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
ALIMENTATION COUCHE-TARD $26.69 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 242.4 million; Market cap: $6.4 billion; Yield: 0.8%) is the largest convenience-store operator in Canada, with over 2,000 outlets. It also has over 3,500 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at over 68% of its stores. In the three months ended January 31, 2011, Couche-Tard’s earnings per share jumped 31%, to $0.38 from $0.29 a year earlier. (All figures except share price and market cap in U.S. dollars.) Sales rose 13.7%, to $5.6 billion from $4.9 billion. Same-store merchandise sales rose 3.9% in the U.S., and 0.4% in Canada. The company gets 77.9% of its sales from the U.S....
Another one of our buys —Breakwater Resources $7.42, symbol BWR on Toronto — has attracted a takeover bid. Breakwater is now the subject of a friendly, $663-million offer from Belgium-based Nyrstar, a major global producer of zinc and lead, as well as silver, gold and copper. Nyrstar’s offer is for $7.00 a share in cash for all of Breakwater’s shares. In addition, Breakwater shareholders will get a special dividend of $0.50 a share in cash....
ACI WORLDWIDE $29 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 33.9 million; Market cap: $967.4 million; No dividends paid) makes software used to process credit card, debit card, ATM, point-of-sale terminal and interbank payment transactions. ACI has more than 750 clients worldwide. Its customers include more than 100 of the world’s 500 largest banks and seven of the top 12 retailers in the U.S. In March 2011, ACI bought ICD Corp. for an undisclosed amount. ICD has over 140 customers who use its software to authorize credit- and debit-card transactions through over 70 different payment processors, including banks and credit card companies....
RUSSEL METALS $23.27 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 59.8 million; Market cap: $1.4 billion; Dividend yield: 4.7%) earned $33 million, or $0.55 a share, in the three months ended March 31, 2011. That’s up sharply from $9.1 million, or $0.15 a share, a year earlier. Revenue rose 24.8% to $657.7 million from $526.8 million. Russel benefited from higher sales volumes and steel prices, and its profit margins improved. The company pays a quarterly dividend of $0.274 a share, for a high 4.7% yield....
BIRCHCLIFF ENERGY $13.66 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 127.7 million; Market cap: $1.7 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. About 76% of Birchcliff’s production is natural gas. The remaining 24% is oil. In the three months ended March 31, 2011, Birchcliff’s production jumped 70.5%, to 17,742 barrels of oil equivalent per day (including natural gas) from 10,407 barrels a year earlier. Cash flow per share rose 52.9%, to $0.26 from $0.17.The production increase and higher oil prices were the main reasons why Birchcliff’s cash flow rose....
TRILOGY ENERGY CORP. $23.75 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 114.6 million; Market cap: $2.7 billion; Dividend yield: 1.8%) produced an average of 25,362 barrels of oil equivalent per day (including natural gas) in the three months ended March 31, 2011. That was up 9.9% from 23,079 barrels a day a year earlier. However, cash flow per share fell 13.3%, to $0.39 from $0.45 a year earlier. Lower gas prices were the main reason for the decline. Still, the company continues to start up new wells. As a result, its daily production should jump to an average of 30,000 barrels for 2011. The company’s total debt is now $413.2 million. That’s a low 13.9% of its market cap. Trilogy trades at 9.7 times its 2011 forecast cash flow of $2.46 a share. The shares yield 1.8%....
LEON’S FURNITURE LTD. $12.33 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 73.1 million; Market cap: $892.9 million; Dividend yield: 2.9%) has built its chain of over 66 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 March 31, 2011, Leon’s sales fell 6.0% in to $191.6 million from $203.8 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales. Earnings fell 14.0%, 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....
AEROPOSTALE INC. $17.60 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 92.8 million; Market cap: $1.4 billion; No dividends paid) reported 1.2% higher sales in the three months ended April 30, 2011, to $469.2 million from $463.6 million. Even so, earnings per share fell 58.3%, to $0.20 from $0.48. The company’s costs rose sharply in the latest quarter, especially for clothing, due to a sharp rise in cotton prices. Aeropostale also had to offer big discounts to clear spring inventory to position itself for the key back-to-school shopping season. Aeropostale operates in a highly competitive market. That makes it hard for the company to pass on higher costs to its customers. However, its online sales continue to grow rapidly. As well, Aeropostale should continue to grow internationally over the longer term, especially in Asia and Latin America....
CALIAN TECHNOLOGIES $18.67 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.8 million; Market cap: $146.0 million; Dividend yield: 5.4%) 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 that is used for testing, operating and managing satellite and other communication systems. In the three months ended March 31, 2011, Calian’s revenue rose 11.9%, to $59.4 million from $53.1 million a year earlier. Earnings rose 6.5%, to $3.3 million from $3.1 million. Earnings per share rose 5.0%, to $0.42 from $0.40, on more shares outstanding. Calian earned higher profit margins on the business and technology service division’s contracts. That offset weaker earnings at the systems-engineering division due to the strong Canadian dollar....
INTACT FINANCIAL CORPORATION $54.19 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 115.1 million; Market cap: $6.0 billion; Dividend yield: 2.7%) has agreed to buy AXA Canada from Paris-based ASX Group for $2.6 billion. AXA Canada is Canada’s sixth-largest home, auto and commercial insurer. AXA Canada will increase Intact’s premium revenue by about 40%, to $6.5 billion a year. It will also cut Intact’s reliance on personal auto insurance, which now accounts for about 49% of its revenue. As well, the purchase lets Intact access the commercial-insurance market. (AXA Canada now gets 36% of its business from selling commercial insurance.) The purchase will also let Intact expand into Quebec, B.C. and Atlantic Canada....