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
NEWELL RUBBERMAID INC. $17 (www.newellrubbermaid.com) continues to close plants and get out of less profitable businesses. The company uses resins from oil to make most of storage bins, tools and household products, so these moves are helping it offset rising raw-material costs. In the first quarter of 2011, Newell’s earnings per share rose 20.0%, to $0.30 from $0.25 a year earlier. The company also raised its dividend by 60.0%. The new annual rate of $0.32 a share yields 1.9%. Best Buy. SNAP-ON INC. $60 (www.snapon.com) earned $0.96 a share in its latest quarter. That’s up 52.4% from $0.63 a year earlier. Sales rose 11.6%, to $693.7 million from $621.6 million. The company continues to see strong demand for its automotive tools and computerized diagnostic equipment, particularly in fast-growing markets like Asia and Eastern Europe. Buy. WELLS FARGO & CO. $28 (www.wellsfargo.com) has raised its quarterly dividend by 140.0%, to $0.12 a share from $0.05. It now yields 1.7%. However, demand for new loans remains weak. Hold....
HEWLETT-PACKARD CO., $35.98, New York symbol HPQ, reported better-than-expected quarterly results this week. However, the company also warned that its earnings growth could slow in the current quarter, because more consumers are switching to tablet computers like the Apple iPad. That’s hurting sales of laptop and desktop computers. The stock fell 11% in response to the warning. In its 2011 second quarter, which ended April 30, 2011, Hewlett earned $2.7 billion. That’s up 3.2% from $2.6 billion a year earlier. Earnings per share rose 13.8%, to $1.24 from $1.09, on fewer shares outstanding. These figures exclude one-time items, such as costs to integrate recent acquisitions. On this basis, the latest earnings beat the consensus estimate of $1.21 a share....
RUSSEL METALS, $24.55, symbol RUS on Toronto, 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. The company benefited from higher sales volumes and metals prices, and improved profit margins. Russel saw revenue gains from all three of its divisions: The steel distribution division’s revenue rose 40%, due to higher flat-rolled steel prices. Metal services revenue rose 30% on higher sales volumes and steel prices. The energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue rise 14% on higher demand for oil and gas rigs....
MOSAID TECHNOLOGIES INC. $30.90 (Toronto symbol MSD; TSINetwork Rating: Extra Risk) (613-599-9539; www.mosaid.com; Shares outstanding: 11.9 million; Market cap: $367.7 million; Dividend yield: 3.2%) mainly licenses patented semiconductor (computer chip) and telecommunications technology, including patents for technology used in smartphones and laptops. The company complements this business by developing its own memory and other technologies. In total, Mosaid holds about 1,651 patents and has 996 patent applications. The company licenses patents based on its own innovations. It also buys patents, and has secured sub-licensing rights to others. In December 2010, Mosaid ended its legal dispute with IBM. Under the agreement, IBM will receive a five-year license to certain Mosaid patents for use in computer chips with embedded memory. IBM will make a series of fixed payments to Mosaid during the term of the agreement. All other terms of the patent license and settlement agreements are confidential....
CHEMTRADE LOGISTICS INCOME FUND $14.34 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics.com; Units outstanding: 30.7 million; Market cap: $439.8 million; Dvd. yield: 8.4%) has agreed to buy Marsulex (Toronto symbol MLX) for $419.5 million. Marsulex provides environmental services that include controlling air quality and treating and handling industrial byproducts and hazardous waste. The company also makes and sells chemicals....
EUROPEAN GOLDFIELDS $12.14 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 184.8 million; Market cap: $2.2 billion; No dividends paid) holds a 95% interest in Hellas Gold. Aktor S.A., Greece’s largest construction company, owns the other 5% of Hellas, as well as 19.3% of European Goldfields’ shares. Hellas owns three gold and base-metal deposits in Greece: the Stratoni zinc/lead/silver property, the Olympias gold/zinc/lead/silver project and the Skouries copper/gold property. In the three months ended December 31, 2010, European Goldfields’ revenue fell 2.6%, to $18.2 million from $18.7 million a year earlier on lower overall production. (All figures except share price and market cap in U.S. dollars.) The company lost $0.09 a share in the latest quarter, compared to a loss of $0.04 share. It holds cash of $57.1 million, or $0.31 a share, and has no debt....
IAMGOLD $19.50 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 374.8 million; Market cap: $7.3 billion; Dividend yield: 0.4%) reports that its Essakane mine in Burkina Faso in western Africa has not been affected by riots in the southern part of the country. In response to protests by soldiers, President Blaise Compaore fired his government and the heads of the country’s military and police. However, a new government is unlikely to disrupt the Essakane mine. That’s because the government owns 10% of the mine, and gets part of the profits. It also gets tax revenue from Essakane....
ZHONGPIN INC. $15.81 (Nasdaq symbol HOGS; TSINetwork Rating: Extra Risk) (086-10-8286-1788; www.zpfood.com; Shares outstanding: 40.4 million; Market cap: $638.0 million; No dividends paid) is a China-based company that processes meat and other foods. Zhongpin specializes in pork and pork products, as well as fruit and vegetables. It sells 390 meat products, including chilled pork, frozen pork and prepared meats, as well as 35 fruit and vegetable products. Zhongpin focuses on prepared meat, with its higher profit margins, rather than bulk pork. The company has 13 processing plants, and sells its foods through over 3,200 retail stores, including 157 independently owned Zhongpin specialty boutiques, 1,072 Zhongpin retail stores and 2,097 exclusive supermarket counter locations. It also sells its foods to 31 domestic and international fast-food chains, such as McDonald’s and KFC. Other customers include school cafeterias, factory canteens and army posts. In the three months ended March 31, 2011, Zhongpin’s revenue jumped 39.9%, to $285.8 million from $204.3 million a year earlier. Earnings rose 27.1%, to $16.9 million from $13.3 million. Earnings per share rose 23.7%, to $0.47 from $0.38, on more shares outstanding. The company’s $293.1 million of debt is a somewhat high 45.9% of its market cap. However, the company also holds cash of $177.6 million....
CASH STORE FINANCIAL SERVICES INC. $13.79 (Toronto symbol CSF; TSINetwork Rating: Speculative) (780-408-5110; www.csfinancial.ca; Shares outstanding: 17.2 million; Market cap: $237.1 million; Dividend yield: 3.5%) earned $0.14 a share in the three months ended March 31, 2011. That’s up 7.7% from $0.13 a share a year earlier. Revenue rose 15.7%, to $47.2 million from $40.8 million. Cash Store aims to increase its profitability by slowing its expansion, except in the U.K., where its stores’ profit margins are high. It is also offering a wider variety of bank accounts through an alliance with Calgary-based DirectCash Bank. The stock now trades at 12 times Cash Store’s forecast 2011 earnings of $1.15 a share. Earnings could rise to $1.70 a share in 2012. The stock trades at just 8.1 times that estimate....
ADOBE SYSTEMS INC. $34.87 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 504.5 million; Market cap: $17.5 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use Adobe’s software to create print publications and web pages. The company also makes Adobe Flash, which lets web site developers make web pages more interactive by adding animation and video. Computer users can download Adobe’s Flash Player viewer for free....