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
MART RESOURCES $0.59 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 340.2 million; Market cap: $188.2 million; No dividends paid) trades at a low multiple to cash flow. That reflects investor concern about operating in politically unstable Nigeria. Right now, Mart is producing oil from its 50%-held Umusadege field in southern Nigeria’s Niger Delta region. This field is about 150 kilometres northeast of the major port city of Warri. The Niger Delta region accounts for over 90% of the company’s proven reserves. This area is the scene of many long-standing ethnic conflicts, including a failed breakaway attempt by the self-proclaimed Republic of Biafra between 1967 and 1970. The Nigerian army is still active in the Niger Delta, where it suppresses attacks on oilfields and pipelines, as well as hostage-taking by militant groups and criminal gangs....
EUROPEAN GOLDFIELDS $12.57 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 182.8 million; Market cap: $2.3 billion; No dividends paid) got a big boost recently when Greece’s Ministry of Environment, Energy and Climate Change said it will grant the company a long-delayed permit to build new mines on two of its mineral deposits in Greece. The Olympias mine could start up later this year, followed by a new mine at Skouries in 2012. The two mines should boost the company’s gold output from 70,000 ounces per year to over 420,000 ounces. The new mines could also make it a takeover target. European Goldfields is a buy.
INTACT FINANCIAL CORP. $55.54 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 115.1 million; Market cap: $6.1 billion; Dividend yield: 2.6%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. Intact has two product lines: its personal products, which contribute 70% of its premiums, include automobile and property insurance that Intact sells to individuals. Commercial products provide the remaining 30% of premiums, and include auto, property, liability, surety and specialty coverage that Intact mainly sells to small- and medium-sized businesses. In the quarter ended March 31, 2011, Intact earned $1.42 a share, up 19.3% from $1.19 a year earlier. Sales rose 6.7%, to $1.23 billion from $1.15 billion....
WESTJET AIRLINES $14.65 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 145.1 million; Market cap: $2.0 billion; Dividend yield: 1.4%) is upgrading its “interline” agreement with Delta Air Lines to a full “code sharing” arrangement. WestJet signed an interline agreement with Delta in February 2011. Under these agreements, airlines co-operate on flights and baggage handling. But under a “code sharing” agreement, WestJet can also sell seats and move luggage onto Delta flights. That will let it serve more cities without having to add flights of its own. Code-sharing agreements are especially valuable for attracting business passengers. That’s because these agreements let customers seamlessly connect between flights and gain extra frequent-flyer points....
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....