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.
Read More
Close
Growth Stocks Library Archives
WAJAX CORP. $45.65 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $762.3 million; Dividend yield: 7.1%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). Wajax operates through 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers....
HILLSHIRE BRANDS CO., $25.32, New York symbol HSH, makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Other products include Sara Lee frozen desserts and Chef Pierre pies. The company took its current form on June 28, 2012. That’s when Wall Street Stock Forecaster recommendation Sara Lee Corp. (New York symbol SLE) split itself into two separate companies: Hillshire Brands and D.E. Master Blenders 1753 N.V. (see below). Following the spinoff of D.E. Master, the remaining Sara Lee shares were converted into Hillshire stock and consolidated on a 1-for-5 basis. Adjusting for the breakup, Hillshire’s sales would have risen 4.0% in its 2012 fiscal year, which ended June 30, 2012, to $4.0 billion from $3.9 billion in fiscal 2011. If you exclude the contribution of an acquisition, sales would have risen 1.2%. The company also raised its prices to cover higher ingredient costs....
DUNDEE REIT, $38.40, symbol D.UN on Toronto, owns and manages 27.6 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.6%. 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. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 78.9% in the latest quarter, to $56.0 million from $31.3 million. Cash flow per unit rose 8.9%, to $0.61 from $0.56, due to more units outstanding (the trust issued new units to pay for recent property purchases)....
DUN & BRADSTREET CORP., $74.49, New York symbol DNB, rose 3% this week on reports that the company may be trying to sell itself. Dun & Bradstreet provides credit reports on over 210 million companies. Its clients use these reports to make lending and buying decisions. The company recently cut its full-year revenue outlook for 2012 because the slowing economy is hurting demand for its credit reports. However, an ongoing cost-cutting plan should continue to push up its earnings....
ALARMFORCE INDUSTRIES, $10.91, symbol AF on Toronto, jumped over 21% this week after it announced that it is launching a strategic review of business opportunities, including a possible sale of the company. We moved AlarmForce to a buy in our July 2012 issue of Stock Pickers Digest, when we made it our Pick of the Month at $9.19. Meanwhile, AlarmForce’s sales rose 10.2% in the three months ended April 30, 2012, to a record $11.1 million from $10.1 million a year earlier. Even so, the company lost $238,021, or $0.02 a share, compared to a profit of $948,921, or $0.07 a share....
APPLE INC., $585.16, Nasdaq symbol AAPL, fell 3% this week after the company reported lower-than-expected revenue and earnings. That’s mainly because it will probably launch a new version of its hugely popular iPhone smartphone later this year. As a result, demand for the current model is falling. The iPhone now accounts for nearly 50% of Apple’s revenue. In its 2012 third quarter, which ended June 30, 2012, Apple sold 26.0 million iPhones, up 28.0% from 20.3 million a year earlier. However, that’s down 25.8% from the 35.1 million iPhones it sold in the second quarter....
FAIRFAX FINANCIAL HOLDINGS, $377.99, symbol FFH on Toronto, has increased its stake in Research in Motion, symbol RIM on Toronto. The company now owns 9.9% of RIM, up from 5.12%. RIM is a recommendation of our Successful Investor newsletter. Fairfax is now RIM’s largest shareholder. The company’s chairman and founder, Prem Watsa, is also on RIM’s board of directors. RIM’s revenue fell 42.7% in the latest quarter. That’s largely because customers are waiting for the company to launch updated phones that use its new BlackBerry 10 software. However, RIM has now delayed these devices to early 2013. As a result, they will miss the busy back-to-school and Christmas shopping seasons....
Many of AT&T’s customers are switching from traditional phones (or land lines) to its more profitable wireless services. The company is also attracting more new subscribers thanks to its recent wireless-network upgrades. At the same time, recent improvements to its fibre optic networks are spurring sales of its Internet and TV services. Competition for new wireless customers is driving down prices. But even so, AT&T’s long-term outlook remains bright. That’s partly because new smartphones are pushing up demand for advanced and highly profitable wireless services, such as video calling. These new services should continue to generate the cash flow AT&T needs to keep upgrading its networks, buying back shares and raising its dividend....
EBAY INC. $43 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $55.9 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) gets half of its revenue from its auction websites, which now have 104.8 million users. The company gets a further 40% from processing online payments through its PayPal service. This business has huge potential, particularly as it expands to retail stores and handling payments from smartphones. The remaining 10% comes from GSI Commerce Inc., which helps businesses process orders from their websites. eBay paid $2.4 billion for GSI in June 2011....
These three fast-food companies typically trade at higher multiples to their earnings than other Consumersector stocks. While a high p/e ratio can be a sign that a stock is overvalued, in the case of these three, it’s more of an indicator that investors recognize the earnings potential of their well-known brands. Their widely recognized names also give them an advantage as they continue to expand in developing countries. MCDONALD’S CORP. $88 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $88.0 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average) is the world’s largest fast-food company by sales. Its 33,735 restaurants in 119 countries serve a wide variety of foods, but they are best known for their hamburgers and french fries....