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
WAL-MART STORES INC. $57 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $193.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.walmart.com) fell 8% recently after it admitted that it is investigating allegations that executives of its 69%-owned Mexican subsidiary paid bribes to local officials in 2005 to speed up the construction of new stores. U.S. companies are prohibited from bribing foreign officials under the 1977 Foreign Corrupt Practices Act. Wal-Mart is fully cooperating with American and Mexican authorities. This should limit any possible fines it may have to pay. The company has also strengthened its internal accounting controls to make sure all of its overseas businesses comply with the anti-bribery law....
In addition to Pfizer, medical device makers like these three offer another way to profit from aging baby boomers and rising health care spending. However, not all are buys right now. BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.3 million; Market cap: $30.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of the company’s sales come from single-use products that continually need to be reordered. Baxter earned $569 million in the first quarter of 2012. That’s down 0.2% from $570 million a year earlier. The company spent $575 million on share buybacks during the quarter. Because of fewer shares outstanding, earnings per share rose 3.1%, to $1.01 from $0.98....
INTERNATIONAL BUSINESS MACHINES CORP. $204 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $244.8 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.ibm.com) continues to expand its analytics operations, which make software that helps businesses and governments quickly gather and analyze a wide range of data. The company recently paid an undisclosed sum for Toronto-based Varicent Software Inc. Over 180 banks, insurance companies and retailers use Varicent’s products to manage employee salaries and bonuses paid to salespeople. IBM is our #1 buy for 2012.
MICROSOFT CORP. $32 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $268.8 billion; Price-to-sales ratio: 3.7; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.microsoft.com) is paying $1.1 billion for 925 patents held by AOL Inc. (New York symbol AOL). It will also license another 300 patents from AOL. Microsoft held cash of $59.5 billion, or $7.09 a share, on March 31, 2012, so it can easily afford this purchase. After the sale closes in the next few weeks, Microsoft will then sell 650 of AOL’s patents to social network operator Facebook Inc. for $550 million. As part of the deal, Microsoft will retain a licence on these patents. AOL’s patents cover Internet communications technologies such as email and instant messaging. Controlling them will help Microsoft defend itself in future patent disputes. The patents will also let the company charge higher licensing fees to smartphone makers....
Intel and Nvidia have thrived as a result of the rapid growth of personal computers in the past two decades. Both companies now aim to duplicate that success with new chips for smartphones and tablet computers. INTEL CORP. $28 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $140.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.intel.com) is the world’s largest computer chip maker. About 80% of all computers use the company’s chips. In the first quarter of 2012, Intel’s revenue rose 0.5%, to $12.9 billion from $12.8 billion a year earlier. Recent flooding in Thailand caused a hard drive shortage that hurt computer sales. That cut demand for Intel’s chips and caused a 2.0% sales decline at the company’s PC Client Group (which supplies two-thirds of its total revenue). However, software sales jumped 137.9% following last year’s purchase of antivirus software specialist McAfee....
GANNETT CO. INC. $14 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 237.0 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 5.7%; TSINetwork Rating: Average; www.gannett.com) earned $80.8 million, or $0.34 a share, in the first quarter of 2012. That’s down 18.3% from $98.9 million, or $0.41 a share, a year earlier. Revenue fell 2.6%, to $1.22 billion from $1.25 billion. The company spent $20 million on new growth projects in the quarter, including new applications for mobile devices and an expansion of its sports-related news services. This was the main reason for the lower earnings. As well, advertising revenue at its newspapers and TV stations should rebound during the Summer Olympics and the run-up to the November presidential election. Gannett is a buy.
Limited Brands and Jones Group own some of the clothing industry’s best-known brands. That puts them in a good position to profit as consumer confidence improves. We like both, but we prefer Limited Brands. LIMITED BRANDS INC. $49 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 289.4 million; Market cap: $14.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.limitedbrands.com) owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal-care products stores. It also owns the La Senza lingerie chain in Canada. The company continues to expand its well-known brands into related niche markets. For example, in 2004, Limited launched the Victoria’s Secret Pink clothing line for younger women. This brand’s success has prompted the company to open two stand-alone Pink stores in the U.S. and eight in Canada....
MACY’S INC. $40 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 418.5 million; Market cap: $16.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.0%; TSINetwork Rating: Average; www.macysinc.com) continues to benefit from its My Macy’s plan to tailor its merchandise to local tastes. This strategy has attracted new shoppers to its department stores and encouraged repeat visits. As a result, its same-store sales were 7.3% higher in March 2012 than in March 2011. Macy’s is also seeing strong sales growth at its websites: online sales jumped 39.0% from March 2011. Macy’s is a buy.
FORD MOTOR CO. $12 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.8 billion; Market cap: $45.6 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.ford.com) is expanding its Chinese operations. Its plan involves spending $760 million to build a new car assembly plant and an additional $600 million to expand an existing facility. The total cost of $1.4 billion is equal to 23% of the $6.1 billion, or $1.51 a share, that Ford earned in 2011. Chinese car sales are expected to rise to 30 million vehicles a year by 2020 from 18.5 million in 2011. Ford’s latest investments will help it take advantage of that trend. Ford is a buy....
MOLSON COORS BREWING CO. $41 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 180.7 million; Market cap: $7.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.1%; TSINetwork Rating: Average; www.molsoncoors.com) has agreed buy StarBev L.P., which owns nine breweries in central and eastern Europe. The deal will close by June 30, 2012. Molson Coors will pay $3.5 billion for StarBev. The company held cash of $1.1 billion at the end of 2011, so it will have to borrow most of the funds it will need to complete this purchase. Molson Coors’long-term debt of $1.9 billion is a moderate 26% of its market cap, so it can comfortably afford to borrow more money....