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. $11.94 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 69.9 million; Market cap: $834.6 million; Dividend yield: 3.0%) has built its chain of over 72 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising. In the three months ended June 30, 2011, Leon’s sales fell 3.0%, to $163.9 million from $169.0 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales. Earnings fell 9.4%, to $9.8 million, or $0.14 a share, from $11.4 million, or $0.16 a share. The slower sales were the main reason for the earnings decline. The company also spent more on advertising....
BIRCHCLIFF ENERGY $14.10 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 126.5 million; Market cap: $1.8 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. Birchcliff has hired advisors to help sell the company after it received expressions of interest from a number of parties. These potential buyers could include Asian investors. Right now, Birchcliff’s management owns 5% of the company. Prominent Toronto investor Seymour Schulich is Birchcliff’s largest shareholder, with a 26% interest....
CALIAN TECHNOLOGIES $18.91 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.7 million; Market cap: $145.6 million; Dividend yield: 5.3%) operates in two areas: the business and technology services division (which supplies 74% of Calian’s revenue) provides engineers, health-care workers and other skilled professionals to clients on a contract basis. The systems engineering division (26% of revenue) sells hardware and software used for testing, operating and managing satellite and other communication systems. In the three months ended June 30, 2011, Calian’s revenue rose 1.7%, to $58.5 million from $57.6 million a year earlier. Earnings fell 10.2%, to $3.5 million from $3.8 million. Earnings per share fell 8.2%, to $0.45 from $0.49, on fewer shares outstanding. Calian earned high profit margins on the business and technology service division’s contracts. However, that wasn’t enough to offset weaker earnings at the systems engineering division, due to the strong Canadian dollar....
WESTJET AIRLINES $12.60 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 139.4 million; Market cap: $1.8 billion; No dividends paid) has just signed an interline agreement with Dubai’s Emirates airline. Under these agreements, two airlines cooperate on flights and baggage handling. WestJet has similar arrangements with Air France, China Airways of Taiwan, China Eastern, Alitalia, Korean Air, Australia’s Qantas Airlines, Japan Airlines, Hong Kong-based Dragonair and El Al Israel. Interline deals can become code-sharing agreements. These are similar to interline pacts, but they also let airlines sell seats and move luggage under their own names onto another carrier’s flights. WestJet has codesharing deals with Cathay Pacific, KLM and American Airlines....
ACI WORLDWIDE $28.35 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 34.3 million; Market cap: $972.4 million; No dividends paid) makes software that is used to process transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. ACI has just bought S1 Corp. for $540 million in cash and stock. S1 sells transaction software for banks, credit unions, retailers and other processors. The company has over 3,000 clients worldwide. In the three months ended June 30, 2011, ACI’s revenue rose 22.7%, to $113.4 million from $92.4 million a year earlier. The company earned $9.8 million, or $0.29 a share, compared to a loss of $150,000, or nil per share. ACI holds cash of $170.8 million, or $4.98 a share....
AMAZON.COM $231.53 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 460.0 million; Market cap: $106.5 billion; No dividends paid) has unveiled new models of its Kindle electronic-book reader, including the Kindle Fire, the company’s first tablet computer. The Kindle Fire features a seven-inch, full colour touch-screen display. It is smaller and has less memory than the top-selling Apple iPad, but it will cost just $199 U.S., compared to $499 U.S. for an iPad. The tablet computer market is fiercely competitive. However, the Kindle Fire’s lower price should help it compete with the iPad and give it an advantage over non-Apple tablets. As well, users will be able to easily buy and download e-books, music, movies and games from Amazon’s web site. The company will also let Kindle Fire users keep their content on its cloud storage service at no extra cost....
TIM HORTONS $49.52 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 161.4 million; Market cap: $8.0 billion; Dividend yield: 1.4%) operates 3,189 coffee-and-donut shops in Canada and 622 in the U.S. Franchisees operate 99.4% of its stores. Tim Hortons earned $95.5 million in the three months ended July 3, 2011. That’s up 1.5% from $94.1 million a year earlier. The company spent roughly $206 million on share buybacks in the quarter. Due to fewer shares outstanding, earnings per share rose 7.4%, to $0.58 from $0.54. If you exclude a severance payment to its former chief executive officer, the company would have earned $0.61 a share in the latest quarter....
EUROPEAN GOLDFIELDS $9.97 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 183.8 million; Market cap: $1.8 billion; No dividends paid) has attracted a number of investments from Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines. Qatar Holdings has given European Goldfields a seven-year, $600 million U.S. loan. In addition, Qatar Holdings is buying a 9.9% stake in European Goldfields from Greek building firm Aktor Construction. European Goldfields will also issue warrants to Qatar Holdings that give it the option to increase its stake to about 29%. If it exercises these warrants, European Goldfields would get an additional $366.8 million....
MOSAID TECHNOLOGIES INC. $42.27 (Toronto symbol MSD; TSINetwork Rating: Extra Risk) (613-599-9539; www.mosaid.com; Shares outstanding: 12.1 million; Market cap: $511.5 million; Dividend yield: 2.4%) received a hostile, $38.00-a-share, all-cash takeover offer from Wi-LAN Inc. (symbol WIN on Toronto) on August 17, 2011. Mosaid Technologies mainly licenses computer chip and telecommunications technology, including patents for technology used in smartphones and laptops. Wi-LAN has now raised its offer to $42 a share. This new bid will expire on November 1, 2011....
FORTRESS PAPER $44.49 (Toronto symbol FTP; TSINetwork Rating: Extra Risk) (1-888-820-3888; www.fortresspaper.com; Shares outstanding: 15.1 million; Market cap: $671.8 million; No dividends paid) bought an idled pulp plant in Thurso, Quebec, for $3 million in April 2010. It then restarted pulp production at this plant. Meanwhile, Fortress has been converting the plant to produce a type of cellulose called dissolving pulp, which is mainly used in viscose fibre, or rayon. The conversion should be fully operational shortly. Dissolving pulp prices remain high, and Fortress has already signed contracts with a number of companies in China. Fortress is also building a 25-megawatt biomass-fuelled cogeneration facility to supply electricity for the Thurso plant....