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
VERIGY LTD. $13.49 (Nasdaq symbol VRGY; SI Rating: Extra Risk) (1-800-447-8378; www.verigy.com; Shs. outstanding: 60 million; Market cap: $807.7 million; No dividends paid) is now the subject of a $12.15-a-share takeover offer from Japan-based Advantest Corp. Advantest is the world’s largest maker of systems that test computer memory chips. Advantest is taking advantage of the high value of the yen against the U.S. dollar to make the offer. Verigy is not satisfied with the $735-million offer, but aims to open discussions with Advantest to negotiate a higher price. The offer is below Verigy’s 2010 high of $13.75, which it reached in January. Separately, Verigy still plans to proceed with its all-stock purchase of LTX-Credence Corp. (Nasdaq symbol LTXC), which should close in the first half of 2011. LTX is a rival maker of computer-chip testing equipment....
MART RESOURCES $0.70 (Toronto symbol MMT; SI Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 335.5 million; Market cap: $115.8 million; No dividends paid) is focused on developing, producing and drilling for oil at its onshore properties in Africa. Mart is currently producing oil from its 50%-held Umusadege field in Nigeria. Mart recently released preliminary results from its latest well at the field, the UMU-6 well. One section of the well flowed oil at 3,433 barrels per day. Average daily production for the entire Umusadege field was 3,886 barrels per day in latest quarter. Operating in Nigeria exposes the company to considerable political risk. However, further drilling success would continue to steadily increase Mart’s oil production....
DUNDEEWEALTH $21.52 (Toronto symbol DW; SI Rating: Speculative) (1-800-301-6745; www.dundeewealth.com; Shares outstanding: 121.3 million; Market cap: $2.6 billion: Dividend yield: 1.9%) has received a friendly takeover offer from Bank of Nova Scotia for the 82% of the company that the bank doesn’t already own. Bank of Nova Scotia is now offering 0.2497 of a Bank of Nova Scotia common share for each DundeeWealth common share. Plus, each DundeeWealth shareholder can choose to receive either $5.00 in cash or 0.2 of a $25.00, 3.70% five-year rate reset Bank of Nova Scotia preferred share for each DundeeWealth common share. DundeeWealth shareholders will also receive a special distribution of $2 a share, as well as a $0.50-a-share interest in Dundee Capital Markets, which will be set up as a separate company....
COMPUTER MODELLING GROUP $25.91 (Toronto symbol CMG; SI Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 18.1 million; Market cap: $467.9 million; Dividend yield: 3.1%) sells software to clients in the oil and gas industry. It also provides consulting services. Computer Modelling’s software helps companies use advanced oil-and-gas recovery techniques to raise output from their existing wells. It has over 360 customers in 50 countries. In the three months ended September 30, 2010, Computer Modelling’s revenue rose 46.8%, to $13.2 million from $9.1 million a year earlier. The company sold more of its software and consulting services to both new and existing customers. Earnings jumped 89.1%, to $4.6 million from $2.4 million. Earnings per share rose 78.6%, to $0.25 from $0.14, on more shares outstanding....
BECKMAN COULTER INC., $72.08, New York symbol BEC, rose 26.3% on Friday on media reports that the company has put itself up for sale. Beckman is reportedly talking with several possible buyers. However, the company could decide to stay public if it doesn’t attract an adequate offer. We’ll say more about this potential sale as more information becomes available....
MAJOR DRILLING, $41.95, symbol MDI on Toronto, jumped 18% this week after the company reported sharply higher results in the latest quarter. In the three months ended October 31, 2010, Major’s revenue jumped 69.2%, to $127.8 million from $75.5 million a year earlier. The company earned $11.4 million, or $0.48 a share, up from $4.1 million, or $0.17 a share. Cash flow was $18.6 million, or $0.78 a share, in the latest quarter. That’s up 51.2%, from $12.3 million, or $0.51 a share. Major expects to see a continued rebound during 2011. Gold prices are at all-time highs, base-metal prices are strong, and many mining companies have raised new funds for exploration....
PEPSICO INC., $65.17, New York symbol PEP, continues to expand internationally. Right now, it gets 45% of its sales from outside the U.S. This week, the company agreed to buy Wimm-Bill-Dann Foods OJSC (New York symbol WBD). Wimm-Bill-Dann is a leading producer of dairy products, fruit juices and baby food in Russia. If Russian regulators approve, PepsiCo will pay $3.8 billion for 66% of Wimm-Bill-Dann. It will then offer to buy the remaining 34%. In all, PepsiCo will pay roughly $5.4 billion. To put this cost in context, the company earned $2.0 billion, or $1.22 a share, in the three months ended September 4, 2010. PepsiCo already has some operations in Russia, so combining plants and distribution networks should save it $100 million a year by 2014....
CAMECO CORP., $37.60, symbol CCO on Toronto, plans to raise its quarterly dividend by 42.9% in 2011, to $0.10 a share from $0.07. The new rate will give the shares a yield of 1.1% based on today’s price. Cameco Corp. is still a buy. NEW GOLD INC., $10.17, symbol NGD on Toronto, has sold its 115 million shares of Australia-listed Beadell Resources Limited for $58 million. New Gold received these shares when it sold its Brazilian subsidiary, which held the Amapari property, in April 2010....
DEL MONTE FOODS CO., $18.83, New York symbol DLM, has accepted a $19.00-a-share takeover offer from a private equity group led by KKR & Co. (New York symbol KKR). The company has until Janury 8, 2011, to seek a better offer. If it can’t find another buyer, the deal with KKR should close by March 31, 2011. The stock is trading at 0.9% below the offer, which indicates that investors do not expect a higher offer....
DUNDEEWEALTH INC., $20.51, symbol DW on Toronto, has received a friendly takeover offer from Bank of Nova Scotia (Toronto symbol BNS), for the 82% of the company that the bank doesn’t already own. In September 2007, Bank of Nova Scotia paid $348 million for an 18% interest in DundeeWealth. The bank also gained a right of first refusal on any sale of the controlling interest in DundeeWealth. Bank of Nova Scotia is now offering 0.2497 of a Bank of Nova Scotia common share for each DundeeWealth common share. Plus, each DundeeWealth shareholder can choose to receive either $5.00 in cash or 0.2 of a $25.00, 3.70% five-year rate reset Bank of Nova Scotia preferred share for each DundeeWealth common share....