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
FORTRESS PAPER $19.87 (Toronto symbol FTP; TSINetwork Rating: Extra Risk) (1-888-820-3888; www.fortresspaper.com; Shares outstanding: 14.3 million; Market cap: $284.1 million; No dividends paid) has moved up over 20% since early June, mostly on a couple of positive developments. First, Fortress’s facility in Thurso, Quebec, which it bought in early 2010, is now operating at 92% capacity. The pulp is meeting customer specifications, and shipments to China are increasing. Second, the company’s Landqart banknote division in Switzerland has announced that a customer has reinstated a significant order that had been postponed. That should take up the excess capacity at the plant....
CALIAN TECHNOLOGIES $20.20 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.7 million; Market cap: $155.5 million; Dividend yield: 5.2%) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems. In the three months ended March 31, 2012, Calian’s revenue rose 3.7%, to $61.6 million from $59.4 million a year earlier. Earnings rose 12.8%, to $3.7 million, or $0.48 a share, from $3.3 million, or $0.42 a share. Just before the quarter ended, Calian bought Primacy Management Inc., of Burlington, Ontario. Since 2003, Primacy has been designing, building and managing in-store health clinics for Loblaw Companies (symbol L on Toronto). Primacy now operates 112 such clinics in Loblaw’s stores across Canada....
LEON’S FURNITURE $10.95 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 69.9 million; Market cap: $765.4 million; Dividend yield: 3.7%) reports that its sales rose 4.4% in the quarter ended March 31, 2012, to $157.4 million from $150.8 million a year earlier. However, earnings fell 16.5%, to $8.6 million, or $0.12 a share. A year earlier, the company earned $10.3 million, or $0.15 a share. Leon’s spent more on marketing in the latest quarter, and it had to deduct some expenses left over from its opening of four new stores late last year. Leon’s plans to continue its expansion by opening roughly five new stores a year over the next five years....
YAMANA GOLD $16.36 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 746.0 million; Market cap: $12.2 billion; Dividend yield: 1.3%) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has three other properties in advanced stages of development. In the quarter ended March 31, 2012, Yamana’s revenue rose 17.6%, to $559.7 million from $476.1 million a year earlier (all figures except share price and market cap in U.S. dollars). The company increased its production and benefited from higher gold prices. Earnings per share rose 19.0%, to $0.25 from $0.21. Yamana held a high cash balance of $867.6 million, or $1.16 a share, on March 31. Its $766.0 million of debt is just 6.3% of its market cap. Thanks to the improved results, the company is raising its quarterly dividend by 18.2% with the July 2012 payment, to $0.065 from $0.055. The shares now yield 1.3%....
CAMECO CORP. $21.63 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306- 956-6200; www.cameco.com; Shares outstanding: 395.3 million; Market cap: $8.6 billion; Dividend yield 0.7%) is buying Germany-based nuclear fuel broker Nukem Energy for $300 million. Nukem acts as an intermediary between uranium buyers and sellers. It also sells uranium from two different sources: it has 4.5 million pounds recycled from dismantled Russian nuclear weapons, as well as newly mined uranium from mines in Uzbekistan. Adding Nukem raises Cameco’s share of the global uranium market to 25% from 18%....
CHESAPEAKE ENERGY $19.04 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848 -8000; www.chkenergy.com; Shares outstanding: 662.3 million; Market cap: $12.6 billion; Dividend yield: 1.8%) has moved up from its low of $13.32 in mid-May. That’s mainly because activist investor Carl Icahn has gotten involved in the company’s restructuring. Icahn, who has a long history of pushing companies to make changes that increase shareholder value, has acquired a 7.6% stake in Chesapeake. Pressure from Icahn has already prompted Chesapeake to announce that it will replace four of its eight board members with nominees of its largest shareholders—Icahn and Southeastern Asset Management Inc., which holds a 13.6% stake. Icahn now plans to push for cost-cutting measures and a more conservative approach to spending. His proposals will likely include cutting drilling budgets and selling certain pipelines and gas-processing plants....
MAJOR DRILLING $12.33 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $982.2 million; Dividend yield: 1.2%) has moved down lately along with most mining and resource-related stocks. That’s because investors are concerned that a potential eurozone breakup, sluggish U.S. growth and a slowdown in China will hurt resource demand. Even so, the company’s revenue rose 72.8% in the three months ended April 30, 2012, to a record $237.2 million from $137.3 million a year earlier. Earnings per share tripled, to $0.39 from $0.13. Many of Major’s customers increased their drilling during the quarter, especially for gold, copper, coal and iron ore. Major raised its twice-yearly dividend by 12.5%, to $0.09 from $0.08, with the May 2012 payment. The stock now yields 1.5%....
CARFINCO FINANCIAL GROUP $7.93 (Toronto symbol CFNI; TSINetwork Rating: Speculative) (1-888 -486-4356; www.carfinco.com; Shares outstanding: 24.6 million; Market cap: $195.1 million; Dividend yield: 5.3%) provides car loans to consumers who aren’t able to meet the criteria of traditional lenders, like banks. Edmonton-based Carfinco started out by financing vehicle repairs in 1997. In 1999, it began providing loans for car and truck purchases. In January 2001, the company got out of the repair-financing business to focus solely on lending money to car buyers. Carfinco converted from a conventional corporation to an income trust in 2004. It converted back to a corporation on January 1, 2012....
STANLEY BLACK & DECKER INC., $63.31, New York symbol SWK, is considering selling its consumer-hardware and home-improvement operations. These businesses make bath fixtures and other home accessories under brands such as Baldwin, Kwikset and Price Pfister. Stanley acquired these operations as part of its merger with rival toolmaker Black & Decker Corp. in March 2010. The company could receive $1.5 billion from these sales. That’s equal to 14% of its $10.8-billion market cap. Stanley will probably use the cash to add to its lineup of industrial tools and security devices, including locks, automatic doors and gates....
AEROPOSTALE INC., $16.73, symbol ARO on New York, is a mall-based retailer of casual clothing and accessories. The company has 919 Aeropostale stores in the U.S. and 70 in Canada and Puerto Rico. It mainly sells its clothing to 14-to17-year-olds. In addition, its 87 P.S. from Aeropostale stores in the U.S. are aimed at seven-to-12-year-old elementary-school children. Today, Aeropostale opened its first store in Quebec, at the Place du Royaume mall in the city of Saguenay. The company will open six more stores in the province through the rest of 2012. Additional locations include Place Laurier in Quebec City, Fairview Pointe Claire in Point-Claire, Promenades St. Bruno in St. Bruno De Montarville, Galleria D’Anjou in Anjou, Mail Champlain in Brossard and Les Galeries de la Capitale in Quebec City....