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
C.R. BARD INC. $91 (www.crbard.com) aims to improve its efficiency by closing plants and cutting jobs. These moves will cost the medical-device maker $20 million. To put this in context, Bard earned $135.9 million, or $1.43 a share, in its latest quarter. As well, the company plans to borrow $750 million and use the cash to buy back shares. That’s equal to 9% of its market cap. Buy. GENERAL ELECTRIC CO. $17 (www.ge.com) has raised its quarterly dividend by 16.7%, to $0.14 a share from $0.12. The new annual rate of $0.56 yields 3.3%. Buy. MOODY’S CORP. $27 (www.moodys.com) paid $151.4 million for CSI Global Education Inc., the exclusive provider of the Canadian Securities Course, which Canadian stockbrokers must complete before they receive their licenses. The price is equal to 1.1 times the $136.0 million, or $0.58 a share, that Moody’s earned in the three months ended September 30, 2010. Buy.
CAMECO CORP. $38.25 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 393.5 million; Market cap: $15.0 billion; Div. yield 0.7%) is the world’s largest uranium producer. It supplies over 18% of global production, and has large, high-grade reserves, low-cost operations, significant market share and a number of uranium mines. The company also holds a 31.6% interest in Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear-power complex. Uranium traded as low as $40 U.S. a pound in March 2010. Recently, it rose as high as $61, largely on news that China plans to raise its nuclear-power generation targets by 60%. Cameco recently signed two contracts with Chinese nuclear utilities: it will deliver 23 million pounds of uranium to China National Nuclear Corp., China’s largest nuclear-power producer, by 2020. It will also deliver 29 million pounds of uranium oxide to fast-growing nuclear producer China Guangdong Nuclear Power through 2025....
Gold is trading near all-time highs — and could go higher. That’s because many investors fear that artificially low interest rates and high government budget deficits will spur inflation. We still think the best way for aggressive investors to profit in gold is through junior miners that are raising production by adding new mines. Here are four examples: New Gold $9.33, Toronto symbol NGD, operates three mines, with a fourth expected in 2012. Buy....
SYMANTEC CORP. $17.15 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 789.3 million; Market cap: $13.5 billion; No dividends paid) makes software that protects computers from viruses and intruders. The popular Norton anti-virus program is its best-known consumer product. It also sells a range of products and services to businesses, including software and services for data backup and protection, as well as data-archiving to meet increasingly strict regulatory and compliance regulations. In the three months ended October 1, 2010, Symantec earned $266 million, or $0.34 a share. That’s down 10.1% from $296 million, or $0.36 a share, a year earlier. These figures exclude one-time items, such as the cost of integrating companies Symantec bought. Revenue was flat at $1.5 billion. Corporate customers account for two-thirds of Symantec’s revenue. The uncertain economy is prompting some of its clients to hold off on buying new software....
WYNDHAM WORLDWIDE $29.42 (New York symbol WYN; SI Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 175.0 million; Market cap: $5.1 billion; Dividend yield: 1.9%) plans to buy privately held vacation rental company James Villa Holidays of the U.K. for about $77 million. The purchase will give Wyndham greater exposure to the Mediterranean villa market. James Villa has more than 2,300 properties in 50 locations in France, Spain, Portugal, Italy, Greece, Cyprus and Malta. Aside from vacation rentals, James Villa offers air travel, car rental and other services. The acquisition will slightly increase Wyndham’s earnings....
CHESAPEAKE ENERGY $23.51 (New York symbol CHK; SI Rating: Extra risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 654.3 million; Market cap: $15.4 billion; Dividend yield: 1.3%) is a major U.S. natural-gas producer. Gas makes up 90% of its production. Chesapeake focuses on onshore conventional and unconventional gas reserves. It has a leading position in nearly every major unconventional discovery in the U.S. east of the Rockies, including the Barnett Shale in Texas; the Haynesville and Bossier Shales in Louisiana and Texas; the Fayetteville Shale in Arkansas; the Marcellus Shale in the West Virginia, Pennsylvania and New York; and the Eagle Ford Shale in Texas. Shale gas is natural gas that is trapped in rock formations. To extract it, companies use highly pressurized water and sand to crack the shale. Extraction methods are constantly improving, and steadily increasing shale-gas production....
DOREL INDUSTRIES $34.89 (Toronto symbol DII.B; SI Rating: Extra Risk) (514-731-0000; www.dorel.com;Shares outstanding: 32.9 million; Market cap: $1.1 billion; Dividend yield: 1.7%) reports that its earnings rose 1.1% in the three months ended September 30, 2010, to $0.92 a share from $0.90 a share a year earlier. (All figures except share price in U.S. dollars.) Revenue rose 9.8%, to $569.5 million from $518.5 million. Revenue was up across all three of the company’s divisions: The recreational/leisure segment reported 18.8% higher revenue; home furnishings gained 18.4%; and the juvenile division’s revenue rose 0.2%. The company raised its quarterly dividend by 20%, to $0.15 from $0.125, with the June payment. The shares now yield 1.7%....
INTACT FINANCIAL CORP. $50.86 (Toronto symbol IFC; SI Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 113.0 million; Market cap: $5.7 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. Intact has two product lines: Its personal products, which contribute 70% of its premiums, include automobile and property insurance that Intact sells to individuals. Commercial products provide the remaining 30% of premiums, and include auto, property, liability, surety and specialty coverage that Intact mainly sells to small- and medium-sized businesses. In the three months ended September 30, 2010, Intact earned $0.72 a share. That’s a big improvement over the $0.07 a share it lost a year earlier. Revenue rose 6.2%, to $1.19 billion from $1.12 billion....
CASH STORE FINANCIAL SERVICES INC. $14.81 (Toronto symbol CSF; SI Rating: Speculative) (780-408-5110; www.csfinancial.ca; Shares outstanding: 17.1 million; Market cap: $253.0 million; Dividend yield: 2.8%) earned $0.44 a share in the three months ended September 30, 2010. That’s up 29.4% from $0.34 a share a year earlier. Revenue rose 19.5%, to $49.8 million from $41.6 million. Cash Store Financial operates 544 stores under two banners: The Cash Store and Instaloans. Both stores offer consumer payday loans (advances on upcoming paycheques). The company continues to benefit from steady growth in the profitable niche market of payday advance loans....
NORTHGATE MINERALS CORP. $3.08 (Toronto symbol NGX; SI Rating: Speculative) (604-681-4004; www.northgateminerals.ca; Shares outstanding: 291.1 million; Market cap: $896.5 million; No dividends paid) is focused on building a mine at its Young-Davidson gold property in northern Ontario. The $339-million open-pit/underground mine is now under construction, and is scheduled to start up in 2012. It is expected to produce 180,000 ounces of gold per year for the first two years of its expected 15-year life. Its production would then rise to 190,000 ounces. Northgate also owns the Kemess South open-pit gold/copper mine in north-central B.C. However, it expects to exhaust this mine’s reserves in 2011....