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
APPLE INC., $665.24, Nasdaq symbol AAPL, has won a patent-infringement lawsuit against South Korea-based Samsung Electronics. The jury decided that Samsung copied some features of Apple’s popular iPhone smartphones and iPad tablet computers. As a result, it will have to pay Apple $1.05 billion in damages. To put this award in context, Apple held cash and investments of $117.2 billion, or $125.07 a share, on June 30, 2012. In addition to the damages, Apple wants the court to ban certain Samsung products in the U.S. The ruling could help boost Apple’s market share, at least temporarily. However, this decision mainly applies to older Samsung products, and the company will likely modify its current devices to avoid violating Apple’s patents....
CAMECO CORP., $21.48, symbol CCO on Toronto, has agreed to buy the Yeelirrie uranium project in Western Australia from BHP Billiton, symbol BHP on New York. BHP is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks. Cameco is the world’s largest uranium producer. It supplies over 25% of global production and has large, high-grade reserves, low-cost operations, significant market share and a number of uranium mines. Cameco will pay $430 million U.S. for Yeelirrie when the deal closes by the end of 2012. The company held cash and investments of $894.9 million (Canadian) on June 30, 2012, so it can comfortably afford this purchase....
HEWLETT-PACKARD CO., $17.58, New York symbol HPQ, reported better-than-expected earnings this week. However, rising demand for tablet computers and mobile phones continues to hurt sales of its printers and personal computers. That caused the stock to fall 10%. In its fiscal 2012 third quarter, which ended July 31, 2012, Hewlett lost $8.9 billion, or $4.49 a share. That’s mainly because it wrote down $8 billion of goodwill related to its $13.9-billion purchase of Electronic Data Systems (EDS) in August 2008. It also wrote down the value of the Compaq brand by $1.2 billion. Without these items, Hewlett would have earned $2.0 billion, down 13.5% from $2.3 billion a year earlier. Earnings per share fell 9.1%, to $1.00 from $1.10, on fewer shares outstanding. That beat the consensus estimate of $0.98....
DUNDEE REIT, $38.84, symbol D.UN on Toronto, has announced plans to sell its portfolio of 86 industrial properties to a new trust called Dundee Industrial REIT. These buildings contain 6.6 million square feet of leasable space. No price has yet been set for the properties. Dundee Industrial REIT will pay for the properties by selling shares to the public through an initial public offering. The trust is selling off these holdings as part of its plan to focus entirely on office buildings. However, it does plan to retain an as-yet-unspecified interest in Dundee Industrial REIT after the share sale. That will let it continue to benefit from these properties’ future growth....
Google’s shares have soared over 500% since it became a public company in 2004. Even so, we feel it still has plenty of growth ahead. The company is using its strong earnings from its world-leading Internet search business to invest in a variety of promising projects. Some, such as driverless cars and eyeglasses with embedded computer displays, have limited commercial appeal. However, other recent projects like its Android software for mobile devices have become important contributors to Google’s growth. Even after its big jump in the past few years, the stock remains attractive in relation to its earnings....
MCCORMICK & CO. INC. $60 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 120.2 million; Market cap: $7.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.mccormick.com) is buying Wuhan Asia-Pacific Condiments Co., Ltd., a leading maker of bouillon products in China. The company will pay $141 million for this business when the deal closes in mid-2013. To put that price in context, McCormick earned $80.4 million, or $0.60 a share, in its fiscal 2012 second quarter, which ended May 31. 2012. The new operations will add $115 million to McCormick’s annual sales of $3.9 billion....
These small industrial companies face a number of challenges, including rising costs and falling sales in Europe and other overseas markets. However, all four are leaders in their niche industries. That should continue to spur their long-term growth. They also have long histories of raising their dividends. Still, we see only two as buys right now. GENUINE PARTS CO. $64 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing sector; Shares outstanding: 155.1 million; Market cap: $9.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.1%; TSINetwork Rating: Average; www.genpt.com) gets 50% of its sales and 53% of its earnings by selling auto parts. The company operates 1,300 of its own outlets under the NAPA banner, and its distribution business serves 4,750 independent stores across North America....
INTERNATIONAL BUSINESS MACHINES CORP. $197 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $216.7 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.ibm.com) is paying an undisclosed sum for Texas Memory Systems. The deal should close by the end of 2012. Privately held Texas Memory specializes in solid-state computer storage drives. Unlike regular hard drives, these are flash-memory drives with no moving parts. As a result, they use less energy and let computers access data quicker. This technology should speed up IBM’s mainframes and enhance its analytics software, which helps businesses and governments quickly gather and analyze huge amounts of data. IBM is our #1 buy for 2012.
NVIDIA CORP. $15 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 618.8 million; Market cap: $9.3 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.nvidia.com) continues to see strong demand for its Tegra chips from makers of smartphones and tablet computers. In its 2013 second quarter, which ended July 29, 2012, Nvidia’s sales rose 2.7%, to $1.04 billion from $1.02 billion a year earlier. However, earnings fell 11.9%, to $170.5 million from $193.5 million. Earnings per share fell 15.6%, to $0.27 from $0.32, on more shares outstanding. Research spending rose 13.5%, to $281.2 million, or a high 26.9% of its revenue. This was the main reason for the lower earnings. However, new chips from these outlays should spur sales....
J.C. PENNEY CO. INC. $24 (New York symbol JCP; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 218.8 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.3; Dividend suspended in May 2012; TSINetwork Rating: Extra Risk; www.jcpenney.com) operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods over the Internet. In response to strong competition from discount retailers, Penney is shifting to an everyday pricing strategy. The company feels that predictable prices will spur customers to visit more often instead of waiting for items to go on sale. Penney is also remodelling its stores to feature more in-store boutiques devoted to single brands, such as its Sephora beauty and fragrance shops. As well, the company is investing in new computer systems and simplifying its purchasing....