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
BRIGGS & STRATTON CORP. $20 and other lawn-mower engine makers have agreed to settle over 65 class-action lawsuits that accused the companies of using misleading labels on their engines. The settlement will cut Briggs’ after-tax earnings by $19 million. That’s over half of the $35.5 million, or $0.71 a share, that it earned in the year ended June 30, 2009. Still, the settlement lowers the company’s long-term risk. Buy. SHERWIN-WILLIAMS CO. $66 has now raised its dividend for 31 consecutive years. The new annual rate of $1.44 a share yields 2.2%. As well, the stock has gained 15% since February 2010, mainly because of takeover rumours. Hold. GANNETT CO. INC. $17 expects advertising revenue from its newspapers and TV stations to fall by about 10% in the first quarter of 2010 from a year earlier. However, that’s better than the 18% drop in ad sales it reported in the fourth quarter of 2009. Buy.
PEPSICO INC., $66.56, New York symbol PEP, rose 2% this week after the company raised its dividend and announced a new share buyback plan. PepsiCo’s new quarterly dividend is $0.48 a share. That’s up 6.7% from $0.45. The new annual rate of $1.92 yields 2.9%. The company also plans to buy back up to $15 billion of its common shares over the next three years. That’s equal to 14% of its $104.5-billion market cap....
20-20 TECHNOLOGIES INC., $3.35, symbol TWT on Toronto, reported that its earnings jumped 158.1% in its latest quarter. In the three months ended January 31, 2010, the company earned $462,000, or $0.02 a share. A year earlier, it earned $179,000, or $0.01 a share (all figures except share price in U.S. dollars). Montreal-based 20-20 makes computer-aided design, sales, engineering and manufacturing software for clients in the interior-design and furniture industries. The company has customers in 100 countries, and markets software in 23 languages....
INTACT FINANCIAL CORP. $42.95 (Toronto symbol IFC; SI Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 119.9 million; Market cap: $5.1 billion; Dividend yield: 3.2%) 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 Financial has over four million clients. It controls roughly 11% of the Canadian insurance market. Intact was formerly ING Canada, a unit of Dutch financial services group ING Groep NV. In February 2009, ING Groep sold ING Canada to the public. The company then changed its name to Intact Financial. Intact has two product lines: Its personal products contribute 70% of its premiums and include automobile and property insurance that Intact sells to individuals. Commercial (30% of premiums) includes auto, property, liability, surety and specialty coverage that Intact mainly sells to small- and medium-sized businesses....
WESTJET AIRLINES $13.49 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) fell 3% on news that Sean Durfy will resign as the company’s chief executive officer. His replacement is Gregg Saretsky, WestJet’s executive vice-president of operations. Sudden resignations like this always add to a stock’s uncertainty. However, the new CEO has 25 years of experience in the Canadian airline industry. As well, the change will have little impact on WestJet’s low air fares and strong focus on customer service. These benefits continue to help it lure customers away from Air Canada, its chief rival. In 2009, WestJet’s share of Canada’s air-travel market rose to 38% from 36% in 2008....
EUROPEAN GOLDFIELDS $6.55 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 181.8 million; Market cap: $1.2 billion; No dividends paid) holds a 95% interest in Hellas Gold. Hellas owns three gold and base-metal deposits in northern Greece: the Stratoni zinc/lead/silver property, the Olympias gold/zinc/lead/silver project and the Skouries copper/gold property. European Goldfields also owns 80% of the Certej gold/silver project in Romania. The company has completed a positive feasibility study on Certej, and applied for environmental approval and a mining permit....
INTERNATIONAL ROAD DYNAMICS $0.92 (Toronto symbol IRD; SI Rating: Speculative) (306-653-6600; www.ird.ca; Shares outstanding: 14 million; Market cap: $12.9 million; No dividends paid) jumped more than 50% in mid-March after it reported quarterly results that were higher than a year ago. In the three months ended November 30, 2009, International Road’s revenue rose 3.9%, to $12.8 million from $12.3 million a year earlier. The company has customers all over the world; it reported higher sales in all regions, and across most of its product lines. International Road earned $0.03 a share, up from nil a year ago. International Road makes products and systems that manage highway traffic, as well as weigh-station technology for trucks....
LEON’S FURNITURE LTD. $12.20 (Toronto symbol LNF; SI Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.8 million; Market cap: $863.8 million; Dividend yield: 2.3%) has built its chain of over 66 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising. In the three months ended December 31, 2009, Leon’s revenue fell 3.9%, to $198 million from $206.1 million a year earlier. But despite the decline, earnings per share rose 3%, to $0.34 from $0.33. The weak economy prompted many consumers to put off buying new furniture. That’s why Leon’s revenue fell during the latest quarter. However, the company’s earnings rose because it was able to cut its costs....
BMTC GROUP $36.51 (Toronto symbol GBT.A; SI Rating: Extra Risk) (514-648-5757; No web site; Shares outstanding: 26.3 million; Market cap: $960.2 million; Dividend yield: 1.1%) is one of Quebec’s largest retailers of furniture, electronic goods and household appliances. In the three months ended December 30, 2009, BMTC’s revenue rose 3.3%, to $223.9 million from $216.8 million. Earnings per share (excluding one-time items) jumped 27.8%, to $1.01 from $0.79. Cost cuts and higher investment returns raised earnings. BMTC plans to split its shares on a 2-for-1 basis on April 6, 2010....
DELPHI ENERGY $3.18 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 101.2 million; Market cap: $321.8 million; No dividends paid) explores for oil and gas in Alberta and B.C. Natural gas makes up 83% of its daily output. In the three months ended September 30, 2009, Delphi’s average daily output rose 5.6%, to 6,773 barrels of oil equivalent (this measurement includes natural gas) from 6,409 barrels. Despite the higher production, Delphi’s cash flow per share fell 33.3%, to $0.16 from $0.24 a year earlier. That’s because of lower oil and natural-gas prices. Delphi now holds 172,209 acres of undeveloped land. That’s up 37.3% from 125,359 acres in 2008. That gives it lots of drilling targets to increase output....