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
Oil prices will likely stay volatile, particularly as slowing Asian economies cut their consumption. We feel the best way for investors to lower their risk is to stick with well-established producers like these two. Both have high-quality reserves that should last decades. CHEVRON CORP. $112 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $224.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.chevron.com) is the second-largest integrated oil company in the U.S. after ExxonMobil. Chevron is still assessing the damage caused by a fire at its oil refinery in Richmond, California. This facility processes 245,000 barrels of crude oil a day and accounts for 10% of the refining capacity on the U.S. west coast. It will likely be several months before it resumes normal operations....
SONY CORP. ADRs $12 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $12.0 billion; Price-to-sales ratio: 0.2; Dividend yield: 2.7%; TSINetwork Rating: Average; www.sony.com) is buying California-based Gaikai Inc., whose technology makes it easier to play online video games. The purchase will help Sony sell more video games to users of its mobile phones and handheld gaming devices. The company will pay $380 million for Gaikai when the deal closes later this year. To put that in context, it lost $312 million, or $0.31 per ADR, in the three months ended June 30, 2012. Sony is a hold.
WINDSTREAM CORP. $9.59 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 588.0 million; Market cap: $5.6 billion; Price-to-sales ratio: 1.1; Dividend yield: 10.4%; TSINetwork Rating: Average; www.windstream.com) reported revenue of $1.5 billion in the quarter ended June 30, 2012, up 49.3% from $1.0 billion a year earlier. The gain is mainly due to its December 2011 purchase of PAETEC Holding Corp., which sells telecommunication services to businesses. Integration costs cut its earnings by 43.4%, to $54.7 million, or $0.09 a share, from $96.7 million, or $0.19 a share. As a result of this purchase, Windstream now gets 68% of its revenue from broadband services, up 2.5% from a year earlier. That’s helping it offset declining traditional phone revenue. The company feels that closing overlapping functions will save it $50 million in 2012 and $100 million by the end of 2014. That should let it keep paying quarterly dividends of $0.25 a share, for a 10.4% annualized yield....
MOTOROLA SOLUTIONS INC. $48 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 286.3 million; Market cap: $13.7 billion; Priceto- sales ratio: 1.6; Dividend yield: 2.2%; TSINetwork Rating: Average; www.motorolasolutions.com) makes specialized equipment, such as bar-code scanners and radios for police and fire vehicles. It gets two-thirds of its revenue by selling its products to governments; the remaining third comes from businesses. Earnings jumped 29.6% in the three months ended June 30, 2012, to $0.70 a share from $0.54 a year earlier. Revenue rose 8.3%, to $2.1 billion from $2.0 billion. Sales to government customers rose 13.6%. However, weak economic conditions in Europe cut sales to businesses by 1.6%. It also raised its quarterly dividend by 18.2%, to $0.26 a share from $0.22. The new annual rate of $1.04 yields 2.2%....
BROADRIDGE FINANCIAL SERVICES INC. $24 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 124.9 million; Market cap: $3.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.0%; TSINetwork Rating: Average; www.broadridge.com) gets 70% of its revenue from its Investor Communication Solutions division, which distributes proxy materials, including ballots, to investors in stocks and mutual funds. It also counts the votes. Broadridge’s ProxyEdge software helps centralize and simplify shareholder voting, particularly if a meeting involves multiple ballots. Broadridge mails and processes 60% of all proxy votes worldwide. The remaining 30% of its revenue comes from its Securities Processing Solutions division, which provides transaction-processing services that automate many functions, including taking and executing orders, confirming trades, settlement and accounting. Big changes since spinoff ...
NEWELL RUBBERMAID INC. $18 (www.newellrubbermaid.com) saw its sales fall 1.9% in the second quarter of 2012, to $1.52 billion from $1.55 billion a year earlier. If you exclude unusual items, such as the negative impact of currency exchange rates, sales would have risen 2.3%. The gain was mainly due to strong demand for baby strollers and construction tools. Earnings per share rose 4.4%, to $0.47 from $0.45. Best Buy. BUCKEYE PARTNERS L.P. $50 (www.buckeye.com) earned $54.4 million, or $0.55 a unit, in the three months ended June 30, 2012. That’s down 40.9% from $92.0 million, or $1.00 a unit, a year earlier. However, the year-earlier figure included a $34.1-million gain on the sale of its investment in a Texas-based pipeline company. Revenue fell 8.8%, to $982.6 million from $1.1 billion, mainly because of lower prices for fuels its sells, like gasoline. Hold. FRONTIER COMMUNICATIONS CORP. $4.62 (www.frontier.com) is selling more high-speed Internet and TV services. However, demand for traditional phone service continues to decline. That’s why its overall revenue fell 4.8% in the second quarter of 2012, to $1.26 billion from $1.32 billion a year earlier. However, earnings per share improved 33.3%, to $0.08 from $0.06. Job cuts and other cost-saving moves were the main reason for the earnings jump. Hold.
PASON SYSTEMS INC., $14.24, symbol PSI on Toronto, saw its revenue jump 29.8% in the three months ended June 30, 2012, 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 a share. Pason rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that companies use to remotely collect data from their drilling operations. The company serves oil and natural gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina. Even with declining oil prices and continued low gas prices, drilling activity rose 6% in the U.S. and Canada 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. That was the main reason for the higher revenue and cash flow. The company also benefited from stronger activity in all of its international markets, particularly Argentina, Brazil, Australia and Mexico....
GOOGLE INC., $677.14, Nasdaq symbol GOOG, recently completed its $12.5-billion purchase of cellphone maker Motorola Mobility Holdings. This week, the company announced a new plan to make Motorola Mobility more profitable. This initiative involves including cutting 20% of its workforce and closing 30 of its 90 plants. Motorola Mobility will also shift its focus from regular cellphones to more profitable products like smartphones and tablet computers. It may also sell its home TV business, which makes set-top boxes for cable companies. Google expects to pay $275 million in severance and other costs. That’s equal to 8% of the $3.35 billion, or $10.21 a share, that it earned in the three months ended June 30, 2012....
DUNDEE REIT $38.86 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 96.6 million; Market cap: $3.8 billion; Dividend yield: 5.7%) owns and manages 27.6 million square feet of office, industrial and retail space. The trust has a 95.6% occupancy rate. In the three months ended June 30, 2012, Dundee’s revenue jumped 89.6%, to $181.2 million from $95.6 million a year earlier. Most of the increase came from properties the trust recently purchased. Cash flow jumped 78.9%, to $56.0 million from $31.3 million. Cash flow per unit rose 8.9%, to $0.61 from $0.56, on more units outstanding (the trust issued new units to pay for the acquired properties)....
ALARMFORCE INDUSTRIES $11.22 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $136.9 million; Dividend yield: 0.9%) has jumped 26% since the start of August after it announced that it is launching a strategic review of its business, including a possible sale of the company. AlarmForce is increasing its advertising as it expands into the U.S. It’s also investing more in its VideoRelay system, which it launched in October 2011. VideoRelay lets subscribers watch their homes through their computers and smartphones. Users can either view live video or receive alerts when the system detects motion. It also lets them establish two-way voice communication through the camera....