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
TIM HORTONS $51.37 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 154.9 million; Market cap: $8.0 billion; Dividend yield: 1.6%) aims to take advantage of fast-growing interest in home coffee systems. Under a new agreement, Kraft Foods and Tim Hortons will make and sell plastic cups, called T-Discs, filled with Tim Hortons premium blend coffee, including decaf and latte, and sealed with a foil top. Kraft’s Tassimo beverage machine pierces the foil and brews a fresh single cup. The Tassimo system also scans a barcode on the T-Disc that tells it how much water to use, how long to brew the coffee and how hot it should be....
Natural gas prices recently dropped below $2 U.S. per thousand cubic feet, their lowest level in 10 years. That’s because new shale gas discoveries and record warm temperatures have increased inventories. Prices have since moved up somewhat, to $2.77. The low prices have pushed down shares of producers that rely heavily on natural gas, including Bellatrix Exploration and Delphi Energy (below). Even so, the long-term outlook for natural gas prices, and for both these stocks, remains positive. BELLATRIX EXPLORATION $3.82 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266- 8670; www.bellatrixexploration.com; Shares outstanding: 107.5 million; Market cap: $410.7 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 63% of its output; the remaining 37% is oil....
SASOL LTD. (ADR) $46.39 (New York symbol SSL; TSINetwork Rating: Extra Risk) (082-883-9697; www.sasol.com; ADRs outstanding: 645.0 million; Market cap: $29.9 billion; Dividend yield: 3.1%) reports that in its fiscal year ended June 30, 2012, revenue rose 19.0%, to $20.3 billion from $17.1 billion in the previous fiscal year (all figures in U.S. dollars). Earnings per ADR rose 25.8%, to $5.05 from $3.99. Higher oil prices were the main reason for the gains. The U.S. dollar also rose against the South African rand; that pushed up the value of Sasol’s sales outside South Africa. The company plans to build an $8-billion to $9-billion gas-to-liquids (GTL) plant in Louisiana. It has also completed a feasibility study for an $8-billion GTL plant in Alberta....
ALIMENTATION COUCHE-TARD $45.20 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 179.4 million; Market cap: $8.1 billion; Dividend yield: 0.7%) has reported sharply higher sales and earnings in its latest quarter. Without one-time costs related to its $2.7-billion purchase of Statoil Fuel & Retail ASA, the company’s earnings per share rose 26.7%, to $0.95 from $0.75 (all figures except share price in U.S. dollars). Sales rose 16.1% to $6.0 billion from $5.2 billion. The gains came from higher fuel prices, acquisitions and higher merchandise sales. (The company gets about 30% of its sales by selling merchandise.) The results also included 11 days of operations from the Statoil gas station chain. Alimentation Couche-Tard is still our #1 buy for 2012....
DOMINO’S PIZZA $34.44 (New York symbol DPZ; TSINetwork Rating: Average) (734-930- 3030; www.dominos.com; Shares outstanding: 56.7 million; Market cap: $2.0 billion; No dividends paid) now operates in over 70 markets worldwide. Its international stores supply almost half of its sales and about a third of its earnings. The company still has considerable room to grow internationally. For example, Jubilant Foodworks just opened the 500th Domino’s outlet in India. This company, which has the exclusive rights to operate Domino’s restaurants in that country, aims to continue its aggressive expansion by opening 100 new restaurants over the next year. Jubilant also has franchise rights for Domino’s in Bangladesh, Nepal and Sri Lanka....
ATLANTIC TELE-NETWORK $42.74 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million;Market cap: $666.7 million; Yield: 2.3%) sells telecommunications services, mainly in rural areas in the U.S., Bermuda and the Caribbean region. In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12....
APPLE INC., $691.28, Nasdaq symbol AAPL, unveiled the latest version of its hugely popular iPhone martphone this week. The new iPhone 5 features a larger touchscreen, faster processor and a longer-lasting battery. As well, the new model is compatible with long-term evolution (LTE) wireless networks, which are roughly five times faster than current networks. As well, Apple has upgraded iOS, the software that powers its mobile devices. It has also improved some of its other products, including its iPod music players....
ALARMFORCE INDUSTRIES, $11.65, symbol AF on Toronto, reports that it attracted more customers and increased its revenue in the latest quarter. However, its earnings fell as it continued to expand its business. In the three months ended July 31, 2012, the company’s sales rose 10.9%, to $11.4 million from $10.3 million a year earlier. Even so, AlarmForce lost $6,589, or nil per share, compared to a profit of $831,342, or $0.07 a share. AlarmForce’s earnings fell because it increased its advertising spending as it expanded into Florida. It also invested more in its VideoRelay system, which it launched in October 2011. VideoRelay lets subscribers watch their homes through their computers and smartphones....
ALIMENTATION COUCHE-TARD, $49.95, 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. If you exclude one-time costs related to its $2.7-billion purchase of Norway’s Statoil Fuel & Retail ASA, Couche-Tard’s earnings rose 23.8% in the three months ended July 22, 2012, to $173.0 million from $139.7 million a year earlier (all figures except share price in U.S. dollars). Earnings per share rose 26.7%, to $0.95 from $0.75, on fewer shares outstanding. Sales rose 16.1% to $6.0 billion from $5.2 billion....
FEDEX CORP., $87.38, New York symbol FDX, fell 2% this week after it warned that its earnings in its 2013 first quarter, which ended August 31, 2012, will fall short of its earlier forecast. That’s because FedEx’s international air transport business is shipping fewer packages. As well, more of this division’s industrial clients are switching to cheaper—but slower— methods, like ships and trains. As a result, FedEx now expects to report earnings of $1.37 to $1.43 a share in its first quarter, down from its earlier prediction of $1.45 to $1.60....