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
CHESAPEAKE ENERGY $30.68 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 654.3 million; Market cap: $20.1 billion; Dividend yield: 1.0%) has agreed to sell a third of its Denver-Julesburg and Powder River Basin shale-gas leases in northeast Colorado and southeast Wyoming to Chinese stateowned oil company CNOOC Ltd. CNOOC will pay Chesapeake $670 million for the stake, as well as up to 66.7% of Chesapeake’s share of the development costs, up to an additional $697 million. This is Chesapeake’s second sale to CNOOC. In October 2010, CNOOC bought a third of Chesapeake’s Eagle Ford shale-gas project in Texas for $1.08 billion. It will also pay up to 75% of Chesapeake’s development costs, up to an additional $1.08 billion....
LEON’S FURNITURE LTD. $15.41 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.1 million; Market cap: $1.1 billion; Dividend yield: 2.3%) 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 September 30, 2010, Leon’s sales fell 4.2%, to $179.5 million from $187.4 million a year earlier. Weaker consumer spending hurt sales in the latest quarter. Before one-time items, earnings per share rose 11.4%, to $0.25 from $0.22. Earnings rose mostly due to the stronger Canadian dollar, which cut the cost of furniture the company imports. Leon’s was also able to lower its expenses....
AEROPOSTALE INC. $26.40 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 92.5 million; Market cap: $2.4 billion; No dividends paid), reports that its January sales rose 7% from a year earlier. Same-store sales rose 1%. That beat consensus estimates of a sales decrease. For the four-week period ended January 30, 2011, the company’s total sales (including new stores) were $120.4 million. Aeropostale also successfully sold most of its holiday merchandise, and is now beginning to sell its new spring clothing....
ALARMFORCE INDUSTRIES $9.25 (Toronto symbol AF: TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $113.2 million; No dividends paid) sells two-way voice alarm systems and monitoring services in Canada and the U.S. AlarmForce’s system differs from others because it lets emergency operators verify an alarm by establishing immediate, two-way voice contact with homeowners. It then dispatches security personnel to the client’s home. If intruders are present, the two-way contact can frighten them away. The company has used radio and TV advertising to gain a high profile. It gives its system away in order to add new subscribers. In return, they pay $25 a month for monitoring service, and sign on with a three-year contract. AlarmForce makes and owns each system....
DIAMONDS NORTH RESOURCES $0.17 (Toronto symbol DDN; TSINetwork Rating: Start-up) (1-866-802-2010; www.diamondsnorthresources.com; Shares outstanding: 86.9 million; Market cap: $14.8 million; No dividends paid) has identified 22 areas on its Amaruk property in Nunavut that could contain nickel. Its partner, Minerals and Metals Group, plans to spend $1.65 million to explore the property in 2011. Minerals and Metals is earning a 75% interest in nickel and other base metals on the Amaruk property by spending a total of $6 million and completing a prefeasibility study. It spent $2.35 million on the property in 2010. Diamonds North Resources is still a buy, but for highly aggressive investors only.
WESTJET AIRLINES $15.45 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 139.8 million; Market cap: $2.2 billion; Dividend yield: 1.3%) has just signed an “interline” agreement with Delta Air Lines. Under these agreements, two airlines cooperate on flights and baggage handling. WestJet has similar arrangements with Air France-KLM, China Airways of Taiwan, Hong Kong-based Dragonair and American Airlines. Interline deals can evolve into “code sharing” agreements. These are similar to interline pacts, but also let airlines sell seats and move luggage under their own names onto another carrier’s flights. Last year, WestJet entered into its first code-sharing deal with Cathay Pacific. WestJet, our Stock Pickers Digest “Stock of the Year for 2011,” is still a buy....
AMAZON.COM $186.62 (Nasdaq symbol AMZN; TSINetwork Rating: Extra Risk) (206- 266-1000; www.amazon.com; Shares outstanding: 448.8 million; Market cap: $83.8 billion; No dividends paid) has agreed to pay $320 million for the 58% of privately held Lovefilm International Ltd. that it didn’t already own. Amazon.com took a minority stake in U.K. based Lovefilm after it sold its DVD rental business in the U.K. and Germany to Lovefilm in 2008. Lovefilm rents movies, TV shows and video games by mail. As well, customers with Internet-enabled TV sets and game consoles can view Lovefilm’s content online. Taking full control of Lovefilm will let Amazon compete with rivals like popular Internet movie service Netflix (New York symbol NFLX)....
CRITICALCONTROL SOLUTIONS CORP. $0.78 (Toronto symbol CCZ; TSINetwork Rating: Speculative) (1-877-215-5883; www.criticalcontrol.com; Shares outstanding: 46.6 million; Market cap: $36.4 million; No dividends) 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%). About 45% of Alberta’s provincial-government ministries are clients. The company estimates that 85% of western Canada’s oil and gas firms use its products. CriticalControl has two main divisions:...
BECKMAN COULTER INC., $82.78, New York symbol BEC, has accepted a friendly, $83.50-a-share takeover offer from Danaher Corp. (New York symbol DHR). Beckman shareholders and regulators must still approve the deal, but it should close by June 30, 2011. The stock is trading below Danaher’s offer, which indicates that investors do not expect a higher offer. Beckman Coulter is still a hold....
BAFFINLAND IRON MINES, $1.50, symbol BIM on Toronto, is now over 90% held by joint takeover bidders Luxembourg-based ArcelorMittal, the world’s largest steelmaker, and Nunavut Iron Ore Acquisition. The final offer was for $1.50 a share for all of Baffinland’s shares. When the bid is completed, Arcelor will own 70% of Baffinland, and Nunavut will own 30%. If you have not already done so, you should tender your Baffinland shares to the offer before the February 17, 2011 deadline. Even if you don’t tender, you’ll still receive the full $1.50 a share without paying brokerage commissions. It will just take longer for the money to appear in your brokerage account....