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.
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Growth Stocks Library Archives
TOROMONT INDUSTRIES LTD. $22.86 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 76.6 million; Market cap: $1.8 billion; Dividend yield: 2.3%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc....
CONAGRA FOODS INC., $31.88, New York symbol CAG, fell 5% this week after the company warned that weaker-than-expected demand for its brand name foods, such as Hunt’s ketchup, Peter Pan peanut butter and Slim Jim meat snacks, is hurting its earnings. As a result, the company now expects that it earned $0.37 a share in the first quarter of its 2014 fiscal year, which ended August 31, 2013. This forecast excludes unusual costs related to its recent purchase of Ralcorp Holdings, the largest maker of private label food in the U.S. Even so, ConAgra’s forecast is well below the consensus estimate of $0.45 a share. The company is now adjusting its pricing and marketing strategies to spur its sales, but lower ingredient costs and savings from the Ralcorp merger will still let it meet its debt repayment goals in fiscal 2014 and 2015....
MAJOR DRILLING GROUP INTERNATIONAL INC., $7.28, symbol MDI on Toronto, is a large contract drilling firm that mainly serves the mining industry. In the three months ended July 31, 2013, Major’s revenue fell 54.4%, to $108.2 million from a record $237.6 million a year earlier. Earnings also declined sharply, to $1.5 million, or $0.02 a share, from $31.9 million, or $0.40. The latest earnings included $2.0 million of one-time pre-tax restructuring charges, such as costs related to layoffs. The company has cut its staff by 45%, or 2,300 workers, over the past year. Many of Major’s large- and medium-sized mining customers slowed their drilling activity in the latest quarter, and orders from junior miners dropped sharply. That’s because juniors are having a lot of difficulty raising funds in today’s uncertain resource markets....
VERIZON COMMUNICATIONS INC., $46.34, New York symbol VZ, has agreed to buy the 45% of Verizon Wireless that it doesn’t already own from U.K.-based Vodafone Group plc (Nasdaq symbol VOD). Verizon Wireless is a joint venture that sells wireless services to 100.1 million subscribers in the U.S. In the second quarter of 2013, it supplied 67% of Verizon’s revenue and 80% of its earnings. The company will pay $130 billion for Vodafone’s stake. That’s almost as much as Verizon’s $132.6-billion market cap (or the total value of all its outstanding shares)....
CARFINCO FINANCIAL GROUP INC., $10.20, symbol CFN on Toronto, provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks. Carfinco has now expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less affluent borrowers. Persian operates in Massachusetts, New Hampshire, Maine, Connecticut and Vermont. It works with about 362 car dealers who use the company to get loans for their customers. Persian currently has $42.7 million U.S. in outstanding loans. To put that in perspective, Carfinco has $195.0 million of loans....
VERIZON COMMUNICATIONS INC., $47.38, New York symbol VZ, is negotiating with U.K.-based Vodafone Group plc (Nasdaq symbol VOD) to buy the 45% of Verizon Wireless that it doesn’t already own. Verizon Wireless is a joint venture that sells wireless services to 100.1 million subscribers in the U.S. In the second quarter of 2013, it supplied 67% of Verizon’s revenue and 80% of its earnings. Buying full control could cost Verizon as much as $130 billion. That’s almost equal to the company’s $135.6 billion market cap (or the total value of all its outstanding shares)....
ALIMENTATION COUCHE-TARD, $60.74, symbol ATD.B on Toronto, rose almost 5% today after reporting its latest quarterly results. In the three months ended July 21, 2013, Couche-Tard’s sales jumped 48.0%, to $8.9 billion from $6.0 billion a year earlier. The gain mostly came from Norway’s Statoil Fuel & Retail ASA, which Couche-Tard bought for $2.7 billion in June 2012 (all figures except share price in U.S. dollars). The company also benefited from higher fuel volumes and merchandise sales. Couche-Tard gets about 30% of its revenue by selling merchandise. Excluding one-time items, earnings rose 20.9%, to $220.0 million from $182.0 million. Earnings per share rose 16.0%, to $1.16 from $1.00, on more shares outstanding. The latest earnings beat the consensus estimate of $0.95 a share....
A key part of our three-part investing approach is to downplay or avoid stocks in the broker/media limelight (the other two parts are invest mainly in well-established stocks and to spread your money out across the five main economic sectors).
Stanley is a good example of an out-of-the-limelight stock....
Stanley is a good example of an out-of-the-limelight stock....
NEWELL RUBBERMAID INC. $25 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 288.0 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.newellrubbermaid.com), like Stanley (see left), is a good example of an out-of-the-limelight stock with long-term appeal.
Also like Stanley, Newell is selling its less profitable operations and focusing on products with greater growth potential, such as pens and tools for industrial users.
For example, it recently agreed to sell some of its hardware businesses, which make a variety of hooks, hinges, door knobs and paint brushes....
Also like Stanley, Newell is selling its less profitable operations and focusing on products with greater growth potential, such as pens and tools for industrial users.
For example, it recently agreed to sell some of its hardware businesses, which make a variety of hooks, hinges, door knobs and paint brushes....
These three firms provide vital information to lenders and other financial companies. They are also leaders in their niche markets. That cuts their risk and makes it hard for new competitors to challenge them.
DUN & BRADSTREET CORP. $100 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 38.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) is the world’s largest provider of credit reports on individual companies....
DUN & BRADSTREET CORP. $100 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 38.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) is the world’s largest provider of credit reports on individual companies....