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
SYMANTEC CORP. $14.99 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 789.3 million; Market cap: $11.8 billion; No dividends paid) jumped 10%, to $13.80, on August 20 in response to Intel Corp.’s $7.7-billion purchase of McAfee Inc. (New York symbol MFE). Symantec’s shares have since moved even higher. Like McAfee, Symantec is a leading maker of computer-security software. Symantec could also become a takeover target, as its shares are well off their high. The possibility of a takeover adds to Symantec’s appeal, but it’s not enough reason to buy the stock right now....
CANALASKA URANIUM $0.10 (Toronto symbol CVV; SI Rating: Start-up) (1-800-667-1870; www.canalaska.com; Shares outstanding: 171.6 million; Market cap: $16.3 million; No dividends paid) plans to consolidate its shares on a 1-for-10 basis. That will lower its shares outstanding from about 171.6 million to 17.2 million. Companies typically cut back their shares to make them more attractive to institutional or other large investors who typically avoid stocks that trade for just pennies a share. Consolidations, or reverse stock splits, sometimes hurt investor confidence. They can undermine the value of a given holding by as much as 25%, at least temporarily, even though there is no change in the company’s business or assets. Other times, however, they have little, if any, effect....
ACCORD FINANCIAL CORP. $7.51 (Toronto symbol ACD; SI Rating: Speculative) (416-961-0007; www.accordfinancial. com; Shares outstanding: 9.4 million; Market cap: $70.6 million) is up over 36% since it reported improved results in the latest quarter. The company also raised its dividend. In the three months ended June 30, 2010, revenue rose 42.1%, to $8.1 million from $5.7 million a year earlier. Earnings jumped to $2.3 million, or $0.25 a share, from $1.3 million, or $0.05 a share. The improving economy pushed up Accord’s results. Accord gets most of its revenue from the factoring business in Canada and the U.S. Factoring is the purchase of accounts receivable at a discount. Accord profits by collecting on these receivables, generally at face value....
FORTRESS PAPER $34.90 (Toronto symbol FTP; SI Rating: Extra Risk) (1-888-820-3888; www.fortresspaper.com; Shares outstanding: 12.1 million; Market cap: $423.9 million; No dividends paid) operates a plant in Switzerland that makes security paper used in banknotes, passports and visas. The company’s German plant makes high-quality wallpaper-base products. In April 2010, Fortress bought an idled pulp plant in Thurso, Quebec, for $3 million. It restarted pulp production, but plans to convert the plant to produce a type of cellulose mainly used in viscose-fibre (rayon) products, including clothing. This fibre has strong growth prospects, particularly in warmer regions with growing economies, such as Asia and South America. The Quebec and federal governments will contribute grants, tax credits and loans for most of the $153-million conversion. Start up is scheduled for mid-2011. In the three months ended June 30, 2010, Fortress’ revenue rose 22%, to $60.5 million from $49.6 million a year earlier. Excluding one-time items, earnings per share rose 42.3%, to $0.37 from $0.26. Strong pulp prices were the main reason for the gains....
APPLE INC., $263.41, Nasdaq symbol AAPL, rose 3% this week after the company relaxed some of the restrictions it places on software developers who write programs for its iPhone and iPad mobile devices. Relaxing these restrictions will make it easier for programmers to write software for multiple devices. That should expand the number of programs available to iPhone and iPad users, and let Apple collect more fees from software sales. Apple is a buy....
MAJOR DRILLING, $27.04, symbol MDI on Toronto, jumped 10% this week after the company reported sharply higher results in the latest quarter. Major’s revenue jumped 75.2% in the three months ended July 31, 2010, to $109.5 million from $62.5 million a year earlier. The company earned $5.1 million, or $0.21 a share. A year earlier, it lost $3.3 million, or $0.14 a share. Cash flow was $12.1 million, or $0.51 a share, in the latest quarter, up 58.9% from $7.6 million, or $0.32 a share. Major expects to see a continued rebound during the rest of 2010. Gold prices are near all-time highs, base-metal prices are strengthening, and many mining companies have raised new funds for exploration....
3M COMPANY, $83.84, New York symbol MMM, announced two acquisitions this week. Both purchases will strengthen 3M’s position in the fast-growing security-products industry. The company is buying California-based based Cogent Inc. (Nasdaq symbol COGT). Cogent specializes in biometric technologies, such as devices that scan fingerprints before allowing access to secure facilities or computer data. 3M will pay $943 million for Cogent. However, Cogent holds cash of $513 million, so the price is really $430 million. This is a small purchase for 3M, which earned $1.1 billion, or $1.54 a share, in the three months ended June 30, 2010. The company expects to close this deal by the end of 2010. 3M has also agreed to buy privately held Attenti Holdings S.A. for $230 million. Israel-based Attenti makes devices that keep track of people, such as hospital patients or people awaiting trial or on probation. This purchase should close in the fourth quarter of 2010....
CANALASKA URANIUM, $0.09, symbol CVV on Toronto, plans to consolidate its shares on a 1-for-10 basis. That will lower its shares outstanding from about 171.9 million to 17.2 million. Companies typically cut back their shares to make them more attractive to institutional or other large investors who typically avoid stocks that trade for just pennies a share. Consolidations, or reverse stock splits, sometimes hurt investor confidence. They can undermine the value of a given holding by as much as 25%, at least temporarily, even though there is no change in the company’s business or assets. Other times, however, they have little, if any, effect....
AMERICAN WOODMARK $15.67, symbol AMWD on Nasdaq, is a major U.S. maker of cabinets for kitchens and bathrooms. It sells its cabinets under the American Woodmark, Timberlake and Shenandoah brands. In the three months ended July 31, 2010, American Woodmark lost $3.4 million, or $0.24 a share. Still, that’s a lot better than the $6.4 million, or $0.45 a share, it lost a year earlier. If you exclude one-time restructuring charges, the company would have lost $0.34 a share a year ago. Sales rose 8.4%, to $109.3 million from $100.8 million. The company’s recent cost cuts, including lower labour costs, were the main reason for the improved results. In the last year, American Woodmark has laid off a number of salaried employees, closed two less-efficient plants and suspended production at a third....
HEWLETT-PACKARD CO., $38.00, New York symbol HPQ, wants to buy California-based 3PAR Inc. (New York symbol PAR), which makes data-storage systems for large corporations and government agencies. Hewlett is offering $30.00 a share, or a total of $1.9 billion, for 3PAR. That tops an earlier offer of $27.00 a share from rival computer maker Dell Inc. (Nasdaq symbol DELL). This is small purchase for Hewlett. The price is just 2% of its $88.7-billion market cap (or the value of all of its outstanding shares). But adding 3PAR would expand Hewlett’s expertise in the rapidly growing field of “cloud computing.” That’s where data and software reside on one or more centralized computer servers. Users connect to these servers over the Internet through a variety of devices. By centralizing data and programs, cloud computing cuts a client’s costs and improves security....