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
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....
EUROPEAN GOLDFIELDS, $13.65, symbol EGU on Toronto, jumped 36.5% this week. That’s because Greece’s Ministry of Environment, Energy and Climate Change said it will grant the company a 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. European Goldfields has faced delays in getting the appropriate permits. It submitted an environmental-impact study last year, but the Greek government delayed approval of the study. That was partly due to local opposition, but also to make sure the project would not pollute groundwater deposits in the area....
PLEASE NOTE: Our next Hotline will go out on Friday, July 8, 2011. STANLEY BLACK & DECKER INC., $72.05, New York symbol SWK, has agreed to buy Sweden’s Niscayah Group AB. Niscayah designs and installs security systems, including surveillance cameras and fire alarms, for a wide variety of businesses. This is a big purchase for Stanley, which will pay $1.2 billion for Niscayah, including assumed debt. That’s 94% more than the $619.3 million, or $4.12 a share, that Stanley earned in 2010. The company holds cash of $1.9 billion, so it can easily pay for this purchase without having to sell shares, which would dilute the ownership of existing shareholders....
PLEASE NOTE: Our next Hotline will go out on Friday, July 8, 2011. IAMGOLD CORP., $18.14, symbol IMG on Toronto, has now sold its 18.9% stake in the Tarkwa and Damang gold mines in Ghana to South African mining giant Gold Fields Ltd. IAMGold received cash of $667 million U.S. for these interests. The company now holds over $1.1 billion U.S. in cash and gold bullion. That gives it lots of options to spur its share price: it could raise exploration spending; make an acquisition; pay dividends; or buy back shares....
PLEASE NOTE: Our next Hotline will go out on Thursday, June 30, 2011. FEDEX CORP., $91.78, New York symbol FDX, delivers packages and documents in the U.S. and over 220 countries and territories. For the fiscal year ended May 31, 2011, FedEx’s revenue rose 13.2%, to $39.3 billion from $34.7 billion in 2010. The company earned $1.45 billion, or $4.57 a share, up 22.6% from $1.2 billion, or $3.76 a share. If you exclude unusual items, FedEx earned $4.90 a share in 2011. That matched the consensus estimate....
PLEASE NOTE: Our next Hotline will go out on Thursday, June 30, 2011. WESTJET AIRLINES, $14.69, symbol WJA on Toronto, is now in the process of upgrading its “interline” agreement with Delta Air Lines to a full “code sharing” arrangement. Delta is the second-busiest U.S. airline carrier by traffic, behind United Airlines. WestJet signed an interline agreement with Delta in February 2011. Under these agreements, two airlines co-operate on flights and baggage handling. WestJet has similar deals with Air France-KLM, China Airways of Taiwan, and Hong Kong-based Dragonair. As well, the company recently signed interline agreements with Australia’s Qantas Airlines and Japan Airlines Corp....
It pays to be skeptical of companies that mainly grow through acquisitions. That’s because many purchases come with hidden problems that can hurt the buyer’s future earnings. The buyer can also weaken its balance sheet with excessive debt if it borrows heavily to fund an acquisition. However, we like AT&T’s recent purchase of rival U.S. wireless carrier T-Mobile. The company’s extra wireless frequencies (or “spectrum”) are a hidden asset that will help AT&T handle rising demand for wireless data as more people access the Internet with mobile devices, like smartphones. As well, AT&T has a long history of integrating new businesses. That cuts the risk of this purchase. AT&T INC. $31 (New York symbol T; Conservative Growth & Income Portfolios, Utilities sector; Shares outstanding: 5.9 billion; Market cap: $182.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) gets 50% of its revenue from its wireless division, which has 97.5 million customers in the U.S. The wireline division, which supplies 48% of AT&T’s revenue, sells traditional landline phone services to 40.6 million customers in 22 states. It gets the remaining 2% by selling ads in phone directories....