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
MOSAID TECHNOLOGIES INC. $22.18 (Toronto symbol MSD; SI Rating: Extra Risk) (613- 599-9539; www.mosaid.com; Shares outstanding: 11.8 million; Market cap: $260.9 million; Dividend yield: 4.5%) mainly licenses patented semiconductor (computer chip) and telecommunications technology, including patents for technology used in smartphones and laptops. The company complements this business by developing its own memory and other technologies. In total, Mosaid holds about 1,900 patents and applications. The company licenses patents based on its own innovations. It also buys patents, and has secured sublicensing rights to others.
Selling to world leaders
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APACHE CORP., $105.44, New York symbol APA, has made two major purchases that will expand its offshore oil-drilling operations in the Gulf of Mexico. This week, the company agreed to buy Mariner Energy Inc. (New York symbol ME) for $2.7 billion in cash and stock. Mariner has reserves of 181 million barrels of oil equivalent (including natural gas). Besides offshore fields in the Gulf of Mexico, Mariner has onshore properties in Texas and New Mexico. Apache will also assume $1.2 billion of Mariner’s debt. The deal should close in the third quarter of 2010. Apache is also buying Devon Energy Corp.’s (New York symbol DVN) oil and gas reserves on the Gulf of Mexico Shelf for $1.05 billion. Devon is a recommendation of our Stock Pickers Digest newsletter. These fields hold 83 million barrels of oil equivalent. Apache aims to complete this purchase by the end of June....
AMAZON.COM INC., $142.17, symbol AMZN on Nasdaq, has received approval from the Canadian government to open a distribution centre in Canada. In 2002, the government let Amazon open a Canadian web site, www.amazon.ca, but would not let the company build a warehouse because of concerns about foreign ownership of Canadian cultural industries. Right now, Canadian orders are handled in the United States, and shipped into the country through a subsidiary of Canada Post. Amazon will invest $20 million in the new warehouse. It has also promised to invest $1.5 million to promote Canadian culture and authors, and make more Canadian content available to users of its Kindle electronic-book reader....
CEDAR FAIR L.P., $14.11, New York symbol FUN, owns 11 amusement parks, six outdoor water parks, one indoor water park and five hotels, mostly in the midwestern and northeastern U.S. The stock rose 17% this week. That’s because Cedar Fair has cancelled a friendly, $11.50-a-unit takeover offer from private-investment firm Apollo Global Management. Many unitholders thought that price was too low, so this move raises the possibility of a higher bid. Cedar Fair will pay Apollo $6.5 million in cancellation fees. To put this figure in context, Cedar Fair earned $35.4 million, or $0.63 a unit, in 2009....
ALIMENTATION COUCHE-TARD INC., $18.90, symbol ATD.B on Toronto, has launched a $1.9-billion hostile takeover bid for Casey’s General Stores (symbol CASY on Nasdaq). Casey’s owns 1,507 convenience stores in the U.S. Midwest. The stores offer a wide variety of food and non-food merchandise, as well as gasoline, under the names Casey’s General Store, HandiMart and Just Diesel. Casey’s has rejected Couche-Tard’s all-cash, $36-a-share bid as inadequate. Casey’s is now trading at $39.10, which is 8.6% above Couche-Tard’s offer. That suggests that investors expect a higher bid....
APPLE INC., $235.97, Nasdaq symbol AAPL, rose 2% this week on media reports that the company will soon launch a new version of its hugely popular iPhone. Aside from being thinner than the current iPhone, the new model will likely have more memory and a number of new features. Apple may also be developing an iPhone that runs on code division multiple access (CDMA) cellphone networks. Right now, the iPhone uses global system for mobile communications (GSM) technology. More cellphone providers use GSM than CDMA. However, some large U.S. carriers, including Verizon (see below) and T-Mobile, use CDMA networks. A CDMA iPhone would let Apple expand its market share by making the iPhone available to these carriers....
NISSAN MOTOR CO., $17.50, symbol NSANY on Nasdaq, has set a price for its LEAF electric vehicle, which will be the first electric car to be widely sold in the U.S. Nissan plans to ship the LEAF to selected U.S. dealers in December, and sell the car nationwide in 2011. The LEAF will carry a manufacturer’s suggested retail price of $32,780 U.S. When you include a $7,500 federal tax credit, the car’s price will fall to $25,280. The LEAF will also be eligible for further rebates in California and some other states. Nissan will offer a lease program starting at $349 a month, not including tax credits....
GENERAL MILLS INC., $70.48, New York symbol GIS, fell 3.5% this week, even though the company reported better-than-expected earnings and sales in its latest quarter. General Mills is the second-largest cereal maker in the U.S., after Kellogg. It also makes yogurt, baking mixes and canned and frozen vegetables, among other foods. In the three months ended February 28, 2010, General Mills’ sales rose 2.6%, to $3.63 billion from $3.54 billion a year earlier. That beat the consensus sales estimate of $3.62 billion....
DUNDEEWEALTH INC., $14.78, symbol DW on Toronto, manages investments and operates a brokerage business. The company also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice. DundeeWealth has raised its quarterly dividend by 100%, to $0.07 per share from $0.035. The shares now yield 1.9%. The company had already raised its dividend by 75%, to $0.035 per share from $0.02 with the October 2009 payment. DundeeWealth is still a buy....
The retailing industry is fiercely competitive. But leading retailers like Wal-Mart and PetSmart have special advantages that give them an edge. For example, Wal-Mart’s huge size lets it extract low prices from suppliers all over the world. PetSmart is much smaller that Wal-Mart, so it doesn’t have the same sway over its suppliers. However, PetSmart’s focus on high-quality products and specialized services continue to help it dominate its niche industry....