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.
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Growth Stocks Library Archives
GENERAL ELECTRIC CO. $19 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $201.4 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines (31% of revenue, 32% of earnings); aircraft engines (13%, 17%); health care equipment, such as medical scanners (13%, 14%); home appliances and lighting (6%, 1%); and locomotives (3%, 4%). Following the 2008/2009 financial crisis, the company scaled back the activities of its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 34% of GE’s revenue and 32% of its earnings.
Recession took a toll ...
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TENNANT CO. $42 (www.tennantco.com) continues to see strong demand for its ec-H2O floor-scrubbing machine, which uses electricity to make tap water act like a detergent. That eliminates the need for soaps and cleaning agents, and lowers the machine’s operating costs. However, overall sales fell 0.6% in the first quarter of 2012, to $172.6 million from $173.7 million a year earlier, due to weaker demand in Europe. Earnings per share fell 6.7%, to $0.28 from $0.30. Hold. SYMANTEC CORP. $16 (www.symantec.com) has paid an undisclosed sum for Nukona Inc., whose software lets companies apply security policies to employee-owned computers and smartphones while leaving personal activities untouched. This technology nicely complements Symantec’s other data-security products. Hold. NORDSTROM INC. $55 (www.nordstrom.com) has raised its quarterly dividend by 17.4%, to $0.27 a share from $0.23. The new annual rate of $1.08 yields 2.0%. Buy.
INTERNATIONAL BUSINESS MACHINES CORP., $199.60, New York symbol IBM, reported higher-than-expected earnings for the latest quarter. However, revenue fell short of the consensus estimate. That caused the stock to fall 2% this week. In the three months ended March 31, 2012, the company earned $3.1 billion. That’s up 7.1% from $2.9 billion a year earlier. IBM spent $3.0 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 13.0%, to $2.61 from $2.31. Without unusual items, mainly costs to integrate acquisitions, IBM’s earnings per share would have risen 15.4%, to $2.78 from $2.41. On this basis, the latest earnings beat the consensus estimate of $2.65 a share....
ALIMENTATION COUCHE-TARD, $39.52, symbol ATD.B on Toronto, has jumped almost 16% since it announced on Wednesday that it is buying Norway’s Statoil Fuel & Retail ASA for $2.8 billion U.S. Couche-Tard is now up over 29% since we made it our #1 stock pick for 2012 in our February issue at $30.55. Statoil Fuel currently has over 1,700 stations in Scandinavia and over 550 in Central and Eastern Europe, including Russia. The company accounts for over 30% of convenience store sales in each of Norway, Sweden, Denmark, Latvia and Estonia, and is in the top five in both Lithuania and Poland....
MAJOR DRILLING $15.27 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866-264-3986; www.majordrilling.com; Shares outstanding: 79.1 million; Market cap: $1.2 billion; Dividend yield: 1.2%) is a large contract drilling firm that mainly serves the mining industry. In its fiscal 2012 third quarter, which ended January 31, 2012, Major’s revenue rose 69.1%, to $182.2 million from $107.7 million a year earlier. Earnings per share jumped to $0.12 from $0.02. Due to seasonal factors, the third quarter is typically the company’s weakest. Many of Major’s customers increased their drilling during the quarter, especially for gold, copper, coal and iron ore. The company gets 38% of its revenue from Canada and the U.S., 32% from South and Central America, and 30% from Australia, Asia and Africa....
ALIMENTATION COUCHE-TARD $39.60 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 179.4 million; Market cap: $7.1 billion; Dividend yield: 0.8%) has jumped over $5 since it announced that it is buying Norway’s Statoil Fuel & Retail ASA for $2.8 billion U.S. Couche-Tard is now up 29% since we made it our #1 stock Pick for 2012 in our February issue at $30.55. Statoil, Norway’s largest North Sea oil producer, owns 54% of publicly traded Statoil Fuel....
LEON’S FURNITURE LTD. $12.09 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 69.9 million; Market cap: $845.1 million; Dividend yield: 3.3%) has built its chain of over 72 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising. In the three months ended December 31, 2011, Leon’s sales fell 2.1%, to $193.8 million from $197.9 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales. Earnings fell 7.0%, to $19.9 million, or $0.28 a share, from $21.4 million, or $0.30 a share. The slower sales were the main reason for the earnings decline. The company also spent more on advertising....
REITMANS (CANADA) LTD. $15.27 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 66.3 million; Market cap: $1.0 billion; Dividend yield: 5.2%) reports that its sales fell 3.3% in the quarter ended January 28, 2012, to $260.0 million from $268.7 million a year earlier. Same-store sales fell 1.7%. The company earned $4.7 million, or $0.07 a share. That’s down 66.2% from $13.8 million, or $0.21 a share. Fewer shoppers visited Reitmans’ stores in the quarter, due to weaker consumer confidence. As well, the company spent more on promotions to fend off rising competition....
WAJAX CORP. $49 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.6 million; Market cap: $813.4 million; Dividend yield: 6.6%) 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 December 31, 2011, Wajax’s revenue rose 19.2%, to $377.2 million from $316.4 million a year earlier. Demand remained strong across all of the company’s markets....
NISSAN MOTOR CO. (ADR) $20.45 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $47.0 billion; No dividends paid) reported record U.S. sales in March. Overall, the company sold 136,317 cars and trucks in the U.S. during the month. That’s up 12.5% from 121,141 vehicles in March 2011. The Nissan division’s sales jumped 14.8%, to a record 126,132 vehicles. Infiniti sales rose 9.8%, to 10,185 vehicles....