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
SYMANTEC $16.67 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 751.0 million; Market cap: $12.5 billion; No dividends paid) sells Internet-security technology, including antivirus and Internet and email-filtering software, to businesses and consumers. In the three months ended September 30, 2011, earnings per share before one-time items rose 14.7%, to $0.39 from $0.34. Sales rose 13.6%, to $1.7 billion from $1.5 billion. The company’s sales to businesses and consumers continue to increase due to rising concerns about identity theft and online intruders....
WYNDHAM WORLDWIDE CORP. $34.10 (New York symbol WYN; TSINetwork Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 162.0 million; Market cap: $5.5 billion; Dividend yield: 1.8%) is one of the world’s largest hospitality companies, with 7,190 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 a number of vacation resorts, rental properties, luxury clubs and time-shares. Wyndham now has 97,000 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 September 30, 2011, Wyndham’s revenue rose 13.8%, to $1.2 billion from $1.1 billion a year earlier. 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 3.1%....
AMAZON.COM $211.99 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 461.0 million; Market cap: $97.7 billion; No dividends paid) reported sharply lower earnings in the latest quarter. In the three months ended September 30, 2011, Amazon’s earnings fell 72.7%, to $63 million, or $0.14 a share. A year earlier, it earned $231 million, or $0.51 a share. The decline came despite a 43.9% jump in sales, to $10.9 billion from $7.6 billion. During the quarter, the company spent $779 million on “technology and content,” up 74% from $442 million a year earlier. That was the main reason for the lower earnings....
DUNDEE REIT $32.70 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 58.9 million; Market cap: $1.9 billion; Dividend yield: 6.7%) owns and manages 18.9 million square feet of office, industrial and retail space. The trust has a 95.8% occupancy rate. In the three months ended September 30, 2011, Dundee’s revenue rose 75.4%, to $110.9 million from $63.2 million a year earlier. Most of the increase came from properties the trust recently purchased. Dundee’s cash flow rose 69.4% in the latest quarter, to $36.6 million from $21.6 million. Cash flow per unit rose just 11.5%, to $0.58 from $0.52, due to more units outstanding (the trust issued new units to pay for the acquired properties)....
REITMANS (CANADA) LTD. $14.89 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 66.6 million; Market cap: $991.7 million; Dividend yield: 5.3%) has decided to convert its 25 Cassis stores to its other banners, including Reitmans, Penningtons, Smart Set, Addition Elle and Thyne Maternity. Cassis, which was launched in 2006, is the newest of Reitmans’ chains. Its stores sell business-casual clothing for women. Cassis supplies less than 2% of Reitmans’ yearly sales. However, the company will take a one-time charge of $4 million (after tax) in the current quarter to write down Cassis’ assets and pay severance to laid off workers. To put that in context, Reitmans earned $31.7 million in the latest quarter....
MOSAID TECHNOLOGIES INC. $45.79 (Toronto symbol MSD; TSINetwork Rating: Extra Risk) (613-599-9539; www.mosaid.com; Shares outstanding: 12.1 million; Market cap: $554.1 million; Dividend yield: 2.2%) has agreed to a friendly, $46.00-a-share, all-cash takeover offer from U.S.-based private-equity firm Sterling Partners. The Sterling Partners bid counters the most recent $42-a-share hostile offer from Wi-LAN. Prior to that, Wi-LAN had offered $38 a share. Mosaid is now trading at $45.79 a share, or just below Sterling’s bid. This indicates that investors do not expect a higher price. Wi-LAN has also said it would not raise its bid any further....
WESTJET AIRLINES $12.12 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 141.3 million; Market cap: $1.7 billion; Dividend yield: 1.7%) reports that its revenue rose 13.3% in the three months ended September 30, 2011, to $775.3 million from $684.1 million a year earlier. Demand remains high for the company’s flights, and it has entered into new partnerships with other airlines. These were the main reasons for the higher revenue. However, earnings fell 10.4%, to $39.3 million from $43.8 million. Earnings per share fell 6.7%, to $0.28 from $0.30, on fewer shares outstanding. Higher fuel prices were the main reason for the lower earnings. Fuel costs averaged $0.89 a litre in the latest quarter, up 27% from a year earlier....
DOMINO’S PIZZA $32.21 (New York symbol DPZ; TSINetwork Rating: Average)(734-930-3030; www.dominos.com; Shares outstanding: 61.8 million; Market cap: $2.0 billion; No dividends paid) is the world’s largest chain of pizza stores that offer takeout and delivery. The company operates 9,541 stores in the U.S. and over 70 other countries. Franchisees run most of these outlets. In the three months ended September 11, 2011, Domino’s earnings per share jumped 33.3%, to $0.36 from $0.27. Sales rose 8.3%, to $376.3 million from $347.4 million. U.S. same-store sales rose 3.0%. International same-store sales jumped 8.1%. International sales have risen for 71 consecutive quarters, and should keep growing. Domino’s plans to add 300 stores a year outside the U.S., and has lots of room to expand in Europe, Latin America and Asia....
ADOBE SYSTEMS INC., $28.43, Nasdaq symbol ADBE, fell 5% this week after the company announced a new restructuring plan. A big part of this plan is Adobe’s decision to quit making its Flash software for smartphones and other mobile devices (Flash lets web site developers make web pages more interactive by adding animation and video). That’s mainly because Apple Inc. (Nasdaq symbol AAPL) refused to include Flash in its hugely popular iPhone and iPad. Apple feels Flash is slow and uses too much battery power....
DUNDEE REIT, $32.92, symbol D.UN on Toronto, owns and manages 18.9 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.8%. In the three months ended September 30, 2011, Dundee’s revenue rose 75.4%, to $110.9 million from $63.2 million a year earlier. Most of the increase came from properties the trust recently purchased. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 69.4% in the latest quarter, to $36.6 million from $21.6 million. Cash flow per unit rose just 11.5%, to $0.58 from $0.52, due to more units outstanding (the trust issued new units to pay for the acquired properties)....