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
LEON’S FURNITURE LTD. $12.53 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 72.3 million; Market cap: $905.9 million; Dividend yield: 3.2%) saw its sales fall 4.3% in the latest quarter, to $174.4 million from $182.1 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales. Earnings per share fell 4.0%, to $0.24 from $0.25. Leon’s plans to speed up its expansion by opening roughly five new stores a year over the next five years. It is also renovating many of its existing stores....
CAMECO CORP. $17.79 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 390.0 million; Market cap: $6.9 billion; Dividend yield 2.3%) has dropped its hostile takeover bid for Hathor Exploration (symbol HAT on Toronto). However, Cameco could still profit from Hathor’s uranium properties (see below). Hathor’s main exploration properties, including its Midwest Northeast property, are on the east side of the Athabasca Basin. This region contains all of Canada’s producing uranium mines and accounts for 23% of global production. Cameco holds cash of $1.2 billion, or $3.30 a share, so it can afford to make acquisitions that enhance its growth prospects. However, it dropped its Hathor bid because it felt the price had risen too high....
EUROPEAN GOLDFIELDS $12.16 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 183.8 million; Market cap: $2.2 billion; No dividends paid) is up over 20% since early December. The rise came after the company confirmed that unnamed potential buyers have approached it about a takeover. Eldorado Gold, symbol ELD on Toronto, and Centerra Gold, symbol CG on Toronto, are rumoured to be interested parties. We’ve said for some time that European Goldfields could become a takeover target as its new mines move toward production. That’s even more of a possibility now, after its recent financing deal with Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines in Greece and Romania. These mines should let the company produce around 400,000 ounces of gold a year by 2014....
TOROMONT INDUSTRIES LTD. $20.01 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 77.2 million; Market cap: $1.5 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. Toromont also makes refrigeration systems through its CIMCO division. In July 2011, Toromont completed the spinoff of Enerflex Ltd.. Shareholders received shares of the new Toromont and shares of Enerflex. That company leases and sells equipment and services for natural gas production, including field production plants and compression and processing plants. In the three months ended September 30, 2011, higher equipment sales and rentals pushed up Toromont’s revenue by 9.3%, to $367.3 million from $336.0 million a year earlier. Without one-time items, earnings per share rose 33.3% to $0.40 from $0.30, on the higher revenue and improved profit margins....
INTERNATIONAL BUSINESS MACHINES CORP., $194.56, New York symbol IBM, continues to expand its software business. This week, it agreed to buy DemandTec Inc. (Nasdaq symbol DMAN), which makes software that retailers and makers of consumer products use to analyze their customers’ spending habits. This information helps them predict consumer behaviour and quickly adjust their prices. Adding DemandTec will also enhance IBM’s expertise in fast-growing area of cloud computing. IBM will pay $440 million for DemandTec when the sale closes in the first quarter of 2012. The company earned $3.8 billion, or $3.19 a share, in the three months ended September 30, 2011, so it can easily afford this purchase....
EUROPEAN GOLDFIELDS, $12.86, symbol EGU on Toronto, is up almost 29% this week. The rise came after the company confirmed that an unnamed potential buyer has approached it about a takeover offer. Eldorado Gold, symbol ELD on Toronto, is rumoured to be the interested party. European Goldfields’ Skouries and Olympias gold projects in Greece and its Certej project in Romania would be good fits for Eldorado, which already has mines in Greece and Turkey. We’ve said for some time that European Goldfields could become a takeover target as its new mines move toward production. That’s even more of a possibility now, after its recent financing deal with Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines....
LIMITED BRANDS INC., $42.61, New York symbol LTD, rose 11% this week, mainly because the company will pay a special dividend of $2.00 a share on December 23, 2011. That’s in addition to its regular quarterly dividend of $0.20 a share, for a 1.9% annualized yield. Limited Brands 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 also reported that its sales fell 2.3% in November 2011, to $872.6 million from $893.0 million in November 2010. However, that’s mainly because the company recently sold 51% of a business that buys apparel from various manufacturers. On a same-store basis, sales rose 7% during the month....
NISSAN MOTOR CO., $18.15, symbol NSANY on Nasdaq, reported record U.S. sales in November. Overall, the company sold 85,182 cars and trucks in the U.S. during the month. That’s up 19.4% from 71,366 vehicles in November 2010. The Nissan division’s sales jumped 21.5% to a record 76,754 vehicles. Sales of Infiniti vehicles rose 3.0%, to 8,428 vehicles. The all-new Versa Sedan sold particularly well. Rising demand for this car lifted overall sales of the Versa subcompact by 38.2%, to a total of 9,291 vehicles. Nissan Altima sales continued to be strong: the company sold 20,613 of these cars in November, up 12.2% over the prior year. As well, sales of the Rogue crossover jumped 27.2% in November, to a record 10,845 vehicles....
AMERIGO RESOURCES, $0.53, symbol ARG on Toronto, processes copper and molybdenum from the waste rock from Chile’s El Teniente, the world’s largest copper mine. This contract runs through 2021. Amerigo has a further agreement to process material from the nearby Colihues tailings pond. The company gets 94% of revenue by processing copper. The remaining 6% comes from molybdenum. In the three months ended September 30, 2011, Amerigo’s revenue rose 6.8%, to $42.0 million from $39.3 million a year earlier (all figures except share price in U.S. dollars). Higher copper prices offset lower production and molybdenum prices....
AT&T INC., $27.41, New York symbol T, is facing strong opposition from regulators over its planned purchase of rival wireless carrier T-Mobile from Germany’s Deutsche Telekom AG. Adding T-Mobile would make AT&T the largest wireless carrier in the U.S., with 132 million subscribers. The Federal Communications Commission feels the combination of AT&T and T-Mobile would hurt competition in the wireless market. As well, the Department of Justice has launched a court challenge to block the deal. The trial should begin in February 2012. Due to the growing uncertainty over this deal, AT&T said that it will record a $4-billion charge against its earnings for the fourth quarter of 2011. That represents the break-up fee ($3 billion in cash plus $1 billion in wireless spectrum) that AT&T agreed to pay Deutsche Telekom if it can’t complete the purchase....