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
GOOGLE INC. $609 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 326.0 million; Market cap: $198.5 billion; Price-to-sales ratio: 4.9; No dividends paid; TSINetwork Rating: Above Average; www.google.com) has completed its $12.5-billion purchase of cellphone maker Motorola Mobility Holdings Inc. (New York symbol MMI). Owning Motorola gives Google access to patents that it can use to defend itself against lawsuits from other mobile phone makers. It will also make it easier for Google to integrate its popular Android operating system with new smartphones and tablet computers. Google is a buy.
WEYERHAEUSER CO. $20 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 537.5 million; Market cap: $10.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.0%; TSINetwork Rating: Extra Risk; www.weyerhaeuser.com) is a leading maker of forest products, including paper and packaging. The company owns or leases over 20.3 million acres of timberland in the U.S. and Canada. In 2010, Weyerhaeuser converted to a real estate investment trust (REIT). REITs pay little or no income tax, and must pay 90% of their earnings to their shareholders as dividends. Right now, Weyerhaeuser pays a regular quarterly dividend of $0.15 a share, for a 3.0% annualized yield. The company continues to sell less profitable assets: in 2011, it sold $838 million of real estate....
Buckeye Partners and Cedar Fair are master limited partnerships (MLPs). MLPs pay out most of their income to investors. As a result, they pay very little income tax. However, MLPs are not eligible for RRSPs or RRIFs. As well, Canadian investors are subject to a 35% U.S. withholding tax on income from MLPs. However, you can usually claim a non-refundable Canadian tax credit to offset that withholding tax. BUCKEYE PARTNERS L.P. $48 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 97.8 million; Market cap: $4.7 billion; Price-to-sales ratio: 1.0; Dividend yield: 8.6%; TSINetwork Rating: Average; www.buckeye.com) operates over 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. Buckeye also owns oil and natural gas storage terminals and other related businesses....
J.P. MORGAN CHASE & CO. $34 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $129.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.5%; TSINetwork Rating: Average; www.jpmorganchase.com) recently announced a $2-billion loss on complex hedging contracts that it uses to cut the risk on corporate bonds it holds. This unexpected trading loss has prompted the bank to suspend its plan to repurchase $15 billion of its shares by March 31, 2013. However, it will continue to pay a quarterly dividend of $0.30 a share, for an annualized yield of 3.5%. J.P. Morgan Chase is still a hold.
APACHE CORP. $83 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 390.8 million; Market cap: $32.4 billion; Price-to-sales ratio: 1.9; Dividend yield: 0.8%; TSINetwork Rating: Average; www.apachecorp.com) has been forced to write down the value of its Canadian properties by $390 million due to weak natural gas prices. Without this charge, Apache would have earned $1.2 billion in the three months ended March 31, 2012. That’s up 4.2% from $1.1 billion a year earlier. Earnings per share rose 3.4%, to $3.00 from $2.90, on more shares outstanding. Revenue rose 15.6%, to $4.5 billion from $3.9 billion. Production rose 5.1%, to 769,296 barrels of oil equivalent per day from 731,905 barrels. Half of Apache’s production is oil, which is helping it profit from high oil prices. Moreover, it gets 38% of its gas from outside North America, where gas prices rose an average of 17% in the quarter....
FRONTIER COMMUNICATIONS CORP. $3.50 (New York symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 998.5 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 11.4%; TSINetwork Rating: Average; www.frontier.com) earned $52.5 million in three months ended March 31, 2012, down 4.0% from $54.7 million a year earlier. Earnings per share were unchanged at $0.05 on fewer shares outstanding. These figures exclude costs related to Frontier’s July 2010 purchase of traditional phone (or land line) accounts from Verizon. Revenue fell 5.8%, to $1.3 billion from $1.35 billion. That’s because Frontier continues to lose residential (down 9.2%) and business (down 5.7%) customers. However, the $0.10-a-share quarterly dividend still seems safe: the payout accounted for a moderate 39% of Frontier’s free cash flow (cash flow less capital expenditures) in the latest quarter. Frontier Communications is still a hold.
AGILENT TECHNOLOGIES INC. $41 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 348.0 million; Market cap: $14.3 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.0%; TSINetwork Rating: Average; www.agilent.com) makes testing systems that help improve electronic products, such as cellphones and computer equipment. To cut its exposure to the cyclical electronics industry, Agilent is expanding its medical and drug-testing businesses, mainly through acquisitions. In May 2010, it paid $1.5 billion for Varian Inc., which makes testing equipment for medical research labs. As well, the company recently announced that it will pay $2.2 billion for Dako, a Denmark-based firm that makes equipment that detects cancers in blood and other tissue samples. Thanks to deals like these, medical- and chemical-testing equipment now supplies half of Agilent’s overall sales....
QUAKER CHEMICAL CORP. $41 (www.quakerchem.com) has raised its quarterly dividend by 2.1%, to $0.245 a share from $0.24. The new annual rate of $0.98 yields 2.4%. Buy. MCCORMICK & CO INC. $57 (www.mccormick.com) continues to benefit from rising demand for packaged spices and seasonings overseas. The company aims to get 20% of its sales from fastgrowing countries like India, Poland and China by 2015. McCormick is also fuelling its growth with new products: it has launched over 200 new spices and other items in the past year. Buy. TUPPERWARE BRANDS CORP. $54 (www.tupperwarebrands.com) earned $1.03 a share in the first quarter of 2012, up 14.4% from $0.90 a year earlier. Strong demand for its food containers and beauty products in Asia and Latin America should continue to offset the rising cost of plastic resin, which is made from oil. Best Buy....
J.C. PENNEY CO. INC., $26.29, New York symbol JCP, fell 23% this week after the company reported much-worse-than-expected quarterly earnings. It also suspended its $0.20-a-share quarterly dividend to conserve cash. Penney operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods over the Internet. The company recently began a major restructuring that includes 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....
WAJAX CORP., $49.00, symbol WJX on Toronto, sells and services cranes, forklifts and other heavy equipment. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). In the three months ended March 31, 2012, Wajax’s revenue rose 17.8%, to $358.1 million from $303.9 million a year earlier. Demand remained strong across all of the company’s markets. Earnings rose 33.6%, to $17.1 million, or $1.03 a share, from $12.8 million, or $0.77 a share. The stock trades at just 11.9 times this year’s forecast earnings of $4.12 a share....