate over $1 billion in annual sales. Meanwhile, Procter’s sales rose 0.6% in its 2014 fiscal year, which ended June 30, 2014, to $83.1 billion from $82.6 billion in fiscal 2013. Higher sales volumes (up 3%) and selling prices (up 1%) offset the negative impacts of currency exchange rates (down 2%) and low-margin products (down 1%). Before writedowns and unusual items, earnings rose 5.0%, to $4.22 a share from $4.02....

1 min read

Pat McKeough

Growth Stocks

Amex has plenty of room to grow

AMERICAN EXPRESS CO. $89 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $89.0 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.2%; TSINetwork Rating: Average; www. americanexpress.comtarget="_blank”) started up in 1850 and is now one of the world’s largest issuers of payment cards, with 109.9 million cards outstanding in over 130 countries. Billionaire investor Warren Buffett owns 14.3% of the company. Amex issues two types of cards: charge cards, which have no preset spending limit and must be paid in full each month; and traditional credit cards, which let users carry a balance. High-quality clientele cuts risk...

2 min read

Pat McKeough

Growth Stocks

Updating Quaker Chemical Corp., Buckeye Partners L.P., and Stanley Black & Decker Inc.

QUAKER CHEMICAL CORP. $78 (www.quakerchem.com) has purchased ECLI Products, an Illinois-based maker of greases for customers in the automotive, aerospace and natural resource industries. The company paid $52 million for ECLI, which is equal to 92% of its 2013 earnings of $56.3 million, or $4.27 a share ($3.84 a share without unusual items). The new operations look like a nice fit with Quaker’s main industrial lubricants products and will add $7 million to its annual gross earnings. However, Quaker trades at a high 19.2 times its forecast 2014 earnings of $4.07 a share. Hold. BUCKEYE PARTNERS L.P. $78 (www.buckeye.com) recently bought 20 oil terminals from Hess Corp. (New York symbol HES). However, due to losses at Buckeye’s fuel-trading division, its earnings fell 27.7% in the second quarter of 2014, to $61.9 million from $85.7 million a year earlier. The partnership sold units to help pay for the Hess assets. Due to more shares outstanding, earnings per share fell at a faster pace of 33.8%, to $0.53 from $0.80. Hold. STANLEY BLACK & DECKER INC. $91 (www.stanleyblackanddecker.com) has raised its quarterly dividend by 4.0%, to $0.52 a share from $0.50. The new annual rate of $2.08 yields 2.3%. However, at 16.8 times its earnings, the stock is expensive for a cyclical maker of tools and building-security products. Hold.

1 min read

Pat McKeough

Growth Stocks

Wall Street Stock Forecaster Hotline – Friday, August 22, 2014

BHP BILLITON LTD. ADRs, $69.71, New York symbol BHP, is the world’s largest mining company, with major operations in Australia, South Africa, Chile, the U.K. and North America. This week, BHP announced that it will spin off some of its operations as a separate Australia-based firm. This unnamed company will hold BHP’s aluminum, manganese, nickel and silver operations, as well as some of its coal mines. BHP did not reveal the details of the spinoff. However, the new company’s shares will mainly trade on the Australian Securities Exchange. Its American Depositary Receipts (ADRs) will trade on the over-the-counter market in the U.S....

6 min read

Pat McKeough

Growth Stocks

Stock Pickers Digest Hotline – Friday, August 22, 2014

BELLATRIX EXPLORATION LTD., $8.53, symbol BXE on Toronto, produces natural gas (65% of output) and oil (35%) in Alberta, B.C. and Saskatchewan. Bellatrix jumped 14% this week after U.S. activist investor Orange Capital LLC revealed that it has been investing in the company since July 2. It now holds about 10.2 million shares Bellatrix shares, or a 5.3% interest. Orange Capital wants the company to discuss changing the size and composition of its 10-person board of directors. It also wants Bellatrix to hire a financial advisor to explore strategic alternatives, including selling its midstream assets (natural gas processing plants and pipeline gathering systems) or an outright sale of the entire company....

5 min read

Pat McKeough

Growth Stocks

Here’s our Pick of the Month - September 2014

RUSSEL METALS $37.45 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.4 million; Market cap: $2.3 billion; Dividend yield: 4.1%) is one of North America’s largest metal distributors....

1 min read

Pat McKeough

Growth Stocks

Big gains for Tims

TIM HORTONS $66.99 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 134.3 million; Market cap: $9.1 billion; Dividend yield: 1.9%) is up 11%, near all-time highs, since reporting better-than-expected quarterly results on August 6.

In the three months ended June 29, 2014, Tim Hortons’ revenue rose 9.3%, to $874.3 million from $800.1 million a year earlier....

1 min read

Pat McKeough

Growth Stocks

Buy Mitel, hold on to Stuart Olson

STUART OLSON INC. $10.01 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 24.9 million; Market cap: $270.0 million; Dividend yield: 4.8%) (formerly The Churchill Corp.) provides building-construction, commercial and industrial electrical contracting, earthmoving and industrial insulation services to government and private sector clients....

2 min read

Pat McKeough

Growth Stocks

New name, same high yield

DREAM OFFICE REIT $29.07 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dundeereit.com; Units outstanding: 104.6 million; Market cap: $3.1 billion; Dividend yield: 7.7%) (formerly Dundee REIT) owns and manages 24.5 million square feet of office and retail space in major cities across Canada.

In the quarter ended June 30, 2014, Dream’s revenue rose 3.1%, to $204.4 million from $198.2 million a year earlier....

1 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.