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
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)....
PROCTER & GAMBLE CO., $63.03, New York symbol PG, is one of the world’s largest makers of household and personal-care products. Some of its top brands include Tide detergent, Crest toothpaste, Head & Shoulders shampoo and Pampers diapers. In April 2011, the company agreed to merge its Pringles potato-chip business with Diamond Foods Inc. (Nasdaq symbol DMND), which makes a variety of snack foods, including potato chips, nuts and popcorn. Pringles accounts for less than 4% of Procter’s revenue and earnings. Under the terms of the deal, Procter will give its investors the option to exchange some or all of their shares for a holding in Diamond. That would give Procter shareholders 57% of the combined company. Diamond investors would own the remaining 43%....
TRILOGY ENERGY CORP., $35.29, symbol TET on Toronto, owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 71% of Trilogy’s production is natural gas. The remaining 29% is oil. In the three months ended September 30, 2011, Trilogy produced an average of 29,035 barrels of oil equivalent per day (including natural gas). That was up 29.3% from 22,462 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 30,000 barrels for all of 2011. Cash flow per share rose 82.1%, to $0.51 from $0.28 a year earlier; the production increase and higher oil prices were the main reasons for the gain....
TUPPERWARE BRANDS CORP., $59.47, New York symbol TUP, makes high-quality household products, including plastic food and beverage containers and educational toys. It also makes wide range of cosmetics, bath oils and fragrances. The company continues to see strong demand in fast-growing economies, such as Asia and Latin America. Tupperware now gets 63% of its sales from these markets. That’s helping it offset slower sales in North America and Europe. In the three months ended October 1, 2011, Tupperware earned $50.3 million. That’s up 23.3% from $40.8 million a year earlier. During the quarter, the company spent $195.7 million on share buybacks. Due to fewer shares outstanding, earnings per share rose 29.7%, to $0.83 from $0.64....
MOSAID TECHNOLOGIES INC., $45.95, symbol MSD on Toronto, has agreed to a friendly, $46.00-a-share, all-cash takeover offer from U.S.-based private-equity firm Sterling Partners. Mosaid mainly licenses computer chip and telecommunications technology, including patents for technology used in smartphones and laptops. The Sterling Partners bid counters last week’s $42-a-share hostile offer from Wi-LAN. Prior to that, Wi-LAN had offered $38 a share....
These two well-established food makers are using different strategies to increase their sales and profits. Heinz continues to expand overseas, while ConAgra prefers to focus on its domestic business. Both companies continue to cut costs and improve their efficiency. Both strategies should help Heinz and ConAgra spur their longterm growth, and give them lots of room to keep raising their dividends. As well, both continue to trade at attractive multiples to earnings....
MCDONALD’S CORP. $92 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $92.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.mcdonalds.com) is a good example of a high-quality stock that continues to thrive despite stock-market weakness. The stock is now around 44.3% above the $63.75 peak that it hit prior to the 2009 market downturn. Its profits have grown thanks in part to new menus items, such as premium coffees and oatmeal. In the third quarter of 2011, sales rose 13.7%, to $7.2 billion from $6.3 billion a year earlier. Same-store sales rose 5.0%. Earnings rose 8.6%, to $1.5 billion from $1.4 billion. Earnings per share rose 12.4%, to $1.45 from $1.29, on fewer shares outstanding....