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
These two telecom firms are expanding through acquisitions. The cash flow from their new operations will help them maintain their high dividends. However, they’re both heavily reliant on traditional telephone services, which limits their growth potential.
FRONTIER COMMUNICATIONS CORP....
FRONTIER COMMUNICATIONS CORP....
NORDSTROM INC. $67 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 189.7 million; Market cap: $12.7 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.0%; TSINetwork Rating: Average; www.nordstrom.com) aims to sell part of its credit card business, which has $2 billion in outstanding loans, to a bank....
CEDAR FAIR L.P. $52 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.8 million; Market cap: $2.9 billion; Price-to-sales ratio: 2.5; Dividend yield: 5.4%; TSINetwork Rating: Average; www.cedarfair.com) lost $1.51 a share in the first quarter of 2014, compared to a loss of $1.95 a year earlier....
SONY CORP. ADRs $16 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $16.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.3%; TSINetwork Rating: Average; www.sony.com) has brought in a new restructuring plan that involves selling its money-losing Vaio personal computer business and cutting 3% of its workforce....
PFIZER INC. $30 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.4 billion; Market cap: $192.0 billion; Price-to-sales ratio: 3.9; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest maker of prescription drugs....
QUAKER CHEMICAL CORP. $75 (www.quakerchem.com) has increased its quarterly dividend by 20.0%, to $0.30 a share from $0.25. The new annual rate of $1.20 yields 1.6%. However, the company uses oil to make its industrial lubricants and other chemical products, and higher oil prices could slow its earnings growth. Hold. BUCKEYE PARTNERS L.P. $78 (www.buckeye.com) has raised its quarterly payout by 1.5%. The new annual rate of $4.40 yields 5.6%. Distributions accounted for a high 1.03 times of Buckeye’s cash flow, net of capital expenditures, in the latest quarter. Hold. T. ROWE PRICE GROUP INC. $81 (www.troweprice.com) continues to benefit from rising stock markets, which are spurring demand for its mutual funds. Assets under management rose 15.2%, to a record $711.4 billion as of March 31, 2014 from $617.4 billion a year earlier. The company’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings also gain when the price of these assets rises. Earnings per share jumped 15.4% in the first quarter of 2014, to $1.05 from $0.91 a year earlier. Buy....
COMPUTER MODELLING GROUP LTD., $29.94, symbol CMG on Toronto, makes software and provides services that help its clients get as much oil as possible from their existing wells. The company makes mostly recurring revenue from software licences and consulting contracts, which gives it long-term stability. In the quarter ended March 31, 2014, Computer Modelling’s revenue rose 3.6%, to $20.0 million from $19.3 million a year earlier. Software licence sales (89% of total revenue) increased slightly. However, consulting and professional services revenue (11%) rose 39.1%, due to new projects and a large consulting deal. Earnings gained 6.7%, to $7.7 million from $7.25 million. Per-share earnings jumped 18.8%, to $0.19 from $0.16, on fewer shares outstanding. That matched the consensus estimate....
AT&T INC., $35.32, New York symbol T, has agreed to buy DirecTV (Nasdaq symbol DTV), which has 20.3 million satellite TV customers in the U.S. and 18.1 million in Latin America. DirecTV also owns regional sports networks and other cable channels. The company will pay $48.5 billion (70% stock and 30% cash). If you include DirecTV’s debt, the deal is worth $67.1 billion. To put that in context, AT&T’s market cap (the value of all outstanding shares) is $183.5 billion. AT&T expects to close the deal in mid-2015. At that time, DirecTV shareholders will own roughly 15% of the combined company....
HILLSHIRE BRANDS CO., $36.62, New York symbol HSH, makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Other foods include Sara Lee frozen desserts and Chef Pierre pies. This week, the company agreed to buy rival Pinnacle Foods (New York symbol PF), whose main brands include Duncan Hines baking mixes, Vlasic pickles, Mrs. Butterworth’s table syrup and Birds Eye frozen dinners. Hillshire will pay $4.3 billion in cash and shares, though if you include Pinnacle’s debt, the entire transaction is worth $6.6 billion. Hillshire expects to close the deal in September 2014. At that point, Pinnacle shareholders will own 33% of the combined company....
AIMIA INC, $19.15, symbol AIM on Toronto, owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.8 million members who collect Aeroplan miles from participating companies. Members can exchange miles for flights, car rentals, hotel rooms and merchandise. The company also owns Nectar, the U.K.’s biggest loyalty program. In addition, it has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico. On January 1, 2014, TD Bank replaced CIBC as the main credit card issuer for Aeroplan. Under a new 10-year deal, TD is now launching new cards under the Aeroplan banner, including cards for frequent flyers and small businesses. The deal also let CIBC hang on to Aeroplan accounts held by customers who also bank at CIBC. That was about half the Aeroplan portfolio....