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
CHIPOTLE MEXICAN GRILL $375.73 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.3 million; Market cap: $11.8 billion; No dividends paid) reported 23.7% higher sales in the three months ended December 31, 2011, to $596.7 million from $482.5 million a year earlier. Earnings rose 23.2%, to $1.81 a share from $1.47 a share. The company will open 155 to 165 new restaurants in 2012. That will push up its sales. However, rising food costs will keep putting pressure on its profit margins. It’s uncertain if Chipotle can further raise its prices to offset those increases. Chipotle trades at nearly 46 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers....
CIMAREX ENERGY $81.59 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 85.7 million; Market cap: $7.0 billion; Dividend yield: 0.5%) produces and explores for oil and natural gas. Gas makes up 56% of its output. Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast. In the three months ended December 31, 2011, Cimarex’s production averaged 601.4 million cubic feet of natural gas equivalent per day (including oil). That’s down slightly from 604.5 million cubic feet a year earlier. The company did not offset natural declines at its Gulf Coast wells with new production....
CHESAPEAKE ENERGY $23.02 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 659.3 million; Market cap: $15.2 billion; Dividend yield: 1.5%) plans to cut its daily natural gas production by 8% due to low gas prices. That will take about 500 million cubic feet per day off the market. Chesapeake is the second-largest natural gas producer in the U.S. Chesapeake will now shift the focus of its drilling to oil and natural gas liquids (NGLs), which are broken down into ethane, propane and butane and sold to a variety of customers. For example, ethane is used to make a host of everyday products, like grocery and garbage bags, toys, medical tubing and so on. NGLs are typically priced in relation to crude oil. Chesapeake Energy is still a buy.
WESTJET AIRLINES $13.95 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 130.8 million; Market cap: $1.8 billion; Dividend yield: 1.7%) reports that its revenue rose 12.9% in the three months ended December 31, 2011, to $781.5 million from $692.2 million a year earlier. Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue. Earnings fell 4.3%, to $35.6 million from $37.2 million. Higher fuel prices were the main reason for the decline. However, earnings per share were unchanged at $0.26, due to fewer shares outstanding. The company has also raised its quarterly dividend by 20%, to $0.06 from $0.05. The shares now yield 1.7%....
NISSAN MOTOR CO. ADR $19.90 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $45.8 billion; No dividends paid) reported that its earnings rose 3.2% in the three months ended December 31, 2011, to 82.7 billion yen ($1.07 billion U.S.) from 80.1 billion yen ($1.04 billion U.S.) a year earlier. That’s a particularly strong performance in light of the fact that flooding in Thailand cut Nissan’s production by 33,000 vehicles in the quarter. The strong yen also hurt the company’s profits from overseas sales. Even so, the latest earnings beat the consensus estimate of 71.7 billion yen. Nissan’s sales are rising in all of its markets outside Japan, including Europe and the U.S., as well as China and emerging markets like India, Russia and Brazil. Overall, the car-maker sold 1.2 million vehicles during the quarter, up 19.5% from a year earlier....
INTACT FINANCIAL CORP. $60.00 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $7.8 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. In the three months ended December 31, 2011, Intact’s revenue rose 48.7%, to $1.58 billion from $1.06 billion. That was mainly due to AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion last year. AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada....
NCR CORP., $21.14, New York symbol NCR, jumped 11% this week after it agreed to sell its DVD rental business, which operates through automated kiosks, to Coinstar Inc. (Nasdaq symbol CSTR) for $100 million. NCR has also agreed to provide Coinstar with maintenance services, hardware and software. That will boost NCR’s profits by $25 million over the deal’s five-year term. The sale should close in the third quarter of 2012. Meanwhile, NCR reported better-than-expected earnings for 2011. During the year, the company earned $49 million, or $0.31 a share. That’s down 58.8% from $119 million, or $0.72 a share, in 2010. However, if you exclude writedowns and other unusual items, NCR would have earned $1.92 a share in 2011. That beat the consensus estimate of $1.83....
WESTJET AIRLINES LTD., $13.34, symbol WJA on Toronto, reports that its revenue rose 12.9% in the three months ended December 31, 2011, to $781.5 million from $692.2 million a year earlier. Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the higher revenue. Earnings fell 4.3%, to $35.6 million from $37.2 million. Higher fuel prices were the main reason for the decline. However, earnings per share were unchanged at $0.26 due to fewer shares outstanding. The company has also raised its quarterly dividend by 20%, to $0.06 from $0.05. The shares now yield 1.8%....
ABB LTD. ADRs, $21.91, New York symbol ABB, has agreed to buy Thomas & Betts Corp. (New York symbol TNB), which makes a range of industrial products, including heating and air conditioning equipment, electrical connectors and transmission towers for power companies. ABB will pay $3.9 billion for Thomas & Betts when the deal closes later this year. To put that in perspective, ABB earned $2.3 billion, or $1.02 per ADR (each American Depositary Receipt represents one ABB common share) in the nine months ended September 30, 2011. This purchase nicely complements ABB’s current lineup of electrical products. As well, Switzerland-based ABB can use Thomas & Betts’ distributors to sell more of its products in the U.S. Moreover, ABB feels that combining purchasing and other overlapping functions could cut its yearly costs by $200 million by 2016....
RUGGEDCOM INC., $32.81, symbol RCM on Toronto, jumped 26% this week after it received a friendly takeover bid from Siemens Canada Ltd. Siemens is offering $33 a share in cash. The company is a subsidiary of giant German conglomerate Siemens AG. RuggedCom, which makes computer networking equipment that is used in harsh environments, was the target of a hostile takeover bid from Belden Inc., a U.S. cable and networking equipment maker. Belden recently reaffirmed its offer of $22 in cash for each RuggedCom share. RuggedCom’s board of directors has advised shareholders to accept Siemens’ offer....