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
COMPTON PETROLEUM $1.02 (Toronto symbol CMT; SI Rating: Speculative) (403-237-9400; www.comptonpetroleum.com; Shares outstanding: 263.6 million; Market cap: $268.9 million; No dividends paid) explores for oil and natural gas in western Canada. About 83% of its production is natural gas. In the three months ended December 31, 2009, Compton’s cash flow per share fell sharply, to $0.03 from $0.23 a year earlier. Revenue fell 45%, to $57.6 million from $104.8 million. Lower oil and gas prices contributed to the declines. As well, the company saw a 22.2% drop in production because it sold land to pay down debt....
AASTRA TECHNOLOGIES $33.27 (Toronto symbol AAH; SI Rating: Speculative) (905-760-4200; www.aastra.com; Shares outstanding: 13.9 million; Market cap: $462.5 million; Dividend yield: 2.4%) develops and markets products and systems for accessing communication networks, including the Internet. In the three months ended December 31, 2009, Aastra’s earnings per share jumped to $1.11. A year earlier, the company earned $0.10 a share. Despite the higher earnings, revenue fell 16.8%, to $217.8 million from $261.8 million a year earlier, mainly because of the weak economy. However, revenue was up 9.6% from the previous quarter. In April 2008, the company bought the business-communications division of Swedish telecom giant Ericsson. Aastra has now finished integrating this purchase. That has eliminated overlapping costs and pushed up the company’s profits....
TIM HORTONS $33.66 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 179.2 million; Market cap: $6.0 billion; Dividend yield: 1.5%) earned $296.4 million in 2009. That’s up 4.1% from $284.7 million in 2008. Earnings per share rose 5.8%, to $1.64 from $1.55, on fewer shares outstanding. The company’s 2009 sales rose 9.7%, to $2.2 billion from $2.0 billion. That’s mainly because it opened 176 new coffee-and-donut stores: 131 in Canada and 45 in the U.S. Tim Hortons has raised its quarterly dividend by 30.0%, to $0.13 a share from $0.10. The new annual rate of $0.52 yields 1.5%....
YAMANA GOLD INC. $10.28 (Toronto symbol YRI; SI Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 733.4 million; Market cap: $7.5 billion; Dividend yield: 0.4%) reports that its revenue soared 355.2% in the three months ended December 31, 2009, to $399.8 million from $87.8 million a year earlier. (All figures except share price and market cap in U.S. dollars). Earnings (before one-time items) shot up 716.7%, to $100.9 million from $12.4 million. Per-share earnings rose 600.0%, to $0.14 from $0.02, on more shares outstanding. Cash flow per share rose 320.0%, to $0.21 from $0.05. Record high production and gold prices were the main reasons for the gains. The company produced 325,252 ounces of gold in the latest quarter, up 27.7% from 254,774 a year earlier. The rise is partly because its new Gualcamayo mine in Argentina started producing gold in July 2009. The company holds cash of $170.1 million. Its $529.5 million of long-term debt is just 7% of its market cap....
FAIRFAX FINANCIAL HOLDINGS $373.55 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.4 million; Market cap: $7.2 billion; Dividend yield: 2.7%) plans to buy the 91.7% of Zenith National Insurance Corp. (New York symbol ZNT) that it doesn’t already own for $1.4 billion U.S. To help pay for the purchase, Fairfax has raised $200 million U.S. by issuing new shares. Zenith has two wholly owned subsidiaries: Zenith Insurance Company and ZNAT Insurance Company. These firms sell workers’ compensation insurance to businesses across the U.S. Sharply higher layoffs during the economic slowdown have hurt Zenith’s business. Fairfax has taken advantage of its strong financial position to buy other insurers whose share prices have dropped with the slow economy. It recently paid $960 million U.S. for the 27.4% of Odyssey Re Holdings Corp. that it didn’t already own....
ATLANTIC TELE-NETWORK $41.59 (Nasdaq symbol ATNI; SI Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.2 million; Market cap: $632.2 million; Dividend yield: 1.9%) gets 49% of its revenue from its 80% interest in Guyana Telephone and Telegraph Company. The rest comes from wireless interests in the Caribbean and Bermuda, and from small U.S. holdings. Atlantic is working to finish the integration of over 800,000 wireless accounts from Verizon Wireless last year. It paid $200 million for these accounts. The subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. ...
CEDAR FAIR L.P., $11.14, New York symbol FUN, is the target of a friendly, $11.50-a-unit takeover offer from Apollo Global Management, a private-investment firm. Cedar Fair owns 11 amusement parks, six outdoor water parks, one indoor water park and five hotels, mostly in the midwest and northeastern U.S. Apollo needs two-thirds of Cedar Fair’s investors to agree to its takeover. Another private-equity firm, Q Funding III LP, holds 10% of Cedar Fair and opposes Apollo’s offer. However, the units are trading at about 3% below the offer, which indicates that investors don’t expect a higher bid....
ALIMENTATION COUCHE-TARD INC., $18.41, symbol ATD.B on Toronto, has more than 3,500 convenience stores in the U.S., and is the largest convenience-store operator in Canada, with over 2,000 outlets. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at 70% of its stores. The stock fell 8% this week after the company reported lower-than-expected earnings. In its third quarter, which ended January 31, 2010, Couche-Tard’s earnings fell 22.9%, to $54.8 million, or $0.29 a share. A year earlier, it earned $71.1 million, or $0.36 a share. (All figures except share price in U.S. dollars.) The latest quarter’s earnings fell well short of the consensus earnings estimate of $0.38 a share. Earnings mainly fell due to lower profit margins on gasoline sales at the company’s U.S. outlets....
QUAKER CHEMICAL CORP., $25.19, New York symbol KWR, makes lubricants and specialty chemicals that protect machinery from corrosion. The stock rose 26% this week after the company reported 2009 earnings that were much higher than expected. Quaker earned $16.2 million in 2009. That’s up 45.7% from $11.1 million the previous year. Earnings per share rose 40.0%, to $1.47 from $1.05, on more shares outstanding. Both years included costs related to Quaker’s restructuring plan, which included a 10% cut to the company’s workforce. As well, Quaker’s former chief executive officer retired in October 2008 and entered into a three-year consulting contract with the company. That cost Quaker $3.5 million in 2008 and $2.4 million in 2009. It will pay a further $1.3 million this year....
BREAKWATER RESOURCES, $0.43, symbol BWR on Toronto, reports that its Toqui mine in central Chile was undamaged by the recent magnitude 8.8 earthquake. The mine, which produces zinc, lead, gold and silver, continues to operate normally. In 2009, Toqui produced 233,382 ounces of silver, 44,079 ounces of gold, 19,635 tonnes of zinc concentrate and 1,025 tonnes of lead. Breakwater is a buy for highly aggressive investors....