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
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....
TOROMONT INDUSTRIES LTD. $18.99 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.4 million; Market cap: $1.5 billion; Dividend yield: n/a) has completed its spinoff of ENERFLEX LTD., $13.49 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 76.4 million; Market cap: $1.0 billion; Dividend yield: n/a). Toromont shareholders received shares of the new Toromont and shares of Enerflex. Shareholders will not have to pay capital-gains taxes until they sell their shares. (When they do, they will allocate 56.4% of their adjusted cost base to Toromont and 43.6% to Enerflex). Enerflex sells and installs compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in Canada and around the world....
SYMANTEC CORP. $18.59 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (408-517-8000; www.symantec.com; Shares outstanding: 789.3 million; Market cap: $14.5 billion; No dividends paid) sells Internet security technology, including anti-virus and email filtering software. It also sells software and services for backing up and archiving data. Demand for data-security products is rising, particularly as more businesses switch to cloud computing. That’s where data and software are kept on remote servers. Users access these servers over the Internet. To meet this demand, Symantec plans to spend as much as $1.25 billion to buy other software firms this year, especially those that add to its cloud computing expertise....
DOMINO’S PIZZA $23.67 (New York symbol DPZ; TSINetwork Rating: Average)(734-930-3030; www.dominos.com; Shares outstanding: 60.8 million; Market cap: $1.4 billion; No dividends paid) is the world’s largest chain of pizza stores that offer takeout and delivery. The company operates 9,379 stores in the U.S. and over 70 other countries. Franchisees run most of these outlets. Excluding one-time items, Domino’s earnings per share jumped 20% in the three months ended March 27, 2011, to $0.42 from $0.35. The company paid more for food ingredients, but that was offset by lower costs for labour, rent and interest. Sales rose 2.1%, to $389.2 million from $381.1 million. U.S. same-store sales fell 1.4%. However, international same-store sales gained 8.3%....
SYMANTEC CORP., $18.50, Nasdaq symbol SYMC, sells Internet security technology, including anti-virus email filtering software. The company plans to spend between $750 million and $1.25 billion on acquisitions in its current fiscal year, which ends March 31, 2012. That’s equal to roughly 9% of its $14.3-billion market cap. Symantec is particularly interested in companies that expand its expertise in “cloud computing.” That’s where data and software are kept on remote servers. Users access these servers over the Internet....
DELPHI ENERGY, $2.56, symbol DEE on Toronto, explores for oil and gas in Alberta and B.C. Natural gas makes up 74% of its daily output; the remaining 26% is oil. In the three months ended March 31, 2011, Delphi’s production rose 8.0%, to an average of 8,259 barrels of oil equivalent (including natural gas) per day from 7,647 barrels a year earlier. Delphi’s cash flow rose 2.0% in the quarter, to $15.1 million from $14.8 million. Higher production and oil prices were the main reason for the gain. The company’s operating costs also fell. Delphi sold 3.2 million shares to raise $9.0 million in the quarter. Due to more shares outstanding, cash flow per share fell 13.3%, to $0.13 a share from $0.15....
APPLE INC., $343.44, Nasdaq symbol AAPL, rose 3% this week after the company said it will soon launch a new online service called iCloud. This service will let users store their music, videos and other files in an “online locker” that they can access over the Internet using Apple devices, including iPod music players, iPhone smartphones, iPad tablet computers, and Mac desktop and laptop computers. Apple will probably charge a fee for iCloud, even though other companies offer similar online storage services for free. However, the company has a loyal customer base, and users will be able to transfer music and movies they buy from Apple’s iTunes online store to the iCloud. These strengths should help the company attract enough customers to make this service profitable....