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
TOROMONT INDUSTRIES, $26.70, symbol TIH on Toronto, has announced a big contract with Detour Gold Corporation to supply a fleet of mining trucks for the Detour Lake gold project in northern Ontario. Toromont will deliver the initial fleet of 18 Caterpillar 795F AC mining trucks from late 2011 through 2012. In all, the order is worth about $125 million. Detour also agreed to expand the order to 36 mining trucks at a later date. That would boost the order’s value to $304 million. To put these figures in perspective, Toromont’s revenue was $594.2 million in the latest quarter....
NISSAN MOTOR CO. ADR $16.66 (Nasdaq symbol NSANY; SI Rating: Above Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.1 billion; Market cap: $34.9 billion; No dividends paid) is Japan’s third-largest automaker after Toyota and Honda. Its car models include the Maxima, Sentra, Altima and Infiniti. Nissan also makes the Versa subcompact, the 370Z sports car, the Rogue crossover, and the Xterra and Pathfinder SUVs. Its major plants are in Japan, but it also has facilities in the U.S., U.K., Mexico, Spain, Australia and China. In its first quarter, which ended June 30, 2010, the company earned 106.6 billion yen ($1.2 billion U.S., or $0.57 per ADR) compared to a loss of 16.5 billion yen ($169 million U.S., or $0.14) a year earlier. Revenue rose 35.3%, to 2.1 trillion yen ($23.4 billion U.S.) from 1.5 trillion yen ($17.3 billion). That’s because Nissan sold 954,000 vehicles in the latest quarter, up 32% from a year earlier. Asian vehicle sales jumped 62.4% including a 68.2% gain in China. North American sales rose 23.2%, European sales rose 20.8%, and sales in Japan were up 19.2%....
IAMGOLD $18.21 (Toronto symbol IMG; SI Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 372.1 million; Market cap: $6.8 billion; No dividends paid) has interests in five gold mines in Africa, one in Quebec and one in South America. In the three months ended June 30, 2010, IAMGold’s cash flow was $64 million, or $0.17 a share. (All figures except share price and market cap in U.S. dollars.) It holds cash and gold bullion of $227.9 million. Unlike most gold miners, it has no debt. IAMGold recently started production at its Essakane gold mine in the west African country of Burkina Faso. The mine will raise IAMGold’s production by about 25%, to over 1.2 million ounces per year, at a cost of just $500 per ounce....
Here are two of the most promising early-stage diamond stocks. Both have speculative appeal, but they are buys for highly aggressive investors only. DIAMONDS NORTH RESOURCES $0.18 (Toronto symbol DDN; SI Rating: Start-up) (1-866-802-2010; www.diamondsnorthresources.com; Shares outstanding: 86.9 million; Market cap: $15.2 million; No dividends paid) has interests in seven exploration projects covering over four million acres in Nunavut and the Northwest Territories. Its prospects range from early- to advanced-stage exploration. The company funds its exploration programs with its $2.9 million of cash holdings. Diamonds North’s leading prospect is its 100%-owned Amaruk project in Nunavut. To date, the company has discovered 25 kimberlites at the site....
NORTHGATE MINERALS CORP. $3.43 (Toronto symbol NGX; SI Rating: Speculative) (604-681-4004; www.northgateminerals.ca; Shares outstanding: 290.9 million; Market cap: $997.9 million; No dividends paid) has entered into a preliminary financing agreement with France’s Banque BNP Paribas. Northgate will use the $100-million debt facility to help fund its Young-Davidson gold mine in northern Ontario. The company already holds cash of $204.2 million. The $339-million open-pit/underground mine is now under construction, and is scheduled to start up in 2012. It will 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....
ALARMFORCE INDUSTRIES $7.13 (Toronto symbol AF: SI Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $87.2 million; No dividends paid) sells two-way voice alarm systems and monitoring services in Canada and the U.S. AlarmForce’s system differs from others because it lets emergency operators verify an alarm by establishing immediate, two-way voice contact with homeowners. It then dispatches security personnel to the client’s home. If intruders are present, the two-way contact can frighten them away. The company has used radio and TV advertising to gain a high profile. It gives its system away in order to add new subscribers. In return, they pay $25 a month for monitoring service, and sign on with a three-year contract. AlarmForce makes and owns each system....
LOJACK CORP. $3.78 (Nasdaq symbol LOJN; SI Rating: Speculative) (www.lojack.com; 781-326-4700; Shares outstanding: 18.5 million; Market cap: $69.8 million; No dividends paid) sells systems that help track and recover vehicles after they’ve been stolen. LoJack sells its products in the U.S. and 30 other countries. In the three months ended June 30, 2010, LoJack’s revenue rose 5.6%, to $37.4 million from $35.4 million a year earlier. Excluding one-time items, it lost $0.16 a share in the latest quarter, compared to a loss of $0.73 a share. Cash flow was positive in the latest quarter, at $1.1 million, or $0.06 a share. LoJack will need a further rebound in U.S, new-car sales to show substantial growth. Meanwhile, it aims to benefit from its efforts to find new uses for its locator technology. These include tracking and recovering people with special needs who are in distress, as well as cargo and hazardous materials....
ZHONGPIN INC. $14.94 (Nasdaq symbol HOGS; SI Rating: Extra Risk) (086-10-8286-1788; www.zpfood.com; Shares outstanding: 34.7 million; Market cap: $518.8 million; No dividends paid) is a China-based company that processes meat and other foods. Zhongpin specializes in pork and pork products, as well as fruit and vegetables. It sells 358 meat products, including chilled pork, frozen pork and prepared meats, as well as 34 fruit and vegetable products. Zhongpin focuses on prepared meat, with its higher profit margins, rather than bulk pork. The company has 13 processing plants, and sells its foods through over 3,200 retail stores, including 145 independently owned Zhongpin specialty boutiques, 1,012 Zhongpin retail stores and 2,048 exclusive supermarket counter locations. It also sells its foods to domestic and international fast-food chains, such as McDonald’s and KFC. Other customers include school cafeterias, factory canteens and army posts. In the three months ended June 30, 2010, Zhongpin’s revenue rose 32.9%, to $215.1 million from $161.8 million a year earlier. Earnings rose 29.7%, to $14.1 million from $10.8 million. Earnings per share were unchanged at $0.36, due to more shares outstanding. The company’s $167 million of debt is a manageable 32.1% of its market cap....
AMERICAN WOODMARK $16.51 (Nasdaq symbol AMWD; SI Rating: Speculative) (540-665-9100; www.americanwoodmark.com; Shares outstanding: 14.2 million; Market cap: $235.1 million; Dividend yield: 2.2%) lost $0.24 a share in the latest quarter. Still, that’s a lot better than the $0.34 a share it lost a year earlier. Sales rose 8.4%, to $109.3 million from $100.8 million. Savings from last year’s restructuring offset higher costs for raw materials and fuel. Both new construction and remodelling sales rose in the latest quarter. The improved results are encouraging, but the company needs a sustained recovery in housing markets to show substantial sales and earnings increases....
TETHYS PETROLEUM $1.85 (Toronto symbol TPL; SI Rating: Speculative) (416-572-2065; www.tethyspetroleum.com; Shares outstanding: 188 million; Market cap: $347.7 million; No dividends paid) is producing and exploring for oil and natural gas in the Central Asian countries of Kazakhstan, Uzbekistan and Tajikistan. Tethys’ properties in Kazakhstan and Uzbekistan produce about 5 million cubic feet of gas and 1,670 barrels of oil per day. In the three months ended June 30, 2010, Tethys’ revenue jumped 115.6%, to $6 million from $2.8 million. (All figures except share price and market cap in U.S. dollars.) Cash flow per share was negative $0.01, an improvement over negative $0.03 a year earlier....