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
We downplay market-timing and stock-price predictions in our advice. Instead, we focus on investment quality. But we adjust our recommendations to reflect our view of current market risk. When risk seems high, we lean toward “hold” instead of “buy”, or “sell” instead of “hold”. In June 2006, we advised selling a dozen former buys. We weren’t trying to pinpoint a market top. We simply felt these stocks had an unattractive balance of risk to potential reward....
REITMANS (CANADA) LTD. $17.14 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514- 384-1140; www.reitmans.com; Shares outstanding: 66.3 million; Market cap: $1.1 billion; Dividend yield: 4.7%) owns 968 women’s clothing stores across Canada. The chain consists of 364 Reitmans, 161 Penningtons, 158 Smart Set, 121 Addition Elle, 75 Thyme Maternity, 67 RW & Co. and 22 Cassis stores. Reitmans continues to actively monitor its regional markets, and open and close stores as necessary. In 2010, it opened 31 new stores and closed 40. In the three months ended January 29, 2011, sales rose slightly, to $269.5 million from $268.1 million a year earlier. Earnings fell 19.1%, to $11.4 million, or $0.17 a share, from $14.1 million, or $0.21 a share....
ALARMFORCE INDUSTRIES $10.50 (Toronto symbol AF: TSINetwork Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $128.5 million; No dividends paid) sells two-way voice alarm systems and monitoring services in Canada and the U.S. In the quarter ended January 31, 2011, the company’s sales rose 10.0%, to $9.9 million from $9.0 million a year earlier. Earnings per share rose 30%, to $0.13 from $0.10. AlarmForce had 116,700 subscribers on January 31, 2011, up 2.8% from 105,300 a year earlier....
IAMGOLD $19.76 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 374.7 million; Market cap: $7.4 billion; No dividends paid) has agreed to sell its 18.9% stake in the Tarkwa and Damang gold mines in Ghana to South African mining giant Gold Fields Ltd. for $667 million in cash. (All figures except share price and market cap in U.S. dollars.) That will leave IAMGold with 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 100% of the Mupane gold mine in Botswana, 90% of its new Essakane gold mine in Burkina Faso, 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America. IAMGold also owns the Niobec niobium mine in Quebec, and has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories....
ENDEAVOUR SILVER CORP. $11.19 (Toronto symbol EDR: TSINetwork Rating: Speculative) (1-877-685-9775; www.edrsilver.com; Shares outstanding: 81.3 million; Market cap: $909.6 million; No dividends paid) operates two silver mines in Mexico, Guanacevi and Guanajuato. Endeavour has just released preliminary results for the three months ended March 31, 2011. In the quarter, its silver production rose 17%, to a record 900,133 ounces. That, plus higher silver prices, pushed up revenue by 95%, to $35.4 million. (All amounts except share price and market cap in U.S. dollars.) The company plans to increase the Guanajuato mine’s processing capacity by 67% this year. That will let Endeavour produce a total of 3.7 million ounces of silver in 2011....
CASH STORE FINANCIAL SERVICES INC. $14.25 (Toronto symbol CSF; TSINetwork Rating: Speculative) (780-408-5110; www.csfinancial.ca; Shares outstanding: 17.2 million; Market cap: $245.0 million; Dividend yield: 3.4%) operates 566 stores under two banners: The Cash Store and Instaloans. Both stores offer consumer payday loans (advances on upcoming paycheques). The company continues to expand overseas: it recently opened four branches in the U.K. That’s on top of its 18.4% interest in The Cash Store Australia Holdings Inc. (Toronto symbol AUC), which operates 61 Cash Store branches in Australia. In its first quarter, which ended December 31, 2010, Cash Store’s revenue rose 16.6% to $49.3 million from $42.3 million a year earlier. However, earnings fell 39.4%, to $0.20 a share from $0.33 a share a year earlier....
ALIMENTATION COUCHE-TARD $25.89 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 183.6 million; Market cap: $4.8 billion; Dividend yield: 0.8%) reports that its earnings per share rose 31.0% in the three months ended January 30, 2011, to $0.38 from $0.29. Revenue rose 13.7%, to $5.6 billion from $4.9 billion. Same-store merchandise sales climbed 3.9% in the U.S., and 0.4% in Canada. U.S. sales make up 77.9% of total sales. The stock trades at 12.6 times the $2.05 a share that the company will likely earn in 2011....
TEMPUR-PEDIC $58.63 (New York symbol TPX; TSINetwork Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 68.6 million; Market cap: $4.0 billion; No dividends paid) is up over 15% since the company raised its 2011 earnings forecast to between $2.80 to $2.95 a share on revenue of $1.31 billion to $1.36 billion. That’s significantly higher than its previous forecast of $2.72 a share on revenue of $1.26 billion. Tempur-Pedic’s long-term prospects are bright. However, the stock trades at a high 20.1 times the midpoint of its new forecast earnings range....
DELPHI ENERGY $2.67 (Toronto symbol DEE; TSI Network Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 116.5 million; Market cap: $311.2 million; No dividends paid) explores for oil and gas in Alberta and B.C. In the three months ended December 31, 2010, Delphi’s combined daily output of natural gas, natural gas liquids and crude oil rose 24.0%, to 8,539 barrels of oil equivalent from 6,888 barrels a year earlier. Delphi’s cash flow rose 26.5%, to $18.0 million from $14.2 million. Its cash flow per share rose 14.3%, to $0.16 from $0.14....
NEW GOLD $10.02 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315- 9715; www.newgold.com; Shares outstanding: 399.1 million; Market cap: $4.0 billion; No dividends paid) has agreed to buy Richfield Ventures (symbol RVC on Toronto) for $550 million in New Gold shares. New Gold holds cash of $491 million, or $1.25 a share, so it could use some of those funds for the purchase. However, its shares are trading near their all-time highs, so the company decided to pay with stock instead. Richfield owns the Blackwater gold project in central British Columbia, about 450 kilometres north of New Gold’s New Afton project. New Afton is forecast to begin production in mid-2012. The Blackwater project holds as much as 3.8 million ounces of gold. The project is accessible by road, and is near a BC Hydro power line....