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
AMAZON.COM $129.65 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 447.8 million; Market cap: $58.1 billion; No dividends paid) reports that its sales jumped 41.2% in the latest quarter, to $6.6 billion from $4.7 billion a year earlier. Earnings per share rose 39.4%, to $0.46 from $0.33. Sales of electronic books for its Kindle reader continue to grow strongly. In the first half of 2010, Amazon sold 143 e-books for every 100 hardcover books. In the month of June, that ratio rose to 180:100. Amazon was one of the first companies to sell e-books. But major competitors, particularly Apple’s iPad, will erode that advantage....
INTACT FINANCIAL CORP. $44.85 (Toronto symbol IFC; SI Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 114.6 million; Market cap: $5.1 billion; Dividend yield: 3.0%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. Intact has two product lines: Its personal products, which contribute 70% of its premiums, include automobile and property insurance that Intact sells to individuals. Commercial products provide the remaining 30% of premiums, and include auto, property, liability, surety and specialty coverage that Intact mainly sells to small- and medium-sized businesses. In the three months ended June 30, 2010, Intact earned $1.04 a share. That’s up 67.7% from $0.62 a share a year earlier. Revenue rose 5.4%, to $1.32 billion from $1.25 billion....
ACI WORLDWIDE $20.09 (Nasdaq symbol ACIW; SI Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 33.4 million; Market cap: $670.1 million; No dividends paid) makes software and provides services that help its clients process transactions that involve credit cards, debit cards, automated-teller machines, smart cards, point-of-sale terminals and inter-bank payments. In the three months ended June 30, 2010, ACI Worldwide lost $150,000, or nil per share. That’s much better than the $3.6 million, or $0.10 a share, it lost a year earlier. Cash flow per share rose sharply, to $0.28 from $0.02. Revenue rose 6%, to $92.4 million from $87.2 million. The company continues to add clients. It has also taken steps to cut its costs, including layoffs. That’s why its results improved so significantly....
These three penny mines have promising mineral properties, substantial cash holdings, plus connections with major companies than can play a key part in helping them achieve financial success. MIRANDA GOLD $0.43 (Toronto symbol MAD; SI Rating: Start-up) (604-689-1659; www.mirandagold.com; Shares outstanding: 51.2 million; Market cap: $22.0 million; No dividends paid) explores for gold, mainly in the Cortez Trend and Battle Mountain-Eureka regions of Nevada. It has 13 properties in various stages of production in these areas, which are two of the world’s most productive gold belts. The company also has an exploration project in Alaska, and is applying for an exploration license in Colombia. Miranda takes part in a number of joint ventures. These agreements are crucial for junior-exploration firms, as they give them a way to fund further exploration on properties where they have already discovered minerals. Joint ventures also let juniors retain an interest in the properties without taking on debt or resorting to dilutive share issues....
YAMANA GOLD INC. $10.60 (Toronto symbol YRI; SI Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 741.0 million; Market cap: $7.9 billion; Dividend yield: 0.8%) reports that its cash flow per share rose 28.6% in the latest quarter, to $0.18 from $0.14. Yamana’s production rose 5%, to 253,264 ounces of gold. As well, the company sold its gold for an average of $1,201 an ounce in the latest quarter, up 30.3% from $932 an ounce a year ago. Yamana expects its 2010 gold production to rise 12%, to 1.145 million ounces from 1.03 million ounces in 2009. Yamana Gold is still a buy.
BIRCHCLIFF ENERGY $9.60 (Toronto symbol BIR; SI Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 124.8 million; Market cap: $1.2 billion) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. In the three months ended June 30, 2010, Birchcliff’s production rose 9.3%, to 12,357 barrels of oil equivalent per day (this measurement includes natural gas) from 11,313 barrels a year earlier. Cash flow per share rose 5.6%, to $0.19 from $0.18. Birchcliff will now spend $227.2 million on exploration and development this year. It will fund these activities from its cash flow, as well as with debt. Currently, the company’s debt of $236 million is just 19.7% of its $1.2 billion market cap, so it can easily borrow more funds....
DOREL INDUSTRIES $35.18 (Toronto symbol DII.B; SI Rating: Extra Risk) (514-731-0000; www.dorel.com;Shares outstanding: 32.9 million; Market cap: $1.2 billion; Dividend yield: 1.7%) makes a wide range of products, including ready-to assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; home furnishings, including chairs, tables, bunk beds, futons and step stools; and recreational products, including bicycles. Dorel’s earnings jumped 44.6% in the three months ended June 30, 2010, to $1.07 a share from $0.74 a share a year earlier. (All figures except share price in U.S. dollars.) Revenue rose 10.3% to $607.7 million from $551.1 million. The company raised its quarterly dividend by 20%, to $0.15 from $0.125, with the June payment. The shares now yield 1.7%. The stock trades at just 9.5 times the $3.66 a share that Dorel is expected to earn this year....
CASH STORE FINANCIAL SERVICES INC. $16.54 (Toronto symbol CSF; SI Rating: Speculative) (780-408-5110; www.csfinancial.ca; Shares outstanding: 17.1 million; Market cap: $282.3 million; Dividend yield: 2.4%) operates 525 stores under two banners: The Cash Store and Instaloans. Both stores offer consumer payday loans (advances on upcoming paycheques). Advances to customers range from $100 to $1,500. Customers must provide proof of income, copies of recent bank statements, current proof of residence, and current telephone and utility bills. These requirements keep the company’s loan losses to a manageable 4%. Cash Store Financial’s stores also offer cheque cashing, money transfers, debit cards, prepaid credit cards, collections and telephone reconnection....
BROADRIDGE FINANCIAL SOLUTIONS INC., $20.19, New York symbol BR, serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. Broadridge mails and processes 70% of all proxy votes. In its 2010 fiscal year, which ended June 30, 2010, Broadridge earned $225.1 million. That’s up 0.9% from $223.1 million in fiscal 2009. Earnings per share rose 2.5%, to $1.62 from $1.58, on fewer shares outstanding. If you exclude unusual items, mostly income tax gains, Broadridge’s per-share earnings rose 3.3%, to $1.56 from $1.51. On that basis, the latest earnings still fell short of the consensus estimate of $1.57 a share....
RUSSEL METALS, $19.08, symbol RUS on Toronto, earned $0.31 a share before one-time items in the three months ended June 30, 2010. That’s a big improvement over the $0.10 a share it earned a year earlier. Revenue rose 9.4%, to $506.1 million from $462.5 million. The company distributed more steel during the quarter; that was the main reason for the higher revenue. As well, Russel continues to do a good job of controlling its costs and conserving cash: In early 2009, it cut 500 jobs (or 16.7% of its workforce), lowered executive pay by 10% and reduced its remaining employees’ hours. Those measures are helping push up its earnings. As well, the company cut its quarterly dividend by 44.4% last year, to $0.25 a share from $0.45. The stock now yields 5.2% a year, and the dividend now appears safe. Russel holds cash of $283.8 million, or $4.75 a share. Its $335.5 million of long-term debt is a reasonable 30.5% of its market cap....