Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

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.

Big profits from drug management

...

2 min read

Pat McKeough

Growth Stocks

Updating MCCORMICK & CO. INC., CEDAR FAIR L.P. and WASHINGTON FEDERAL INC.

MCCORMICK & CO. INC. $40 has agreed to buy 26% of Eastern Condiments Private Ltd., a leading maker of spices and seasonings in India. The deal should close by the end of 2010. McCormick is paying $35 million for this stake; it earned $66.2 million, or $0.49 a share, in the three months ended May 31, 2010. India is the world’s largest spice consumer, and this investment should help McCormick increase its sales in the country. Buy. CEDAR FAIR L.P. $11 earned $0.09 a unit in the three months ended June 27, 2010. This figure excludes one-time costs related to a failed takeover of the amusement-park operator by a private equity fund. The latest earnings are down 30.8% from $0.13 a share a year earlier. Revenue rose 4.3%, to $275.6 million from $264.1 million. Attendance rose 7% in the first half of 2010. Hold. WASHINGTON FEDERAL INC. $14 earned $12.7 million in its third quarter, which ended June 30, 2010. That’s up 406.7% from $2.5 million a year earlier. Earnings per share rose 266.7%, to $0.11 from $0.03, on more shares outstanding. The company is setting aside less cash for bad loans as the economy recovers; this was the main reason for the earnings jump. As well, dividends paid to the U.S. Treasury under the Troubled Asset Relief Program depressed its year-earlier earnings. Hold.

1 min read

Pat McKeough

Growth Stocks

Wall Street Stock Forecaster Hotline - Friday, August 20, 2010

BHP BILLITON LTD. ADRs, $67.44, New York symbol BHP, is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. BHP produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. The company now wants to expand its potash fertilizer business. This week, it offered to buy Potash Corp. of Saskatchewan (Toronto symbol POT), the world’s largest fertilizer producer. Potash Corp. has six potash mines in Saskatchewan, and one in New Brunswick. Five of its mines have reserves of between 60 and 97 years. (Potash Corp. is a recommendation of our Successful Investor newsletter.) BHP is offering $130.00 a share in cash, for a total of $38.6 billion. That’s equal to 21% of BHP’s $187.7-billion market cap. BHP has secured $45 billion in loans to finance the deal. On December 31, 2009, BHP had $14.9 billion of long-term debt, and held cash of $9.0 billion....

5 min read

Pat McKeough

Growth Stocks

Stock Pickers Digest Hotline - Friday, August 20, 2010

LOJACK CORP., $3.55, symbol LOJN on Nasdaq, 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. The company’s Canadian subsidiary is Boomerang Tracking. 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. The company lost $1.03 a share in the latest quarter, compared to a loss of $0.73 a share. However, the latest quarter included a one-time charge of $0.87 a share for an accounting adjustment. Cash flow was positive in the latest quarter, at $1.1 million, or $0.06 a share. LoJack’s $7.9 million of debt is just 12% of its market cap, and less than half of its cash holdings of $33 million....

4 min read

Pat McKeough

Growth Stocks

Here’s our Pick of the Month - September 2010

TIM HORTONS $37.27 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 174.3 million; Market cap: $6.5 billion; Dividend yield: 1.4%) operates 3,040 coffee-and-donut shops in Canada, and 587 in the U.S. Franchisees operate 99.5% of its stores. In the three months ended July 4, 2010, Tim Hortons earned $94.1 million. That’s up 21.0% from $77.8 million a year earlier. Earnings per share rose 25.6%, to $0.54 from $0.43, on fewer shares outstanding. Tim Hortons continues to add new restaurants and menu items. That helped lift its sales by 5.7%, to $639.9 million from $605.5 million. Same-store sales rose 6.4% in Canada, and 3.1% in the U.S....

1 min read

Pat McKeough

Growth Stocks

Low p/e despite gains

FAIRFAX FINANCIAL HOLDINGS $405.51 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.9 million; Market cap: $8.1 billion; Dividend yield: 2.5%) sells insurance and reinsurance. It also manages investments. This provides it with erratic earnings, and as a result it trades at a low p/e (ratio of share price to per-share earnings). In the three months ended June 30, 2010, the company made $15.55 a share, down from $15.66 a year earlier. Fairfax lost $13 million on insurance operations in the latest quarter. This includes a loss of $36.4 million due to the sinking of BP’s Gulf of Mexico oil rig. More important, the insurance business gives Fairfax lots of cash to invest. Investment gains are the key to Fairfax’s appeal....

1 min read

Pat McKeough

Growth Stocks

Two popular restaurants with gains ahead

RUBY TUESDAY, INC. $9.69 (New York symbol RT; SI Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 64.8 million; Market cap: $627.8 million; No dividends paid) owns 656 restaurants in the U.S. Franchisees run another 165 American outlets, and international franchisees operate 58 restaurants in Canada, Chile, Dubai, Egypt, Guam, Greece, Hawaii, Honduras, Hong Kong, Iceland, India, Jordan, Kuwait, Romania, Saudi Arabia and Trinidad. Ruby Tuesday offers casual American dining. The company continues to improve its menu: It now includes a wide variety of appetizers, handcrafted burgers (including beef, bison, turkey, chicken and crab), a 46-item salad bar, fish, ribs and steaks. In the three months ended June 1, 2010, Ruby Tuesday’s earnings per share rose 17.9%, to $0.33 from $0.28 a year earlier. That’s mainly because the company closed stores, made better use of its workers and cut costs during the quarter....

2 min read

Pat McKeough

Growth Stocks

Great quarter for Wyndham

WYNDHAM WORLDWIDE $25.76 (New York symbol WYN; SI Rating: Extra Risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 178.6 million; Market cap: $4.6 billion; Dividend yield: 1.9%) earned $0.51 a share in the three months ended June 30, 2010, up 30.8% from $0.39 a year earlier. Revenue rose 5%, to $963 million from $920 million. The higher results mostly reflect the recovering global economy, which is pushing up travel demand and increasing the number of guests at Wyndham’s hotels. Wyndham now expects to earn between $1.78 and $1.88 a share this year. It trades at 14.1 times the midpoint of that range....

1 min read

Pat McKeough

Growth Stocks

Hold on to these growth stocks

INTUITIVE SURGICAL $314.05 (Nasdaq symbol ISRG; SI Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 39.4 million; Market cap: $12.4 billion; No dividends paid) makes the “da Vinci,” a computerized surgical system. Intuitive’s shares trade at a high price, but you can buy as few as you wish through any broker. Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This is safer and far less invasive than regular surgery, and helps cut a patient’s recovery time and post-operative discomfort. It also lowers scarring and infection risk. In the three months ended June 30, 2010, Intuitive earned $88.7 million, or $2.26 a share, up 42.1% from $62.4 million, or $1.62 a share, a year earlier. Revenue rose 34.6%, to $350.7 million from $260.6 million....

2 min read

Pat McKeough

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.