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
RUSSEL METALS $27.79 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.2 million; Market cap: $1.7 billion; Dividend yield: 5.0%) is one of North America’s largest metal distributors. It serves its 39,000 clients through 54 locations in Canada and 12 in the U.S.
In the three months ended December 31, 2012, Russel’s revenue rose 7.6%, to $765.9 million from $711.6 million a year earlier.
Revenue at the company’s steel-distribution division fell 20%, and sales at the metal-services business declined 10%....
In the three months ended December 31, 2012, Russel’s revenue rose 7.6%, to $765.9 million from $711.6 million a year earlier.
Revenue at the company’s steel-distribution division fell 20%, and sales at the metal-services business declined 10%....
RUBY TUESDAY INC., $9.10, symbol RT on New York, reports that its revenue fell 4.2% in its fiscal 2013 third quarter, which ended March 5, 2013, to $307.4 million from $320.7 million a year earlier. That’s partly because Ruby Tuesday closed less profitable restaurants in the quarter. It now has 709 company-owned and 77 franchised casual-dining outlets in the U.S. and 11 other countries. Same-restaurant sales fell 2.8% at its company-owned outlets and 1.7% at the franchised locations. The company recently discontinued the new restaurant concepts it was developing: Marlin & Ray’s (seafood), Truffles Grill and Wok Hay (Asian food). If you disregard the cost of closing these outlets and other unusual items, Ruby Tuesday would have earned $0.10 a share in the latest quarter. That missed the consensus estimate of $0.11. The latest earnings are also down 54.5% from $0.22 a share a year earlier....
GENERAL ELECTRIC CO., $23.46, New York symbol GE, continues to expand its oil and natural gas business, which makes a wide variety of industrial equipment, such as pumps, valves, compressors and turbines. This week, GE agreed to buy Texas-based Lufkin Industries Inc. (Nasdaq symbol LUFK). This company’s products help producers bring more oil and gas to the surface in wells with low internal pressure. Demand for this equipment is strong, as it helps producers increase their output and lower their costs. GE will pay $3.3 billion for Lufkin when the deal closes in the second half of 2013. That’s equal to 21% of GE’s 2012 earnings of $16.1 billion, or $1.52 a share....
CONAGRA FOODS INC., $34.42, New York symbol CAG, recently completed its $4.75-billion acquisition of Ralcorp Holdings Inc., the largest maker of private label food in the U.S. The purchase helped push up ConAgra’s sales by 13.4% in its 2013 third quarter, which ended February 24, 2013, to $3.85 billion from $3.4 billion a year earlier. Ralcorp contributed $291.8 million to the latest sales. In addition, ConAgra raised its prices on its branded products, such as Peter Pan peanut butter and Hunt’s tomato sauce, to offset higher ingredient costs. Earnings fell 57.2%, to $120.0 million, or $0.29 a share, from $280.1 million, or $0.68. If you disregard costs to integrate Ralcorp and other unusual items, earnings per share would have risen 3.8%, to $0.55 from $0.53. On that basis, the latest earnings missed the consensus estimate of $0.56 a share....
WESTJET AIRLINES LTD., $25.00, symbol WJA on Toronto, reports that its load factor rose to a record 84.3% in the first quarter of 2013 from 83.0% a year earlier. Load factor is the percentage of available seats that are occupied by paying passengers. More important, the rise came despite the fact that the company increased its capacity by 6.0% to meet higher demand. Revenue passenger miles (the total number of paying passengers on each plane multiplied by the distance travelled in miles) rose 7.8% in the latest quarter. The company is also upgrading its newer planes to include a section with greater legroom and other benefits, such as priority boarding. As well, new partnerships with international airlines like Air France are helping WestJet attract more passengers....
MONSANTO CO., $105.63, New York symbol MON, sells technology-based agricultural products, such as genetically modified seeds, to farmers, grain processors and food companies. The company also sells weed- and pest-control products. The stock rose 4% this week after the company agreed to settle several lawsuits with DuPont Co. (New York symbol DD). Monsanto had sued DuPont for violating its patents. In response, DuPont launched an anti-trust lawsuit against Monsanto. Under the terms of the deal, Monsanto will license some of its genetically modified soybean seeds to DuPont. In return, DuPont will make four annual fixed royalty payments from 2014 to 2017 totalling $802 million. From 2018 to 2023, DuPont will pay royalties on a per-unit basis, subject to annual minimum amounts. These per-unit payments will total $950 million....
INTACT FINANCIAL CORP., $62.25, symbol IFC on Toronto, dropped about 4% this week on reports that Ontario’s minority Liberal party government may vote in support of an NDP motion calling for a 15% reduction in auto insurance premiums. The vote would be in exchange for NDP support on the next provincial budget, which would avoid triggering an election. The NDP points to premiums charged by insurers rising in 2011 even after the Ontario government introduced reforms in 2010 that lowered benefits for drivers and cut payouts on auto accident claims. Intact has enjoyed improved profits from its Ontario auto insurance business since the reforms were put in place, so it has some room to accommodate a rate reduction. And at the same time, the Liberals and NDP may work out a compromise, such as pushing insurers to lower premiums in exchange for the government doing more to combat fraud and clear a backlog of unresolved disputes between insurers and claimants....
FEDEX CORP., $98.48, New York symbol FDX, reported lower-than-expected earnings this week. That’s because many of its customers are shipping their goods using slower but cheaper forms of transportation, such as trucks and ships, instead of FedEx’s more expensive overnight international air service. In its 2013 third quarter, which ended February 28, 2013, FedEx’s earnings per share fell 20.6%, to $1.23 from $1.55 a year earlier. These figures exclude several unusual items, such as the cost of replacing older planes with more efficient models and job cuts through voluntary buyouts. On that basis, the latest earnings missed the consensus estimate of $1.38 a share. However, revenue rose 3.7%, to $11.0 billion from $10.6 billion. The company now expects to earn $6.00 to $6.20 a share for all of fiscal 2013, down from its earlier prediction of $6.20 to $6.60. The stock trades at 16.1 times the midpoint of the lower range. That’s a reasonable p/e ratio, particularly because FedEx’s cost-cutting plan will put it in a strong position to increase its profits as the global economy recovers....
ALIMENTATION COUCHE-TARD, $53.63, symbol ATD.B on Toronto, reported sharply higher sales and earnings in its latest quarter. The company is the largest convenience store operator in Canada, with over 2,000 outlets. It also has nearly 3,700 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. In the three months ended February 3, 2013, Couche-Tard’s sales jumped 75.2%, to $11.6 billion from $6.6 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 prices and merchandise sales. Couche-Tard gets about 30% of its revenue by selling merchandise....
Newell and Tupperware, which make plastic food containers and other household products, have both moved up sharply in the past year. That’s mainly because they’re doing a great job of cutting costs, which is raising their profits and giving them more cash for dividends....