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
AT&T INC., $33.54, New York symbol T, plans to spend $14 billion over the next three years on upgrades to its wireless and wireline networks. That’s equal to 7% of its $190.5-billion market cap. These upgrades will expand the company’s high-speed fibre optic service to 75% of its home and business customers by the end of 2015. Replacing copper wire with fibre optic cable will also make AT&T’s high-speed Internet service faster and more reliable, and help it sign up more customers for its U-verse digital TV service. In addition, the company now says it will expand its 4G long-term evolution (LTE) wireless service to cover 300 million people in the U.S. by the end of 2014. That’s up from its current plan to reach 250 million by that time. LTE networks are up to five times faster than those in use today....
WESTJET AIRLINES LTD., $18.17, symbol WJA on Toronto, reports that its revenue rose 11.8% in the three months ended September 30, 2012, to $866.5 million from $775.3 million a year earlier. Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the increase. WestJet’s load factor rose to a record 84.6%. 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 2% to meet higher demand....
WESTERN UNION CO., $11.95, New York symbol WU, reported better-than-expected quarterly earnings this week. It also raised its dividend. However, the company cut its earnings forecast for all of 2012. That caused the stock to fall 33%. Western Union provides money transfer and foreign-exchange services in over 200 countries. In the three months ended September 30, 2012, the company’s earnings rose 12.4%, to $269.5 million from $239.7 million a year earlier. Western Union is an aggressive buyer of its own shares. Because of fewer shares outstanding, earnings per share rose at a faster pace of 18.4%, to $0.45 from $0.38....
AIMIA INC., $15.34, symbol AIM on Toronto, has agreed to raise its stake in the loyalty program of Grupo Aeromexico, Mexico’s biggest airline. Aimia will pay $88 million U.S. to raise its interest in Club Premier Loyalty & Marketing to 49% from 29%. Grupo Aeromexico will continue to own 51%. Club Premier is Mexico’s leading loyalty program, with more than 2.8 million members and 50 partners. Club Premier members can earn and redeem points on Aeromexico, which offers 550 daily flights throughout the Americas and to Europe and Asia. As well, members can earn points on 14 other airlines, including China Eastern, Delta and Air France-KLM. They also get points for using their American Express and Banamex co-branded credit cards....
WYNDHAM WORLDWIDE CORP., $50.66, symbol WYN on New York, reported higher revenue and earnings in the latest quarter. In the three months ended September 30, 2012, Wyndham’s revenue rose 4.5%, to $1.27 billion from $1.21 billion a year earlier. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 1.9%. Before one-time items, earnings rose 20.2%, to $1.13 a share from $0.94. The company continues to buy back its stock. In the latest quarter, it repurchased 2.6 million shares for $133 million. In all of 2011, it bought back 28.7 million shares for $902 million....
APPLE INC., $604.00, Nasdaq symbol AAPL, has announced that it will soon start selling the iPad mini, a smaller, cheaper version of its hugely popular iPad tablet computer. The iPad mini has a 7.9-inch touchscreen, compared to 9.7 inches for the regular iPad. The company also announced improvements to the full-sized iPad, as well as its iMac desktop and MacBook portable computers. Meanwhile, Apple earned $8.2 billion, or $8.67 a share in three months ended September 29, 2012. That’s up 24.2% from $6.6 billion, or $7.05 a share, a year earlier. Even so, the latest earnings missed the consensus estimate of $8.75 a share. Sales in the quarter rose 27.2%, to $36.0 billion from $28.3 billion. That beat the consensus sales estimate of $35.8 billion. The company sold 26.9 million iPhones, up 57.6% from a year earlier, while iPad sales of 14.0 million were up 26.2%. It also sold 4.9 million Mac computers (up 0.6%) and 5.3 million iPods (down 19.3%)....
The world’s population will probably rise from 7 billion today to 9 billion by 2050. Economic growth in developing countries is also spurring demand for more and better food. To keep up with this demand, farmers will have to significantly increase their crop production. That should fuel more gains for Monsanto, the world’s largest maker of genetically modified seeds. The company’s patented seeds are more resistant to crop-damaging insects and bad weather than regular seeds. These crops also need fewer pesticides and herbicides (or weed killers). As well, many of Monsanto’s seeds require less water, which lowers the need for costly and environmentally disruptive irrigation systems....
MICROSOFT CORP. $28 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $235.2 billion; Priceto- sales ratio: 3.3; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.microsoft.com) has more than doubled its revenue and earnings in the past decade, thanks to steady demand for its Windows operating system and its Office suite of business programs. It has also increased its dividend from $0.08 a share in 2003 to $0.92 in 2012. Even so, the stock has made little progress during this time. That’s partly because more people are using mobile devices instead of computers running Microsoft software. The company hopes to take advantage of rising demand for mobile access with its new Windows 8 operating system, which will work with smartphones and tablet computers as well as traditional computers....
These three industrial stocks make a wide range of products. That helps cut their risk during periods of slow growth, such as the past year. It also puts them in a good position to profit when the global economy picks up. GENERAL ELECTRIC CO. $21 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $222.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines; aircraft engines; health care equipment; home appliances and lighting; and locomotives. To cut the risk of further losses following the 2008 / 2009 financial crisis, the company continues to scale back its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 31% of GE’s overall revenue and 45% of its earnings....
PFIZER INC. $25 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $187.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.pfizer.com) has agreed to buy NextWave Pharmaceuticals Inc. This private company has developed Quillivant XR, a liquid drug that treats attention deficit/hyperactivity disorder (ADHD). Pfizer’s extensive marketing and distribution operations should help expand sales of Quillivant XR. Based on future sales of this drug, this purchase could cost Pfizer a total of $700 million. That’s equal to 15% of the $4.7billion, or $0.62 a share, that it earned in the second quarter of 2012. The deal should close by the end of 2012....