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
On June 28, 2012, Sara Lee investors received one D.E. Master share and five Hillshire shares for each common share they held. They also received a special cash dividend of $3.00 a share. HILLSHIRE BRANDS CO. $26 (www.hillshirebrands.com) makes packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Hold. D.E. MASTER BLENDERS 1753 N.V. 9.36 euros (www.demasterblenders1753.com) is based in Holland, and its shares trade in Amsterdam. It makes coffee and tea. Hold....
CONAGRA FOODS INC., $27.51, New York symbol CAG, rose 8% this week after it reported better-than-expected quarterly earnings. The company also raised its earnings forecast for its full fiscal year and increased its dividend. ConAgra makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. In its fiscal 2013 first quarter, which ended August 26, 2012, ConAgra’s earnings soared 166.6% to $250.1 million, or $0.61 a share. A year earlier, it earned $93.8 million, or $0.23 a share....
CHIPOTLE MEXICAN GRILL, $336.40, symbol CMG on New York, offers higher-quality food and better decor and service than many fast-food chains, and charges slightly higher prices. Under its Food with Integrity initiative, it uses naturally raised meat wherever possible. All of Chipotle’s naturally raised meat comes from animals that are raised in a humane way, never given antibiotics or hormones, and fed a pure vegetarian diet. To expand its Food with Integrity offerings, Chipotle opened a ShopHouse Southeast Asian Kitchen restaurant in Washington, D.C.’s Georgetown neighbourhood in September 2011. The company now plans to open a second location in Georgetown later this year or in early 2013....
WESTJET AIRLINES $17.28 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 126.9 million; Market cap: $2.2 billion; Dividend yield: 1.9%) was trading at $14.10 when we made it our #1 Stock of the Year for 2011. It was a year late getting started, but it’s now hitting new highs. The company serves 81 destinations in North America, Central America and the Caribbean. Its fleet of 99 modern Boeing 737s are 30% more fuel efficient than older aircraft. WestJet is scheduled to receive 36 more 737s through 2018. In the three months ended June 30, 2012, WestJet’s revenue rose 9.0%, to $809.3 million from $742.3 million a year earlier. Demand for its flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue....
SHERRITT INTERNATIONAL $4.90(Toronto symbol S; TSINetwork Rating: Speculative) (1-800- 704-6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.5 billion; Dividend yield: 3.1%) recently finished building a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast. The government of Madagascar has just signed an operating permit that will let Sherritt and its partners begin production at Ambatovy, which will be one of the world’s biggest nickel mines. The $5.5-billion project will be able to produce 60,000 tonnes of refined nickel a year for the next three decades....
ACI WORLDWIDE $42.71 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 39.8 million; Market cap: $1.7 billion; No dividends paid) makes software that is used to process transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. In mid-February 2012, ACI completed its purchase of S1 Corp. for $540 million in cash and stock. This acquisition is a good fit: S1 sells transaction software for banks, credit unions, retailers and other payment processors. It has over 3,000 clients worldwide. In the second quarter of 2012, ACI’s revenue rose 32.1%, to $149.8 million from $113.4 million a year earlier. S1’s $43.1-million contribution was the main reason for the gain....
AMAZON.COM $261.68 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 452.1 million; Market cap: $118.3 billion; No dividends paid) has unveiled two new devices: the Kindle Paperwhite e-book reader and a larger version of the Kindle Fire tablet computer, named the Kindle Fire HD. However, even though its two new products have strong potential, Amazon must continue to deal with intense competition in the e-book market from big rivals like Apple, Barnes & Noble and Google. As well, the Apple iPad is now the dominant tablet, and significant new competitors, including Google and Microsoft, have entered this market. Amazon.com is still a hold.
PASON SYSTEMS $15.76 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.0 million; Market cap: $1.3 billion; Dividend yield: 2.8%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia. In the three months ended June 30, 2012, Pason’s revenue rose 29.8%, to $81.1 million from $62.4 million a year earlier. Cash flow rose 31.5%, to $30.1 million, or $0.37 a share, from $22.9 million, or $0.28. Even with declining oil prices and continued low gas prices, drilling activity rose 6% in Canada and the U.S. in the latest quarter, with a combined 188,291 active days and a rig count of 2,069, compared to 177,791 days and 1,954 rigs a year earlier....
MAJOR DRILLING $11.01 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $870.9 million; Dividend yield: 1.8%) has hiked its dividend and announced record quarterly revenue and earnings. In the three months ended July 31, 2012, Major’s revenue jumped 44.7%, to a record $237.6 million from $164.1 million a year earlier. Earnings per share jumped 60.0%, to $0.40 from $0.25. The strong results have prompted Major to raise its twice-yearly dividend by 11.1%, to $0.10 from $0.09. This follows a 12.5% hike in May, to $0.09 from $0.08. The stock now yields 1.8%....
GOODYEAR TIRE & RUBBER CO. $13.48 (NewYork symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 244.7 million; Market cap: $3.3 billion; No dividends paid) is the world’s largest tire maker, with over 60 plants in 25 countries. In the three months ended June 30, 2012, the company’s sales fell 8.4%, to $5.15 billion from $5.62 billion a year earlier. North American sales rose 1.7%, to $2.5 billion from $2.4 billion, but weak economic growth cut sales by 21.4% in Latin America; 17.9% in Europe, the Middle East and Africa; and 4.2% in Asia. Unfavourable foreign currency moves also lowered Goodyear’s overall sales by 6%....