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.
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Growth Stocks Library Archives
TUPPERWARE BRANDS CORP., $53.77, New York symbol TUP, rose 17% this week after it reported better-than-expected earnings. 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. In 2010, Tupperware earned $225.6 million, or $3.53 a share. That’s up 28.8% from $175.1 million, or $2.75 a share, in 2009. If you exclude unusual items, such as a writedown of goodwill, earnings per share would have risen 20.8%, to $3.72 from $3.08. On this basis, the 2010 earnings beat the consensus estimate of $3.60 a share by 3.3%. Revenue rose 8.1% in 2010, to $2.3 billion from $2.1 billion. The company gets over 85% of its revenue from outside the U.S. If you exclude the impact of foreign-exchange rates, revenue would have risen 6.0% in 2010....
CHESAPEAKE ENERGY CORP., $30.06, symbol CHK on New York, 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 state-owned oil company CNOOC Ltd. (symbol CEO on New York). 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. 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. To put these figures in context, Chesapeake earned $515 million, or $0.81 a share, in the three months ended September 30, 2010....
TUPPERWARE BRANDS CORP., $45.63, New York symbol TUP, is our #1 Stock of the Year for 2011. The company makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. These products account for 70% of its revenue. The remaining 30% comes from its beauty products division, which makes a wide range of cosmetics, bath oils and fragrances. Unlike most consumer product makers, Tupperware mainly prefers to sell its goods through independent dealers instead of stores. The company now has 2.5 million dealers in over 100 countries. These dealers hold “Tupperware parties” in homes, offices and other locations to demonstrate products and take orders for merchandise. Parties also provide an opportunity to recruit new dealers, and make it easier to expand sales in less-developed countries with few retail stores or distribution networks....
ALARMFORCE INDUSTRIES, $9.24, symbol AF on Toronto, has moved up over 23% since the start of this year, and continues to hit all-time highs. AlarmForce reports that it earned $4.8 million, or $0.39 a share, in the year ended October 31, 2010. That’s up 26.5% from $3.8 million, or $0.31 a share, in the previous year. The home-security firm’s revenue rose 8.9%, to $37.2 million from $34.1 million....
We’ve chosen Tupperware as our Stock of the Year for 2011. We first recommended it in the May 2007 issue of Wall Street Stock Forecaster at $26. We felt its direct sales force was an overlooked asset. This independent dealer network keeps the company’s marketing costs low, and is a great way to enter developing markets with few retail stores. Tupperware could also use its network in the future to sell other products besides food containers and cosmetics. The stock has gained 80.8% since we first made it a buy. Even so, we feel it has lots more growth ahead. As well, Tupperware trades at less than 12 times its expected 2011 earnings. That’s a low p/e ratio in light of the company’s well-known brands and continued strong growth potential in emerging markets. TUPPERWARE BRANDS CORP. $47 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 63.2 million; Market cap: $3.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. These products account for 70% of its revenue. The remaining 30% comes from its beauty products division, which makes a wide range of cosmetics, bath oils and fragrances....
Every day from Monday to Friday, we post free investment reports on TSINetwork.ca, our company website. We also email the reports to all our paying subscribers who have given us an email address, and to anyone else who requests them. As a subscriber to Wall Street Stock Forecaster, you’re in a particularly good position to profit from this free service. It’s a great supplement to your monthly Wall Street Stock Forecaster newsletter, at no added cost. Wall Street Stock Forecaster focuses on low-risk U.S. stocks with strong profit and growth potential. Our free TSI Network dailies aim to educate you on best practices in investing. They cover a wide range of investment topics. They explain conservative strategies you can use to build the best portfolio for you, and expand your wealth with less risk. They also zero in on the risks and drawbacks of certain investing practices that you should avoid....
These three chipmakers are leaders in the their niche markets. But they need new products to keep growing. That’s why all three are spending heavily to develop new chips for smartphones and other popular mobile devices. INTEL CORP. $22 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.6 billion; Market cap: $123.2 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading computer-chip maker. For 2010, the company reported record revenue of $43.6 billion. That’s up 24.2% from $35.1 billion in 2009. Earnings jumped 76.1%, to a record $11.6 billion from $6.6 billion in 2009. During the year, Intel paid $1.5 billion to buy back 70 million of its shares. Because of fewer shares outstanding, earnings per share rose 75.2%, to $2.05 from $1.17....
J.P. MORGAN CHASE & CO. $45 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.9 billion; Market cap: $175.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.jpmorganchase.com) earned $15.8 billion in 2010. That’s up 79.7% from $8.8 billion in 2009. Earnings per share rose 75.3%, to $3.98 from $2.27, on more shares outstanding. That’s mainly because loan-loss provisions fell 48.0%, to $16.6 billion from $32.0 billion, as the economy recovers. However, revenue rose just 2.3%, to $102.7 billion from $100.4 billion, due to declines at its credit-card and retail banking operations. Morgan is also spending more to comply with new U.S. banking laws. The higher costs and uncertainty over the new laws will keep Morgan from raising its $0.20-a-share dividend. J.P. Morgan Chase is still a hold.
INTERNATIONAL BUSINESS MACHINES CORP. $161 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $193.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.ibm.com) is the world’s biggest computer company. In the past few years, IBM has shifted its focus from making computers to designing computer systems and managing them on behalf of clients. The company now gets 55% of its revenue and 40% of its earnings from computer services. IBM earned $14.8 billion in 2010. That’s up 10.5% from $13.4 billion in 2009. The company spent $15.4 billion on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 15.1%, to $11.52 from $10.01. Revenue rose 4.3% in 2010, to $99.9 billion from $95.8 billion in 2009. The company signed $22.1 billion of new service contracts in the fourth quarter of 2010. That’s up 18% from a year earlier. On December 31, 2010, IBM’s order backlog was $142 billion, or 1.4 times its annual revenue....
Businesses and consumers are shipping more packages as the economy improves. That’s helping FedEx and Arkansas Best. However, we prefer FedEx because of its larger international focus. It also uses fewer unionized workers. FEDEX CORP. $94 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 315.0 million; Market cap: $29.6 billion; Price-to-sales ratio: 0.8: Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) delivers packages and documents in the U.S. and over 220 countries. Its fleet of 80,000 trucks and 684 aircraft delivers over 8 million packages a day. In FedEx’s 2011 second quarter, which ended November 30, 2010, the company earned $283 million, or $0.89 a share. That’s down 18.0% from $345 million, or $1.10 a share, a year earlier. However, if you exclude one-time charges, earnings per share would have risen 5.5% in the latest quarter, to $1.16. Revenue rose 12.1%, to $9.6 billion from $8.6 billion....