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
Every day from Monday to Friday, we post free investment reports on our website, TSINetwork. ca. We also email the reports to all our paying subscribers, and to anyone else who requests them. As a subscriber to Stock Pickers Digest, you’re in a particularly good position to profit from this free service. Our TSI Network dailies aim to educate you on best practices in investing. They cover a wide range of both aggressive and conservative investment topics. They also zero in on the risks and drawbacks of certain investing practices that you should avoid....
TRILOGY ENERGY CORP. $14.29 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Shares outstanding: 84.2 million; Market cap: $1.2 billion; Dividend yield: 2.9%) owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 81% of Trilogy’s production is natural gas. The remaining 19% is oil. In the three months ended September 30, 2010, Trilogy produced 22,462 barrels of oil equivalent per day (this figure includes natural gas). That was down 6.7% from 24,087 barrels a year earlier....
SHAMARAN PETROLEUM $1.30 (Toronto symbol SNM; TSINetwork Rating: Speculative) (416-364-8820; www.shamaranpetroleum.com; Shares outstanding: 499.5 million; Market cap: $649.4 million) reports positive oil showings at various depths from the Atrush-1 exploration well in Kurdistan. ShaMaran and its partners now plan further drilling to confirm the results. ShaMaran acquired an interest in the Atrush exploration block in September 2010. General Exploration Partners (GEP) owns 80% of the Atrush Block. The Kurdistan Regional Government owns the remaining 20%. Under the deal, ShaMaran acquired a 33.5% stake in GEP for an initial cash payment of $24.1 million U.S., 12.5 million ShaMaran shares and an obligation to commit $15.9 million U.S. to fund exploration....
CHIPOTLE MEXICAN GRILL $229.33 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 30.9 million; Market cap: $7.1 billion; No dividends paid) is a Denver-based Mexican-restaurant chain. Founded in 1993, Chipotle (pronounced chi-POATlay) charges slightly higher prices than fast-food chains, but offers higher-quality food, including naturally raised meat, and better decor and service. Chipotle has 1,023 restaurants, including its first outside of the U.S., in Toronto. In April 2010, Chipotle opened a restaurant in London, England....
ZHONGPIN $19.46 (Nasdaq symbol HOGS; TSINetwork Rating: Extra Risk) (086-10-8286-1788; www.zpfood.com; Shares outstanding: 34.7 million; Market cap: $675.8 million; No dividends paid) plans to build a new, state-of-the-art plant that will let the company produce 100,000 tonnes more prepared pork products, including Chinese-style, western-style, half-cooked and easy-to-cook pork. The new plant will let Zhongpin better meet rising demand in central China. The plant will also meet ever-tightening Chinese government meat-processing standards. Operating almost exclusively in China entails political and currency risk. However, China’s currency is more likely to rise than fall. Meanwhile, demand for higher protein foods, such as pork, continues to rise with the prosperity of China’s middle class....
TEMPUR-PEDIC $40.65 (New York symbol TPX; TSINetwork Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 68.2 million; Market cap: $2.8 billion; No dividends paid) makes and distributes Swedish mattresses and neck pillows made from its Tempur material. The material conforms to the body to provide support and help alleviate pressure points. Tempur-Pedic sells its products in over 80 countries. In the three months ended September 30, 2010, Tempur-Pedic’s earnings jumped 72.1%, to $44.2 million, from $25.7 million a year earlier. The company continues to buy back shares. During the first three quarters of 2010, it bought 8.5 million of its common shares at an average price of $29.41, for a total cost of $250 million. Due to fewer shares outstanding, earnings per share rose 88.2% in the latest quarter, to $0.64 from $0.34....
FIRSTSERVICE CORP. $30.20 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.9 million; Market cap: $873.6 million; No dividends paid) has bought a majority interest in Crosby Property Management, a leading residential property management company in B.C. Crosby manages more than 250 low-, mid and high-rise residential and commercial properties. With $15 million in annual revenue, Crosby is small compared to FirstService, which has $2 billion of annual revenue. However, the purchase gives FirstService a market-leading presence in B.C. FirstService is still a buy.
Long-time readers know that we are constantly reevaluating our stock picks. Below are three stocks we think you should sell. Two of these companies face problems that will weigh on them for the foreseeable future. The third is a thin-trading stock that has moved up recently after moving sideways since 2008. Its growth prospects now appear limited. KINGSWAY FINANCIAL SERVICES $1.31 (Toronto symbol KFS; TSINetwork Rating: Speculative) (905-629-7888; www.kingsway-financial.com; Shares outstanding: 52.1 million; Market cap: $68.2 million; No dividends paid) mainly provides insurance for drivers in the U.S. that standard auto insurers have rejected. This could be because of their driving record, vehicle type, place of residence, age or credit rating....
CYBERPLEX $0.21 (Toronto symbol CX; TSINetwork Rating: Speculative) (416-597-8889; www.cyberplex.com; Shares outstanding: 133.3 million; Market cap: 27.3 million) sells a service that links advertisers’ campaigns with its affiliates. The company says that its average revenue per click fell in December, and the strategies it usually uses to deal with such drops were not as effective. As a result, Cyberplex’s web traffic remains much lower than usual. That means its revenue will be at the lower end of the $75 million to $85 million range it forecast after it released its 2010 third-quarter results. Cyberplex operates in a complex and ever changing market. The company hopes to restore its revenue, but that’s now far from certain....
ZARGON OIL & GAS $21.61 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 23.8 million; Market cap: $513.5 million; Dividend yield: 7.8%) is the new name of Zargon Energy Trust following its conversion to a dividend-paying corporation on January 7, 2011. The move is in response to Ottawa’s new tax on income trust distributions, which came into effect on January 1, 2011. Zargon must now pay corporate taxes. As a result, it plans to lower its monthly dividend by 22.2%, to $0.14 a share, with the February 2011 payment. That will give the stock a 7.8% yield. The company produces oil and natural gas in Alberta, Manitoba, Saskatchewan and North Dakota. Its output is weighted 58% to oil and 42% to natural gas. This diversification helps cut its risk....