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
WAJAX CORP. $35.12 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.8 million; Market cap: $586.4 million; Dividend yield: 6.8%) 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 March 31, 2014, Wajax’s revenue fell 1.5%, to $331.4 million from $336.3 million a year earlier. The decline mostly came from weakness in oil and gas and mining markets....
CALIAN TECHNOLOGIES LTD., $19.71, symbol CTY on Toronto, has acquired Ottawa-based DWP Solutions Inc. for an undisclosed amount. DWP has been in business for 18 years and helps government and defence customers secure their computer networks. The company’s annual revenue is around $6 million. To put that in context, Calian reported $51.2 million of revenue in the latest quarter. The purchase is small for Calian, but it will be a good fit with the company’s Business and Technology Services division, which supplies engineers, health care workers, information technology professionals and other personnel on a contract basis. Calian’s clients are asking for more cyber-security specialists, and DWP will help it meet that demand....
INTEL CORP., $33.70, Nasdaq symbol INTC, rose 8% this week after announcing better than expected first quarter earnings and a new share buyback plan. In the three months ended June 28, 2014, Intel’s earnings jumped 39.8%, to $2.8 billion from $2.0 billion a year earlier. The company spent $2.1 billion on share buybacks during the quarter. As a result, earnings per share rose at a faster pace of 41.0%, to $0.55 from $0.39. That beat the consensus estimate of $0.52. Overall revenue rose 8.0%, to $13.8 billion from $12.8 billion, beating the consensus forecast of $13.7 billion. Revenue from making chips for personal computers (63% of the total) rose 6.2%, mainly because businesses are buying new machines after Microsoft stopped supporting its older Windows XP operating system....
ALIMENTATION COUCHE-TARD, $29.34, symbol ATD.B on Toronto, has reported higher sales and earnings in the latest quarter, as well as a dividend increase. In the three months ended April 27, 2014, Couche-Tard’s sales rose 2.0%, to $9.0 billion from $8.8 billion a year earlier. Excluding one-time items, per-share earnings gained 10.0%, to $0.22 from $0.20 (all figures adjusted for Couche-Tard’s 3-for-1 stock split on April 14, 2014). The company is raising its quarterly dividend by 20.0% with the July 2014 payment, to $0.04 from $0.033. The shares now yield 0.6%....
ARCHER DANIELS MIDLAND CO., $47.85, New York symbol ADM, processes corn, wheat, soybeans, canola, flax seed, peanuts, cocoa and other crops into a wide variety of food ingredients, such as flour, oils and sweeteners. It is also the largest maker of ethanol from corn in the U.S. This week, the company agreed to buy Switzerland-based WILD Flavors, a privately held firm that supplies natural ingredients to over 3,000 food and beverage makers. Archer Daniels will pay 2.3 billion euros (or $3.1 billion U.S.) for WILD when the deal closes by the end of 2014. That’s equal to 10% of Archer Daniels’ $31.3-billion market cap (or the total value of all its outstanding shares)....
DEVON ENERGY CORP., $79.21, symbol DVN on New York, has agreed to sell some of its properties to Linn Energy LLC (Nasdaq symbol LINE) for $2.3 billion. The sale includes Devon’s holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas). The sale will let Devon focus on what it sees as low-risk/high-reward properties, especially the oil-producing assets it bought in Texas’s Eagle Ford shale formation for $6 billion last year....
PETSMART INC., $67.28, Nasdaq symbol PETM, operates 1,340 pet stores in the U.S. and Canada. It also has 200 in-store PetsHotel boarding facilities for dogs and cats. The stock jumped 12% this week on news that activist investment firm Jana Partners now owns 9.9% of the company. Jana has a history of pressuring companies to improve shareholder value, typically by spinning off certain operations, buying back more shares or raising their dividends. PetSmart currently pays a quarterly dividend of $0.195 a share, for a 1.2% annualized yield. Jana could also encourage PetSmart’s management to sell the entire company....
MONSANTO CO., $125.12, New York symbol MON, reported better-than-expected quarterly earnings this week. It also announced a new share buyback plan. Monsanto 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 third quarter of its 2014 fiscal year, which ended May 31, 2014, Monsanto earned $858 million, down 5.6% from $909 million a year earlier. Earnings per share fell 3.6%, to $1.62 from $1.68, on fewer shares outstanding. But even with the decline, the latest earnings beat the consensus forecast of $1.54....
DOREL INDUSTRIES, $38.69, symbol DII.B on Toronto, has agreed to buy Hong Kong-based Lerado Group, a maker of baby strollers and infant car seats, for $120 million. Lerado also makes baby beds, high chairs and baby bouncers. The acquisition includes four facilities—a research centre in Taiwan and three manufacturing plants in China. These will be Dorel’s first company-owned factories in Asia, which reduces its reliance on third-party suppliers in the region; Dorel will now be able to make its own products to sell in China and export around the world. Right now, the company’s juvenile division gets only a small part of its sales from China. But China’s new infant-seat laws and growing middle class make it a great place for Dorel to expand....
GE’s shares dropped from $42 in 2007 to under $6 in 2009, as the financial crisis caused big losses at its banking division. In response, the company decided to shrink this business’s assets to half of what they were before the recession. It expects to complete these cuts by the end of 2014. Meanwhile, GE is expanding its industrial operations, mainly through acquisitions. That’s generally riskier than internal growth, but these businesses have unique technologies that offer competitive advantages. GE has also entered into a new alliance with France’s Alstom that will help it expand in developing nations. GENERAL ELECTRIC CO. $26 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $260.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes machinery for power generation and distribution, such as turbines, as well as other products, like jet engines, medical equipment, appliances, lighting and locomotives....