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.
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Growth Stocks Library Archives
INTUITIVE SURGICAL $397.47 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 40.3 million; Market cap: $14.7 billion; No dividends paid) makes the “da Vinci,” a computerized surgical system. Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This process is safer and far less invasive than regular surgery, and helps cut a patient’s recovery time and post-operative discomfort. It also reduces scarring and the risk of infection. In the three months ended June 30, 2011, Intuitive earned $117.4 million, or $2.99 a share. That’s up 32.4% from $88.7 million, or $2.26 a share, a year earlier. Revenue rose 21.4%, to $425.7 million from $350.7 million....
ADOBE SYSTEMS INC. $29.16 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 525.8 million; Market cap: $14.5 billion; No dividends paid) reported sharply higher earnings in its latest quarter. In the three months ended June 3, 2011, Adobe’s earnings rose 60.7%, to $0.45 from $0.28 a year earlier. Revenue rose 8.5%, to $1.0 billion from $943.0 million. The company recently upgraded its Creative Suite package of photo-editing and desktop-publishing programs. However, Adobe is seeing weaker demand in Europe. Adobe holds cash of $2.6 billion, or about $5.20 a share. The company’s long-term debt of $1.5 billion represents a low 10.3% of its market cap....
DUNDEE REIT $32.85 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 38.9 million; Market cap: $2.0 billion; Dividend yield: 6.7%) owns and manages 14.7 million square feet of office, industrial and retail space. The trust has a high 96.1% occupancy rate. In the three months ended March 31, 2011, Dundee’s revenue rose 57.4%, to $91.0 million from $57.8 million a year earlier. That’s mainly because the trust bought about $475 million of new properties in the quarter, mostly in Ontario. Dundee’s cash flow rose 72.9% in the quarter, to $28.8 million from $16.6 million. Cash flow per unit rose just 1.9%, to $0.55 from $0.54, on more units outstanding. (The trust issued units to pay for the acquired properties.)...
NISSAN MOTOR CO. ADR $21.26 (Nasdaq symbol NSANY; SI Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.0 billion; Market cap: $43.4 billion; No dividends paid) expects to report an operating profit of 460 billion yen ($5.7 billion U.S.) in the year ended March 31, 2011. That’s down 14% from a year earlier. Even so, that’s a strong performance in light of the slowdowns and disruptions that the company experienced in the wake of the Japanese earthquake and tsunami. As well, Nissan expects its worldwide production to rise 9.9% this year, to 4.6 million vehicles. Rivals Toyota and Honda are both expecting production declines....
ALIMENTATION COUCHE-TARD $29.73 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 242.4 million; Market cap: $7.2 billion; Yield: 0.8%) reports that its earnings (excluding one-time items) rose 19.0% in the three months ended April 24, 2011, to $64.0 million, or $0.35 a share. A year earlier, it earned $53.8 million, or $0.30 a share (all figures except share prices in U.S. dollars). Revenue rose 20.9%, to $4.8 billion from $4.0 billion. Same-store sales climbed 3.6% in the U.S., but fell 2.1% in Canada. The company gets 79.3% of its sales from the U.S. Motorists could cut their fuel use in response to sharply higher gasoline prices. That would hurt Couche-Tard’s sales. However, it’s introducing new products with higher profit margins, including new drinks and improved fresh and take-out food....
CHESAPEAKE ENERGY $33.72 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 706.0 million; Market cap: $21.7 billion; Dividend yield: 1.0%) will invest up to $1 billion over the next 10 years in companies that are developing ways to replace gasoline and diesel with cleaner-burning natural gas. Chesapeake will make these investments through a new fund, Chesapeake NG Ventures Corp. It will start by investing $305 million in two firms: First, it will invest $155 million in Sundrop Fuels Inc., a company that plans to build a plant that makes transportation fuel from plant fibre and agricultural waste....
CRITICALCONTROL SOLUTIONS CORP. $0.54 (Toronto symbol CCZ; TSINetwork Rating: Speculative) (1-877-215-5883; www.criticalcontrol.com; Shares outstanding: 45.8 million; Market cap: $28.4 million; No dividends paid.) sells software and services that help businesses better manage, access and store their information. CriticalControl gets about 60% of its revenue from clients in the oil and gas industry, followed by government (20%), health care (10%) and finance and retail (10%). In the three months ended March 31, 2011, Critical-Control’s revenue fell 6.2%, to $12.2 million from $13.0 million a year earlier. Revenue at the Service Bureau Operations division rose 10%, while revenue at the Canadian Energy Services division was flat. Revenue at the U.S. Energy Services division fell 28.0%....
BHP BILLITON LTD. ADRs, $91.08, New York symbol BHP, is buying Petrohawk Energy Corp. (New York symbol HK), which produces oil and natural gas from properties in Texas and Louisiana. The $12.1-billion purchase price is equal to 5% of BHP’s $242.6-billion market cap. The company held cash of $16.6 billion at December 31, 2010, so it can comfortably afford this acquisition. BHP expects to close the deal by September 30, 2011. BHP is mostly a mining company, but is expanding its oil and gas operations. This purchase will give BHP control of roughly one million acres in the large Haynesville, Eagle Ford and Permian Basin shale-gas discoveries. (Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas.)...
CHESAPEAKE ENERGY CORP., $32.96, symbol CHK on New York, will invest up to $1 billion over the next ten years in companies that are developing ways to replace gasoline and diesel with cleaner-burning natural gas. Chesapeake is the second-largest natural-gas producer in the U.S., after Exxon Mobil. The company will make these investments through a new fund, Chesapeake NG Ventures Corp. It will start by investing $305 million in two firms: First, it will invest $155 million in Sundrop Fuels Inc. That will give it a 50% interest in the company. Sundrop plans to build a plant that makes transportation fuel from plant fibre and agricultural waste. This plant, which is scheduled to start up in 2013, will be able to produce 40 million gallons of fuel a year....
TUPPERWARE BRANDS CORP., $71.45, New York symbol TUP, has gained 174.8% since we first recommended it in the May 2007 Wall Street Stock Forecaster at $26. It’s also up 56.6% since we named it as our “#1 Stock of the Year” for 2011 in the January 28, 2011 Hotline. The company makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. It also makes wide range of cosmetics, bath oils and fragrances. Tupperware sells its products through independent dealers and over the Internet, instead of retail stores. This keeps its distribution costs down, and gives it greater flexibility to handle rising prices for plastic resins made from petroleum. As well, Tupperware continues to see strong growth in emerging markets like Brazil, Turkey and Indonesia....