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
DUNDEE REIT $24.77 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 35.5 million; Market cap: $879.7 million; Dividend yield: 8.9%) owns and manages 6.7 million square feet of office, industrial and retail space, including 48 office buildings and 34 industrial properties. Dundee reported revenue of $61 million in the three months ended March 31, 2010. That’s up 26.7% from $48.1 million a year earlier. The best way to measure a real estate investment trust’s operating performance is by looking at its cash flow, and Dundee’s cash flow rose 35.4% in the latest quarter, to $16.6 million from $12.3 million. However, cash flow per unit fell 8.4%, to $0.54 from $0.59, on more units outstanding. The trust’s occupancy rate was 97% in the latest quarter, up from 95.4% at the end of 2009. Higher occupancy and acquisitions were the main reasons for the higher revenue and cash flow....
SYMANTEC CORP. $15.07 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 798.9 million; Market cap: $12.0 billion; No dividends paid) is buying the identity and authentication operations of VeriSign Inc. for $1.3 billion. This business makes Secure Sockets Layer (SSL) software certificates, which web site operators use to cut down on fraud and identity theft. Over 2.3 million web sites use VeriSign’s certificates, which makes it the leader in this market. Symantec sees VeriSign’s technology as a good fit with its existing data-security products. As well, demand for these products should continue to rise as more businesses shift to a cloud-computing model. That’s where data and software are kept on one or more centralized computer networks....
GABRIEL RESOURCES $4.95 (Toronto symbol GBU; SI Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 341.0 million; Market cap: $1.7 billion) is up almost 30% since early June after Romania’s supreme court ordered the country’s environment ministry to award approvals for the company’s Cetate and Corna dams. The dams are necessary for Gabriel’s Rosia Montana project. The decision regarding the dams is a step forward, but the environment ministry has still not said when it will restart the environmental-review process for the entire Rosia Montana project. Some Romanian political parties and environmental groups argue that Rosia Montana would destroy ancient Roman mines. As well, the company will use cyanide to extract the gold. The mine’s opponents contend that this would harm the environment....
CYBERPLEX $0.60 (Toronto symbol CX; SI Rating: Speculative) (416-597-8889; www.cyberplex.com; Shares outstanding: 68.5 million; Market cap: $41.1 million) is buying privately held Tsavo Media for $75 million U.S. Tsavo has more than 300 web sites that offer consumer information in five categories: health & wellness, technology, lifestyle, education and finance. In all, its sites attract more than 30 million visitors each month. Tsavo was profitable in 2009, and had revenue of about $110 million. Cyberplex’s 2009 revenue was $110.4 million, so adding Tsavo will double its annual revenue. The purchase should be a good fit for Cyberplex. That’s because Cyberplex sells a service that links advertisers’ online marketing campaigns with its affiliates, which include web-site operators (like Tsavo), bloggers and email marketers....
AMERICAN WOODMARK $21.45 (Nasdaq symbol AMWD; SI Rating: Speculative) (540-665-9100; www.americanwoodmark.com; Shares outstanding: 14.2 million; Market cap: $303.9 million; Dividend yield: 1.7%) is a U.S.-based maker of cabinets for kitchens and bathrooms. It offers more than 380 cabinet lines in a variety of designs, materials and finishes. The company mainly sells its cabinets through a network of dealers and distributors. It also sells them directly to major homebuilders and retailers, such as Home Depot. American Woodmark operates 14 plants and 10 builder centres across the U.S. In the three months ended April 30, 2010, American Woodmark lost $1.5 million, or $0.11 a share. A year earlier, it lost $2.9 million, or $0.21. Sales fell 20.1%, to $112.4 million from $140.7 million.
Remodelling sales remain weak
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DEL MONTE FOODS CO., $15.28, New York symbol DLM, rose 7% this week after it reported better-than-expected earnings for its latest fiscal year. Del Monte makes canned fruits, vegetables, sauces and soups. It also makes pet food under the Meow Mix, 9Lives and Milk-Bone brands. The company earned $242.0 million in the year ended May 2, 2010. That’s up 63.8% from $147.7 million in the prior year. Earnings per share rose 60.8%, to $1.19 from $0.74, on more shares outstanding. If you exclude a charge related to the early repayment of senior notes, Del Monte would have earned $1.30 a share in the latest year. That easily beat the consensus estimate of $1.22 a share....
NEW GOLD INC., $6.79, symbol NGD on Toronto, will be added to the FTSE Gold Mine Index on June 21, 2010. FTSE is an independent company that is jointly owned by the U.K.-based Financial Times newspaper and the London Stock Exchange. The FTSE Gold Mine Index includes all gold-mining companies that have sustainable gold production of at least 300,000 ounces a year, and get 51% or more of their revenue from mining gold. New Gold expects to produce a total of 330,000 to 360,000 ounces of gold in 2010. The company’s production will probably rise to over 400,000 ounces in 2012....
APPLE INC., $255.97, Nasdaq symbol AAPL, has sold 2 million of its new iPad tablet computers since the beginning of April. At this rate, the company should sell many more iPads than the 6 million it was expected to sell in the first year. As well, Apple is now selling the iPad outside the U.S. That should further push up sales. The stock trades at 19.2 times the $13.30 a share that the company will probably earn in its current fiscal year, which ends September 30, 2010. That’s reasonable when you consider that rising iPad sales will lead to more downloads of music, movies and books from Apple’s iTunes web site. As well, Apple’s iPhone continues to improve its share of the increasingly competitive smartphone market....
ALIMENTATION COUCHE-TARD INC., $19.22, symbol ATD.B on Toronto, will now direct its takeover offer to shareholders of Casey’s General Stores (symbol CASY on Nasdaq). In April, Couche-Tard directed its offer at Casey’s management and board of directors, hoping to win their approval. However, Casey’s rejected Couche-Tard’s all-cash, $36-a-share bid as inadequate. Casey’s is now trading at $35.66, which is just 0.9% below Couche-Tard’s offer. That suggests investors may not be expecting a significantly higher bid. Couche-Tard also plans to nominate nine candidates to replace Casey’s current board of directors....
INTERNATIONAL BUSINESS MACHINES CORP., $125.26, New York symbol IBM, continues to expand its business-software operations. That’s because it earns higher profits from selling software and computer-management services than selling mainframe computers. This week, the company agreed to buy Sterling Commerce from AT&T (see below). Ohio-based Sterling makes software that helps automate and streamline transactions between businesses, such as buying raw materials and replenishing inventory. Sterling has over 18,000 clients. The sale will close later this year. IBM is paying $1.4 billion for Sterling. To put this figure in context, IBM earned $2.6 billion, or $1.97 a share, in the three months ended March 31, 2010....