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.

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Growth Stocks Library Archives

Growth Stocks

Order backlogs a big plus for these two

CALIAN TECHNOLOGIES $17.65 (Toronto symbol CTY; SI Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.8 million; Market cap: $137.5 million Dividend yield: 4.5%) operates in two areas: The business and technology services division accounts for 67% of Calian’s revenue and provides engineers, health-care workers and other skilled professionals to clients on a contract basis. The systems-engineering division contributes the remaining 33% of revenue and sells hardware and software that is used for testing, operating and managing satellite and other communication systems. In the three months ended March 31, 2010, Calian’s earnings fell 40.7%, to $3.1 million, or $0.40 a share, from $5.2 million, or $0.67 a share, a year earlier. Revenue fell 11.3%, to $53.1 million from $59.9 million. Several unusually large satellite-engineering projects pushed up results in the year-earlier quarter. Calian’s order backlog stands at $970 million, or about four years of revenue. It holds cash of $36.3 million, or $4.65 a share, and has no debt. The company raised its quarterly dividend by 17.6%, to $0.20 from $0.17, with the March 2010 payment. The shares now yield 4.5% on an annualized basis....

2 min read

Pat McKeough

Growth Stocks

Chicago buy for FirstService

FIRSTSERVICE CORP. $23.95 (Toronto symbol FSV; SI Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.5 million; Market cap: $683.2 million; No dividends paid) is making a major investment in Colliers Bennett & Kahnweiler (Colliers B&K), which is Chicago’s leading commercial real-estate services firm. Terms were not disclosed. Colliers B&K manages 50 million square feet of property and employs more than 200 real-estate agents and property managers. Adding Colliers B&K will help FirstService expand its commercial real-estate brokerage operations in the key Chicago market....

1 min read

Pat McKeough

Growth Stocks

Buy ACI Worldwide, hold off on Fair Isaac

ACI WORLDWIDE $19.59 (Nasdaq symbol ACIW; SI Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 34 million; Market cap: $666.3 million; No dividends paid) makes software that is used to process transactions that involve credit cards, debit cards, smart cards, automated-teller machines, point-of-sale terminals and interbank payments. ACI has more than 750 clients in 88 countries. Its customers include more than 100 of the world’s 500 largest banks and seven of the top 12 retailers in the U.S. In the three months ended March 31, 2010, ACI’s revenue fell slightly, to $87.7 million from $88.2 million a year earlier. It lost $2.1 million, or $0.06 a share, in the quarter. That’s better than the $4.1 million, or $0.12 a share, it lost a year earlier. Despite the loss, ACI’s cash flow jumped to $11.8 million, or $0.35 a share, from $1.3 million, or $0.04 a share....

2 min read

Pat McKeough

Growth Stocks

Gains ahead for Aastra

AASTRA TECHNOLOGIES $22 (Toronto symbol AAH; SI Rating: Speculative) (905-760-4200; www.aastra.com; Shares outstanding: 14.0 million; Market cap: $307.1 million; Dividend yield: 3.6%) reported that its sales fell 21.6% in the three months ended March 31, 2010, to $171.9 million from $219.3 million a year earlier. Earnings per share fell to $0.58 from $1.02. Despite the lower sales and earnings, Aastra’s outlook is positive. The improving global economy should push up sales of its products and systems. As well, the company holds cash of $118.8 million, or $8.49 a share, and has no long-term debt. The company recently raised its quarterly dividend by 33.3%, to $0.20 from $0.15, with the March 2010 payment. The new annual rate of $0.80 yields 3.6%....

1 min read

Pat McKeough

Growth Stocks

Two junior oils, two levels of risk

BELLATRIX EXPLORATION $2.86 (Toronto symbol BXE; SI Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 92.5 million; Market cap: $264.1 million; No dividends paid) has established oil and gas production in Canada, one of the world’s safest jurisdictions. Bellatrix produces oil and natural gas in Saskatchewan and west-central Alberta. Gas makes up about 74% of its output. In the three months ended March 31, 2010, Bellatrix’s production fell 27.4%, to 7,248 barrels of oil equivalent per day (including natural gas) from 9,981 barrels a year earlier. That’s mainly because Bellatrix cut its capital spending a year earlier to conserve cash and pay down debt. It also suspended its monthly distribution with the March 2009 payment....

2 min read

Pat McKeough

Growth Stocks

Delphi ups its forecast

DELPHI ENERGY $2.65 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 101.5 million; Market cap: $268.9 million; No dividends paid) has raised its 2010 production forecast after a successful winter drilling program. The company expects to report record production of 7,600 barrels of oil equivalent per day (including natural gas) in the first quarter of 2010. That’s up from its earlier forecast of 7,350 barrels. For all of 2010, Delphi expects to produce an average of 7,700 to 8,200 barrels per day, up from its previous estimate of 7,500 to 8,000. The stock now trades at 4.4 times forecast 2010 cash flow of $0.60 a share....

1 min read

Pat McKeough

Growth Stocks

Updating ATLANTIC TELE-NETWORK and SYMANTEC CORP.

ATLANTIC TELE-NETWORK $44.75 (Nasdaq symbol ATNI; SI Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.3 million; Market cap: $683.9 million; Dividend yield: 1.8%) has completed its purchase of more than 895,000 wireless accounts from Verizon Wireless for $200 million in cash. The subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. The deal should close by the end of this year. Verizon Wireless had to sell these accounts for regulators to approve its purchase of Alltel in January 2009. Regulators also had to approve Atlantic’s purchase of the accounts; the company recently received approval from the U.S. Department of Justice and the Federal Communications Commission. These new accounts will bring Atlantic’s total number of wireless subscribers above one million, up from 200,000 today, and make it one of the largest wireless carriers in the U.S....

2 min read

Pat McKeough

Growth Stocks

Chipotle keeps growing

CHIPOTLE MEXICAN GRILL $138.9 (New York symbol CMG; SI Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.5 million; Market cap: $4.4 billion; No dividends paid) reports that its earnings per share climbed 51.9%, to $1.20 from $0.79, in the three months ended March 31, 2010. Sales rose 15.6%, to $409.7 million from $354.5 million. The company opened 20 new restaurants during the quarter. It also saw a 4.3% rise in same-restaurant sales and more customer visits. Chipotle is a Denver-based Mexican-restaurant chain that uses premium ingredients, such as naturally raised meat, in the meals it sells....

1 min read

Pat McKeough

Growth Stocks

Buys for economic-recovery gains

TOROMONT INDUSTRIES LTD. $25.56 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.9 million; Market cap: $2.0 billion; Dividend yield: 2.4%) has two divisions: the equipment group and the compression group. The equipment group’s Caterpillar dealership is one of the world’s largest, covering Ontario, Manitoba, Newfoundland and Labrador, and Nunavut. Toromont’s U.S.-based compression group designs, engineers, builds and installs compression systems for natural gas, fuel gas and carbon dioxide, as well as industrial and recreational refrigeration systems (for such things as hockey, curling and skating surfaces.)...

2 min read

Pat McKeough

Growth Stocks

The Wall Street Stock Forecaster Hotline - Friday, May 14, 2010

INTERNATIONAL BUSINESS MACHINES CORP., $131.19, New York symbol IBM, aims to double its earnings to $20 a share by 2015. To achieve this goal, IBM will expand in developing markets like Russia, India, Brazil and China. These countries are attracting more business activity as their economies grow. That’s increasing the need for IBM’s mainframe computers and technical expertise. By 2015, IBM aims to get 25% of its revenue from these markets, up from 19% last year. The company will also continue to spur its growth by purchasing related companies and assets. It will probably spend $20 billion on these purchases through 2015. That’s equal to 12% of its $170.4-billion market cap....

4 min read

Pat McKeough

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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.