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
GOOGLE INC., $490.92, Nasdaq symbol GOOG, is buying Motorola Mobility Holdings Inc. (New York symbol MMI). Motorola Mobility makes mobile phones and tablet computers that use Google’s Android operating system software. Google will pay $40.00 a share for Motorola Mobility, or a total of $12.5 billion. Google held cash of $39.1 billion, or $121.15 a share, on June 30, 2011, so it can easily afford this purchase. The company aims to close the transaction by the end of 2011. The purchase price is 63% more than Motorola Mobility’s trading price just prior to the takeover announcement. That’s why Google’s stock fell on the news. As well, investors are concerned that software specialist Google is buying a struggling manufacturing company. Moreover, Google has agreed to pay a $2.5-billion break-up fee to Motorola Mobility if the deal falls through....
NEW GOLD $11.97 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 428.8 million; Market cap: $5.3 billion) has three operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico and the Peak mine in Australia. It also owns 30% of the El Morro copper/gold project in Chile (Goldcorp owns the other 70%) and 100% of the New Afton gold/copper/silver project in B.C. El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Afton holds 2.5 billion pounds of copper, 2.7 million ounces of gold and 8.3 million ounces of silver. In June 2010, New Gold bought Richfield Ventures (symbol RVC on Toronto) for $550 million in New Gold shares. Richfield owns the Blackwater gold property in central B.C., about 450 kilometres north of the New Afton project. Blackwater holds as much as 3.8 million ounces of gold. After it brings New Afton into production, New Gold aims to use the same mine-building personnel to construct a mine at Blackwater....
Today’s market turmoil is making many investors wonder if we face a replay of the 2007-2009 market plunge. However, I strongly doubt that we’ve set off on a new multi-year market decline. More likely, we are in a short-term setback — a “correction.” But nobody can consistently predict market trends. That’s why I continue to advise that you limit aggressive investments to no more than, say, 30% of your portfolio....
REITMANS (CANADA) LTD. $13.90 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 66.3 million; Market cap: $942.9 million; Dividend yield: 5.8%) owns 965 women’s clothing stores across Canada. The chain consists of 363 Reitmans, 160 Penningtons, 157 Smart Set, 122 Addition Elle, 73 Thyme Maternity, 67 RW & Co. and 23 Cassis stores. Reitmans continues to actively monitor its regional markets, and open and close stores as necessary. In the three months ended April 30, 2011, Reitmans’ earnings fell 98.3%, to $624,000, or $0.01 a share, from $37.3 million, or $0.23 a share, a year earlier. Sales were down 7.0%, to $219.3 million from $235.7 million. Same-store sales declined 8.7%....
CHIPOTLE MEXICAN GRILL $309.44 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.8 million; Market cap: $9.9 billion; No dividends paid) reported revenue of $571.6 million in the three months ended June 30, 2011. That’s up 22.4% from $466.8 million a year earlier. The company’s restaurants attracted more customers during the quarter. That pushed up its same-restaurant sales by 10.0%. Earnings per share rose 10.1%, to $1.63 from $1.48, on fewer shares outstanding. That’s mainly because the company’s food costs continue to rise, and it’s paying higher labour costs after it replaced illegal workers in the wake of a U.S. government probe of illegal immigrant hiring....
SHERRITT INTERNATIONAL $5.64 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.2 million; Market cap: $1.6 billion; Dividend yield: 2.7%) is a diversified natural-resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power-generation capacity in Cuba. Sherritt is a major nickel producer, with operations in Cuba and Canada. It is also close to finishing a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast. As well, Sherritt produces oil and gas in Cuba, Spain and Pakistan. It is also Canada’s largest thermal coal producer. In the three months ended June 30, 2011, Sherritt’s revenue rose 23.2%, to $500.6 million from $406.3 million. Excluding one-time items, earnings per share rose 5.3%, to $0.20 from $0.19. Higher nickel sales, as well as higher prices for coal and oil, were the main reasons for the improved results. Cash flow per share rose 13.6%, to $0.50 from $0.44....
ENDEAVOUR SILVER $10.36 (Toronto symbol EDR: TSINetwork Rating: Speculative) (1-877-685-9775; www.edrsilver.com; Shares outstanding: 88.8 million; Market cap: $888.1 million; No dividends paid) operates the Guanacevi and Guanajuato silver/gold mines in Mexico. In the three months ended June 30, 2011, Endeavour’s revenue rose 84.7%, to $36.4 million from $19.7 million a year earlier (all amounts except share prices in U.S. dollars). It earned $0.20 a share in the latest quarter, compared to a loss of $0.05 a share. Higher production and sharply higher gold and silver prices were the main reasons for the gains. Endeavour is nearly finished expanding the Guanajuato mine. That will let it produce 3.7 million ounces of silver in 2011, up 12.1% from 3.3 million ounces in 2010. The company has lots of room to increase the reserves of its two mines. It also has three other properties with exploration potential....
DELPHI ENERGY $2.18 (Toronto symbol DEE; TSI Network Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 119.7 million; Market cap: $250.3 million; No dividends paid) explores for oil and natural gas in Alberta, Saskatchewan and B.C. Gas makes up 70% of Delphi’s daily output; the remaining 30% is oil. In the three months ended June 30, 2011, Delphi’s average daily output rose 10.8%, to a record 8,906 barrels of oil equivalent (including natural gas) from 8,035 barrels a year earlier. The higher production pushed up Delphi’s cash flow by 40.1%, to $17.5 million from $12.5 million. Cash flow per share rose 25%, to $0.15 from $0.12, on more shares outstanding....
BELLATRIX EXPLORATION $4.31 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 97.4 million; Market cap: $459.6 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 62% of its output; the remaining 38% is oil. In the three months ended June 30, 2011, the company’s production fell 2.9%, to 11,783 barrels of oil equivalent per day (including natural gas) from 12,141 barrels. However, the decline was mostly due to wet weather conditions, which held back well development. Bellatrix still plans to increase its 2011 capital spending budget by 70%, to $170 million from $100 million. As well, it has confirmed that it still expects to produce 15,000 barrels a day at the end of this year, up from its earlier forecast of 13,000 barrels....
AASTRA TECHNOLOGIES $15.80 (Toronto symbol AAH; TSINetwork Rating: Speculative) (905-760-4200; www.aastra.com; Shares outstanding: 14.2 million; Market cap: $222.4 million; Dividend yield: 5.1%) develops and markets products and systems for accessing communication networks, including the Internet. Its technology is centered around business phone systems, and includes products that integrate mobile and land-line phones. In the three months ended June 30, 2011, Aastra’s sales rose 2.2%, to $174.1 million from $170.3 million a year earlier. That’s mainly because the euro and Swiss franc rose against the Canadian dollar (the company gets three-quarters of its sales from Europe). Earnings rose 18.3%, to $6.1 million, or $0.43 a share. A year earlier, it earned $5.1 million, or $0.37 a share. The improved earnings are largely the result of lower research and development costs....