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.
Read More
Close
Growth Stocks Library Archives
Visa has been around since the 1960s, but only recently became a publicly traded company. eBay started up in 1995. Because of its unique business model, the company was able to avoid the implosion of the dot-com bubble in the early 2000s. We feel both companies offer an attractive way for investors to add to their Finance-sector holdings without exposing themselves to the mortgage-related problems that continue to depress bank stocks. Visa is suitable for all investors. eBay is more risky. VISA INC. $76 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 836.9 million; Market cap: $63.6 billion; Price-to-sales ratio: 7.9; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest retail electronic-payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands. Visa’s credit cards are accepted around the world, and Visa/PLUS is one of the largest global automated-teller machine networks, offering cash access in more than 200 countries....
We are now including company web sites for each investment we cover. Company web sites can give you further information on stocks we recommend, including press releases, newspaper articles, financial reports and shareholder information, plus dividend reinvestment plan details. Of course, our in-house investment experts thoroughly research each company we recommend....
These four companies dominate their niche markets. That gives them protection from new competitors, and helps them stay profitable during economic downturns. Still, only three are buys right now. AGILENT TECHNOLOGIES INC. $36 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 346.0 million; Market cap: $12.5 billion; Price-to-sales ratio: 2.3; No dividends paid; TSINetwork Rating: Average; www.agilent.com) makes testing systems that help improve electronic products, such as cellphones and networking equipment. In May 2010, Agilent bought Varian Inc. for $1.5 billion. Varian makes a wide range of medical and drug-testing equipment, such as mass spectrometers that detect and measure substances in blood and other samples. Medical-equipment demand is less cyclical than testing products, so this move cuts Agilent’s risk....
SYSCO INC. $29 (New York symbol SYY; Conservative Growth Portfolio; Consumer sector; Shares outstanding: 585.1 million; Market cap: $17.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.6%; TSINetwork Rating: Average; www.sysco.com) distributes food and supplies to over 400,000 North American restaurants. Sysco’s revenue rose 7.4% in its first quarter, which ended October 2, 2010, to $9.8 billion from $9.1 billion a year earlier. That’s mainly due to rising prices for meat, dairy and seafood products, However, earnings per share fell 7.3%, to $0.51 from $0.55, because of higher taxes and employee pension costs. Even so, Sysco raised its quarterly dividend by 4.0%, to $0.26 from $0.25. The new annual rate of $1.04 yields 3.6%. Sysco is a hold.
WINDSTREAM CORP. $13 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 483.7 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 7.7%; TSINetwork Rating: Average; www.windstream.com) will buy privately held Hosted Solutions LLC of Houston, Texas. This company hosts the web sites of over 600 businesses. The deal should close by the end of 2010. Windstream will pay $310 million for Hosted Solutions. To put that in perspective, Windstream earned $85.2 million, or $0.18 a share, in the latest quarter. However, the purchase will let Windstream sell its services to Hosted’s clients, and lower its reliance on traditional telephone operations. Windstream also expects the purchase to give it $52 million in tax breaks. Windstream is a hold.
Buckeye Partners and Cedar Fair are master limited partnerships (MLPs). Investors who hold their units have similar rights to ownership and dividends as common shareholders in regular corporations. MLPs pay out most of their income to investors. That lets them avoid federal and state income taxes. In Canada, MLPs are not eligible for RRSPs or RRIFs. So you’ll be subject to a 35% U.S. withholding tax on income from these investments. However, you can usually claim a non-refundable Canadian tax credit to offset that U.S. withholding tax....
AUTODESK INC. $35 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 227.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Average; www.autodesk.com) earned $0.32 a share in its third quarter, which ended October 31, 2010. That’s up 23.1% from $0.26 a year earlier. These figures exclude unusual costs, including expenses related to a restructuring that included cutting 10% of its workforce and merging facilities. Revenue rose 14.3%, to $476.7 million from $416.9 million. Manufacturing activity continues to increase after the recession. That’s spurring demand for Autodesk’s 3D design software. Autodesk is a buy.
More advertisers are targeting audiences that are more specific than those offered by traditional media, like newspapers and TV. That’s helping marketing specialists like Teradata and Harte-Hanks. This trend should spur both companies’ growth for years to come. TERADATA CORP. $41 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector: Shares outstanding: 167.5 million; Market cap: $6.9 billion; Price-to-sales ratio: 3.7; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data. Teradata then analyzes this information and identifies buying habits and trends. Teradata is taking advantage of the weak economy to hire new salespeople. That’s helping it enter new markets and offer more technology and services to its existing clients. These efforts should add $70 million to Teradata’s 2010 sales. As well, it continues to spend around 7% of its revenue on research. Resulting new products should also fuel its growth....
FORD MOTOR CO. $16 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.5 billion; Market cap: $56.0 billion; Price-to-sales ratio: 0.1; No dividends paid; TSINetwork Rating: Speculative; www.ford.com) is lowering its stake in Japanese carmaker Mazda Motor Corp. to 3.5% from 11.0%. This will let Ford and Mazda end a three-way joint venture with a Chinese carmaker. Ford will then be free to form new ventures in China. Ford will sell these shares through an auction process. It expects to receive $372 million. That’s equal to 20% of the $1.9 billion, or $0.48 a share, that Ford earned in its latest quarter. Ford is a buy.
INVACARE CORP. $27 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.4 million; Market cap: $874.8 million; Price-to-sales ratio: 0.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.invacare.com) makes wheelchairs, motorized scooters and other mobility and home-care products. The company is using a new $400-million line of credit to buy back $146 million of 9.75% notes. This will significantly lower its annual interest expense of roughly $23 million. Meanwhile, Invacare continues to benefit from a restructuring, which involved shifting production to low-cost countries and simplifying its product line. In the three months ended September 30, 2010, earnings before one-time items rose 9.0%, to $18.2 million from $16.7 million a year earlier. Earnings per share rose 7.7%, to $0.56 from $0.52, on more shares outstanding. Sales rose 0.8%, to $437.5 million from $434.0 million. If you exclude the impact of foreign-exchange rates, sales would have risen 2.4%....