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
TUPPERWARE BRANDS CORP. $61 (www.tupperwarebrands.com) earned $273.3 million in 2011. That’s up 14.9% from $237.9 million in 2010. Earnings per share rose 19.6%, to $4.45 from $3.72, on fewer shares outstanding. Sales rose 12.4%, to $2.6 billion from $2.3 billion, thanks to improving demand for its plastic food containers and beauty products in fast-growing markets like South America and Asia; emerging markets now account for 58% of its total sales. The company also raised its quarterly dividend by 20.0%, to $0.36 a share from $0.30. The new annual rate of $1.44 yields 2.4%. Best Buy. ALLIANT ENERGY CORP. $43 (www.alliantenergy.com) plans to sell subsidiary RMT Inc., which specializes in wind- and solar-power projects. This business’s losses ballooned in 2011, mainly due to delays at a solar project in New Jersey. Alliant expects to record a charge of $0.10 to $0.14 a share in connection with the sale. Excluding RMT’s losses and other unusual items, the company expects to earn $2.75 to $3.05 a share in 2012. It earned $2.76 a share in 2011. Buy. BUCKEYE PARTNERS L.P. $60 (www.buckeye.com) has raised its quarterly distribution for the 31st consecutive quarter, to $1.0375 a unit from $1.025. The new annual rate of $4.15 yields 6.9%. However, its growth-by-acquisition strategy adds risk. Hold.
GOOGLE INC., $604.64, Nasdaq symbol GOOG, announced that U.S. and European competition regulators have approved its purchase of cellphone maker Motorola Mobility Holdings Inc. (New York symbol MMI). In August 2011, Google agreed to pay $12.5 billion for Motorola Mobility. That’s equal to 6% of Google’s $196.6-billion market cap. Regulators in China and other countries where Motorola Mobility operates still need to approve the takeover. Still, Google plans to close the deal in the next few weeks....
GOODYEAR TIRE & RUBBER, $13.42, symbol GT on New York, reported record sales in the latest quarter. In the three months ended December 31, 2011, the company’s sales rose 12.0%, to a record $5.7 billion from $5.1 billion a year earlier. North American sales climbed 17.5%, to a record $2.6 billion from $2.2 billion. Sales rose 10.7% in Europe, the Middle East and Africa; 2.4% in Latin America; and 5.1% in the Asia-Pacific region....
VITERRA INC. $10.09 (Toronto symbol VT; TSINetwork Rating: Average) (1-866-569-4411; www.viterra.ca; Shares outstanding: 371.7 million; Market cap: $3.8 billion; Dividend yield: 1.5%) is a Saskatchewan-based agribusiness that mainly operates in Canada and Australia. The company accumulates, stores, transports, processes and markets grains, oilseeds and specialty crops including lentils and mustard. Saskatchewan Wheat Pool was a farmers co-operative until it became a public company in 1996. It changed its name to Viterra in 2007 after it bought Agricore United for $1.3 billion. In 2009, Viterra bought Australian grain handler ABB Grain for $1.4 billion. In its 2011 fiscal year, which ended October 31, 2011, Viterra’s revenue jumped 42.8%, to $11.8 billion from $8.2 billion. Earnings per share rose 82.1%, to $0.71 from $0.39. Higher crop shipments and grain prices were the main reasons for the gains....
Even though we recommend mostly aggressive stocks in Stock Pickers Digest, we still manage to pick a large number that get taken over at high profits for our readers. Mosaid Inc. was our second-most-recent winner, with a $46-ashare offer from Sterling Partners. That gave us a 107.2% gain in the 18 months from our first recommendation in May 2010. Our latest pick to attract a takeover at a high profit to our subscribers is RuggedCom $33, symbol RCM on Toronto....
ADOBE SYSTEMS $32.46 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 493.8 million; Market cap: $16.0 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages. The company also makes Adobe Flash, which lets website developers make their pages more interactive by adding animation and video. Adobe recently stopped making Flash for smartphones and other mobile devices. Instead, it will focus on developing products that are based on the newer HTML5 Internet standard....
FAIRFAX FINANCIAL HOLDINGS $417.01 (Toronto symbol FFH: TSINetwork Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $8.3 billion; Dividend yield: 2.4%) now owns 5.12% of Research in Motion, symbol RIM on Toronto. RIM is a recommendation of our Successful Investor newsletter. RIM has appointed Thorsten Heins as its new chief executive officer and a director of the company. Previously, he was RIM’s chief operating officer. The company’s founders and former co-CEOs, Jim Balsillie and Mike Lazaridis, will remain directors. As well, the company has appointed Prem Watsa as a director. Mr. Watsa is the chairman and founder of Fairfax Financial Holdings....
CALIAN TECHNOLOGIES $18.90 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.6 million; Market cap: $143.6 million; Dividend yield: 5.5%) 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 December 31, 2011, Calian’s revenue rose 6.7%, to $56.8 million from $53.3 million a year earlier. Earnings rose 14.4%, to $3.6 million, or $0.47 a share, from $3.1 million, or $0.41 a share. Sales rose at the systems engineering division, partly due to an increase in U.S. military orders. The business and technology services division also saw continued strong demand. Calian’s backlog now stands at $665 million, with contracts running to 2018....
FORTRESS PAPER $36.77 (Toronto symbol FTP; TSINetwork Rating: Extra Risk) (1-888-820-3888; www.fortresspaper.com; Shares outstanding: 14.3 million; Market cap: $525.8 million; No dividends paid) just bought Domtar Corp.’s old pulp mill in Lebel-sur-Quevillon, Quebec. The company plans to convert the mill to produce a type of cellulose called dissolving pulp, which is used to make rayon fabrics. Fortress is buying the plant for a nominal amount of $1, but it will commit to spending $222 million on the conversion, which should be finished in mid-2013. The Quebec government will grant the company a 10-year, $132.4-million loan to help finance the plant. Fortress’s outlook is positive, and the new dissolving pulp plant should make a big contribution to its earnings....
WYNDHAM WORLDWIDE $42.99 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 154.0 million; Market cap: $6.6 billion; Dividend yield: 2.1%) is one of the world’s largest hospitality companies, with 7,205 franchised hotels worldwide. Aside from Wyndham and Ramada, it owns a variety of other brands, including Days Inn, Super 8, Wingate, Baymont Inn & Suites, Microtel Inns & Suites, Hawthorn Suites, Howard Johnson, Travelodge and AmeriHost Inn. In addition to hotels, Wyndham manages vacation resorts, rental properties, luxury clubs and time-shares. Wyndham now has 100,000 vacation rental properties worldwide. This wide range of operations gives the company more consistent cash flow than most of its competitors, which mainly focus on hotels. In the three months ended December 31, 2011, Wyndham’s revenue rose 6.7%, to $1.0 billion from $937.0 million. The company gets most of its revenue from vacation rather than business travel, and vacation bookings rose in the latest quarter. That helped push up Wyndham’s occupancy rate by 3.8%. Before one-time items, earnings rose 2.2%, to $0.47 a share from $0.46. Wyndham continues to buy back its shares. In the latest quarter, it repurchased 6.7 million shares for $225 million. In all of 2011, it bought back 28.7 million shares for $902 million. The company has also raised its quarterly dividend by 53.3%, to $0.23 from $0.15. It now yields 2.1%....