Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

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

Growth Stocks

Stock Pickers Digest Hotline – Friday, December 16, 2011

GOODYEAR TIRE & RUBBER., $13.58, symbol GT on New York, expects to restart its flood-damaged plant in Pathum Thani, Thailand, between March and May of 2012. Goodyear closed this facility, which makes a large portion of its consumer and airplane tires, in October 2011. As a result of the flooding, the airline industry could experience a shortage of certain tires in early 2012. To try to prevent this, Goodyear is increasing production at its other aircraft-tire plants, including its facilities in Danville, Virginia; Stockbridge, Georgia; Kingman, Arizona; and Tilburg, in the Netherlands. Even so, the shutdown at the plant in Thailand will weigh on Goodyear’s production, and will hurt the company’s sales and profits in the fourth quarter of 2011 and the first quarter of 2012. But even with this setback, the company’s long-term outlook remains sound....

6 min read

Pat McKeough

Growth Stocks

Here’s our Pick of the Month - January 2012

ENERFLEX LTD., $12.12 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.2 million; Market cap: 935.7 million; Dividend yield: 2.0%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators. In July 2011, Toromont completed its spinoff of Enerflex. Shareholders received shares of Enerflex and the new Toromont. In the three months ended September 30, 2011, Enerflex’s revenue rose 4.2%, to $282.3 million from $270.9 million a year earlier. The company gets about 28% of its revenue from stable, recurring sales of parts and services. Without one-time items, earnings per share jumped to $0.22 from $0.06, thanks to the higher revenue and improved profit margins. Enerflex’s long-term debt of $132.9 million is a low 14.2% of its market cap Enerflex’s order backlog continues to grow. It added $314.6 million of orders in the latest quarter, to bring its total backlog to $833.2 million on September 30, 2011, up 62.9% from $511.4 million a year earlier. Enerflex benefited from rising shale gas production in the southern U.S., including the Eagle Ford and Marcellus shale areas....

1 min read

Pat McKeough

Growth Stocks

Cheap but risky

MART RESOURCES $0.76 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 340.3 million; Market cap: $258.6 million; No dividends paid) trades at a low multiple to cash flow. That reflects investor concern about unstable Nigeria. Right now, Mart is producing oil from its 50%-held Umusadege field in southern Nigeria. In the three months ended September 30, 2011, Mart’s revenue jumped 237.2%, to $46.8 million from $13.9 million a year earlier. Cash flow per share rose sharply, to $0.125 from $0.028. Mart’s production rose 126.5%, to 446,981 barrels, and oil prices rose....

1 min read

Pat McKeough

Growth Stocks

New mines give these two a bright future

YAMANA GOLD $14.52 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 746.2 million; Market cap: $10.8 billion; Dividend yield: 1.3%) owns seven operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina, and has three other properties in advanced stages of development. In the three months ended September 30, 2011, Yamana’s revenue rose 22.3%, to $555.2 million from $454.0 million a year earlier (all figures except share price and market cap in U.S. dollars). Cash flow per share rose 57.1%, to $0.44 from $0.28. The company raised its production by 4.4% during the quarter, to 279,274 ounces of gold from 267,409 a year earlier. As well, record-high gold prices pushed up Yamana’s selling price for gold by 37.4%....

2 min read

Pat McKeough

Growth Stocks

Labour peace will help ARG

AMERIGO RESOURCES $0.50 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 172.3 million; Market cap: $86.2 million; No divd.) processes copper and molybdenum from the waste rock from Chile’s El Teniente, the world’s largest copper mine. In the three months ended September 30, 2011, Amerigo’s cash flow was $0.03 a share, down from $0.06 a year earlier. However, that was the result of a strike that is now over. Amerigo has just declared its semi-annual dividend of $0.02 a share. That gives the stock a high 8.0% yield. The dividend appears safe, but a prolonged period of low copper prices could lower the cash the company has available for dividend payments....

1 min read

Pat McKeough

Growth Stocks

Strong results prompt dividend hikes

PASON SYSTEMS $11.74 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.3 million; Market cap: $966.2 million; Dividend yield: 3.4%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico and Argentina. In the three months ended September 30, 2011, Pason’s revenue rose 29.2%, to $88.7 million from $68.7 million a year earlier. Many of the company’s clients increased their drilling, especially for shale gas and oil. Earnings jumped 140.0%, to $28.5 million, or $0.35 a share, from $11.9 million, or $0.15 a share. The increased drilling pushed up Pason’s earnings. Strong demand also let the company raise its prices....

2 min read

Pat McKeough

Growth Stocks

Tap into shale gas with CMG

COMPUTER MODELLING GROUP $15.32 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403- 531-1300; www.cmgroup.com; Shares outstanding: 37.8 million; Market cap: $579.1 million; Dividend yield: 2.9%) reports that its revenue fell 10.1% in the three months ended September 30, 2011, to $12.0 million from $13.3 million a year earlier. Licence revenue rose to $10.9 million from $10.8 million, but that was offset by a 57.0% drop in consulting and professional-services revenue, to $1.1 million from $2.5 million. The company consulted on a few large, one-time projects a year ago. Earnings per share fell 7.7%, to $0.12 from $0.13. Already a leader in complex heavy-oil and oil-sands simulations, Computer Modelling should profit as oil and gas producers continue to develop other unconventional sources, such as shale gas....

1 min read

Pat McKeough

Growth Stocks

Exploration successes are a big plus

BIRCHCLIFF ENERGY $13.24 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 131.4 million; Market cap: $1.7 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil. In the three months ended September 30, 2011, Birchcliff’s production jumped 34.6%, to 17,648 barrels of oil equivalent per day (including natural gas) from 13,109 barrels a year earlier. Cash flow per share rose 50.0%, to $0.27 from $0.18. The production increase and higher oil prices were the main reasons for the gain....

2 min read

Pat McKeough

Growth Stocks

Timely split for Imperial

IMPERIAL METALS $12.30 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.9 million; Market cap: $921.3 million) has split its shares on a two-for-one basis. That should make the shares more liquid and help the company attract more investors. Meanwhile, Imperial’s cash flow per share rose 17.8% in the nine months ended September 30, 2011, to $0.86 from $0.73 (adjusted for the two-for-one split). The company aims to use the cash flow from its Mount Polley and Huckleberry mines in B.C. to build a mine at its Red Chris copper/gold property in northwestern B.C....

1 min read

Pat McKeough

Growth Stocks

Low price to earnings adds to their appeal

ALIMENTATION COUCHE-TARD $30.76 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 242.4 million; Market cap: $7.5 billion; Dividend yield: 1.0%) is the largest convenience-store operator in Canada, with over 2,000 outlets. It also has over 3,900 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at over 68% of its stores. In the quarter ended October 9, 2011, Couche-Tard’s earnings per share rose 6.9%, to $0.62 from $0.58 a year earlier (all figures except share price and market cap in U.S. dollars). Sales rose 24.1%, to $5.2 billion from $4.1 billion. The gains came from higher fuel prices, the stronger Canadian dollar and higher merchandise sales. The company gets 30% of its sales by selling merchandise....

2 min read

Pat McKeough

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Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.