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
CAMECO CORP., $27.56, symbol CCO on Toronto, dropped to as low as $26.61 this week after the German government announced that it plans to shut down all of its nuclear reactors by 2022. The stock has since recovered most of the loss. Germany’s decision is the result of anti-nuclear sentiment in the wake of the Japanese earthquake and tsunami, which damaged the Fukushima nuclear plant and allowed radiation to escape. As well, German Chancellor Angela Merkel’s centre-right Christian Democrats lost seats to the Green Party in recent state elections. Right now, nuclear reactors supply about a quarter of Germany’s electricity. It’s doubtful that Merkel can replace that production with wind and solar. The country is more likely to import more electricity from France, which relies on nuclear power for about 80% of its electricity generation....
SONY CORP. ADRs, $26.85, New York symbol SNE, reported higher losses for its latest fiscal year, mainly due to one-time charges related to the March 2011 earthquake and tsunami in Japan. In its 2011 fiscal year, which ended March 31, 2011, Sony lost $3.1 billion, or $3.12 per ADR (each American Depositary Receipt represents one common share). In fiscal 2010, it lost $439 million, or $0.44 per ADR. Revenue rose 11.5%, to $86.5 billion from $77.6 billion. The earthquake disrupted the operations of some of Sony’s suppliers in Japan. That continues to cause parts shortages at Sony’s Japanese plants. Even so, the company expects to sell 27 million TV sets in the current fiscal year, up 20.5% from 22.4 million in fiscal 2011. However, the TV division will probably keep losing money....
AEROPOSTALE INC., $19.08, symbol ARO on New York, is a mall-based retailer of casual clothing and accessories. The company has 974 Aeropostale stores in the U.S., Canada and Puerto Rico. It mainly sells its clothing to 14-to-17-year-olds. Aeropostale’s 57 “P.S. from Aeropostale” stores in the U.S. are aimed at seven-to-12-year-old elementary-school children. In the three months ended April 30, 2011, Aeropostale’s sales rose 1.2% to $469.2 million from $463.6 million. Same-store sales declined 7%, compared with an increase of 8% a year earlier. Sales from the company’s e-commerce business jumped 18.5%, to $28.2 million from $23.8 million. Despite the higher sales, Aeropostale’s earnings dropped 63.9%, to $16.4 million from $45.4 million a year earlier. During the quarter, the company bought back 4.2 million of its shares for $100.1 million. Due to fewer shares outstanding, earnings per share fell 58.3%, to $0.20 from $0.48....
In an effort to dampen speculation, the CME Group, which owns the NYMEX futures exchange, recently raised the minimum amount of money traders must invest when buying crude-oil futures contracts. Even so, we feel oil prices will remain volatile in light of ongoing political unrest in the Middle East.
To lower your risk, we continue to advise that you stick with well-established oil producers like Chevron....
To lower your risk, we continue to advise that you stick with well-established oil producers like Chevron....
It appears we worried some of our readers a few weeks ago, when we advised selling a number of our former buys and dropped them from our recommendations. Several readers asked if this was due to a change in our views about the market. In fact, we chose those stocks as sells due to our low expectations for the stocks themselves, not for the market as a whole. But stock-market trends did figure in our timing. After the sharp upturn in the market that began last summer, it’s only natural to brace for a period of stagnation or weakness. Our sells were all stocks that had been mediocre performers recently. In a bad market, they faced above-average risk of a sizeable drop....
Bank stocks tend to account for the bulk of most investors’ Finance-sector holdings. Banks are writing down fewer loans as the economy recovers and borrowers pay back their loans, but demand for new mortgages and other loans remains weak. To diversify your Finance holdings, we recommend investing in non-bank financial-services companies, such as these six. We have a high opinion of all of them, but not all are buys right now. VISA INC. $78 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 830.1 million; Market cap: $64.7 billion; Price-to-sales ratio: 7.5; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic-payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands....
GENERAL MILLS INC. $39 (New York symbol GIS, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 638.4 million; Market cap: $24.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.generalmills.com) is buying 51% of the private company that makes Yoplait yogurt, as well as 50% of the company that holds the licensing rights to the brand....
APACHE CORP. $124 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 383.4 million; Market cap: $47.5 billion; Price-to-sales ratio: 3.5; Dividend yield: 0.5%; TSINetwork Rating: Average; www.apachecorp.com) plans to spend $8.1 billion to develop its oil and natural-gas projects in 2011, up 8.3% from its earlier estimate of $7.5 billion....
NVIDIA CORP. $18 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 595.1 million; Market cap: $10.7 billion; Price-to-sales ratio: 3.1; No dividends paid; TSINetwork Rating: Average; www.nvidia.com) is buying privately held Icera, which designs energy-efficient chips for cellphones....
The March 2011 earthquake and tsunami severely disrupted the operations of these two Japanese carmakers. Honda appears to be in a better position to recover from the disaster than Toyota.
TOYOTA MOTOR CO. ADRs $82 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $139.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.3%; TSINetwork Rating: Above Average; www.toyota.com) makes 40% of its vehicles in Japan....
TOYOTA MOTOR CO. ADRs $82 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $139.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.3%; TSINetwork Rating: Above Average; www.toyota.com) makes 40% of its vehicles in Japan....