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:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
  3. 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
SYMANTEC CORP. $18.71 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 810.6 million; Market cap: $15.2 billion; No dividends paid) makes software that protects computers from viruses and electronic attacks. The popular Norton anti-virus program is its best-known product. In the three months ended October 2, 2009, Symantec earned $294 million, or $0.36 a share. That’s down 5.8% from $312 million, or $0.37 a share, a year earlier. These figures exclude non-recurring items, such as the cost of integrating companies Symantec bought, and writedowns of buildings it plans to sell. Despite the drop, the latest earnings beat the $0.33 a share that analysts were expecting. That was entirely because of the company’s cost cuts, as its revenue fell 2.9%, to $1.47 billion from $1.52 billion....
TOROMONT INDUSTRIES LTD. $27.51 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 64.9 million; Market cap: $1.8 billion; Dividend yield: 2.2%) has raised its takeover offer for Enerflex Systems Income Fund (Toronto symbol EFX.UN) to $613 million. Enerflex has agreed to the new terms. Enerflex unitholders will now receive a combination of cash and Toromont shares equal to $14.30 per unit. At least 50% of the offer will be in cash, and Toromont common shares will make up the rest. Toromont’s original offer was worth $13.50 a unit. Enerflex is now trading at $14.39 per unit, slightly higher than Toromont’s offer, so it appears some buyers expect the offer to fail. With Enerflex’s support, however, the deal will now likely go through....
Natural-gas prices are up 22.2%, to $5.50 U.S. per thousand cubic feet from $4.50 in early December 2009. Colder weather in the U.S. is the main reason for the rise. As well, producers cut back on drilling in response to lower prices in 2009. That cut inventories. An improving economy is also lifting demand. Gas-weighted Cimarex and Devon trade at reasonable multiples to their forecast cash flows, based on today’s prices. As well, both have low debt and steady development spending. That puts them in a good position to prosper, even if natural-gas prices falter. CIMAREX ENERGY $54.13 (New York symbol XEC; SI Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 83.5 million; Market cap: $4.5 billion; Dividend yield: 0.4%) is an oil and gas explorer and producer that mainly operates in the U.S. Natural gas makes up 70% of its production....
TRILOGY ENERGY TRUST $8.32 (Toronto symbol TET.UN; SI Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Units outstanding: 109.2 million; Market cap: $908.5 million; Dividend yield: 7.2%) will soon convert itself into a conventional corporation. The trust now pays a monthly distribution of $0.05 a unit. After the conversion, it plans to pay a dividend of $0.035 per month. That will give it a 5.0% yield. That’s still a high yield for a dividend-paying oil stock, but the company will have $1 billion in tax losses that it can use to delay paying taxes until 2016. That should let it maintain the high dividend. Trilogy Energy Trust is still a buy.
TRIMBLE NAVIGATION $24 (Nasdaq symbol TRMB; SI Rating: Speculative) (408-481-6914; www.trimble.com; Shares outstanding: 120.4 million; Market cap: $2.9 billion; No dividends paid) makes GPS devices and technology for four main markets: 1) Engineering and construction accounts for the largest share (50%) of Trimble’s sales. 2) Agricultural GPS products (28% of sales) help farmers cut costs and increase yields. For example, GPS allows for more precise plowing, seeding or fertilizing, even at night....
RUGGEDCOM INC. $21.01 (Toronto symbol RCM; SI Rating: Speculative) (1-888-264-0006; www.ruggedcom.com; Shares outstanding: 12.1 million; Market cap: $255.0 million; No dividends paid) has announced that one of its clients bought over $2.1 million U.S. of equipment for use in wind farms in China. That’s a record order for the company. RuggedCom makes computer-networking equipment that is used in harsh environments. Its products include Ethernet switches that connect computers and let them exchange data at high speeds. It also makes Internet-based networks that are faster and more functional than systems that are now used in harsh environments. RuggedCom’s revenue is around $64 million U.S. per year, so the new contract will add approximately 3.3% to its 2010 revenue. But just as important, it will let RuggedCom continue to expand its presence in the growing Chinese market. It also lets the company tap into rising demand for wind farms....
AMERICAN WOODMARK $19.77 (Nasdaq symbol AMWD; SI Rating: Speculative) (540-665-9100;www.americanwoodmark.com; Shares outstanding: 14.1 million; Market cap: $279.7 million; Dividend yield: 1.8%) 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 these through a network of dealers and distributors. It also sells its cabinets directly to major homebuilders and retailers, such as Home Depot. American Woodmark operates 12 plants and various service centres across the U.S. In the three months ended October 31, 2009, American Woodmark lost $5.3 million, or $0.37 a share. A year earlier, it lost $481,000, or $0.03 a share. If you exclude one-time restructuring charges, the company would have lost $0.36 a share in the latest quarter. That’s much higher than the loss of $0.17 a share that analysts were expecting. Sales fell 22.9%, to $104.1 million from $134.9 million. The bigger loss mainly resulted from continued weak sales to homebuilders and contractors. In response to the slow sales, American Woodmark closed two of its less-efficient plants earlier in 2009. It also suspended production at a third and laid off a number of salaried employees. These moves, plus lower fuel and material costs, partly offset the company’s lower sales....
NEW GOLD $4.43 (Toronto symbol NGD; SI Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 388.8 million; Market cap: $1.7 billion; No dividends paid) has entered into an agreement with Goldcorp over the El Morro gold/copper project in Chile. Barrick Gold had previously agreed to pay $465 million for Xstrata plc’s 70% stake in El Morro. Instead, New Gold will exercise its right of first refusal on Xstrata’s 70% stake and then transfer it to Goldcorp. Goldcorp will pay New Gold $50 million in cash, and pay some of New Gold’s costs to develop its 30% share....
AEROPOSTALE INC. $34.54 (New York symbol ARO; SI Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 66.1 million; Market cap: $2.3 billion; No dividends paid) reports that its December same-store sales rose 10% from a year earlier. Same-store sales compare results from stores that have been open for a year or more. This lets investors see how much of a retailer’s sales gains come from internal growth, and how much from new-store openings. For the five-week period ended January 2, 2009, the company’s total sales (which includes new stores) rose 17%, to $460.8 million. Aeropostale’s profit margins rose, as well. That’s because it’s doing a better job of managing its inventory....
DOMINO’S PIZZA $11.16 (New York symbol DPZ; SI Rating: Average)(734-930-3030; www.dominos.com; Shares outstanding: 58.4 million; Market cap: $652.1 million; No dividends paid) rose sharply in January. The gain was mostly due to positive investor reaction to Domino’s new television ads for its new pizza. The company is aiming to increase its market share by changing its main pizza recipe. It will add seasoned crusts, as well as new tomato sauces and cheeses. The unconventional 15-, 30- and 60-second ads use a documentary style to show focus groups and Twitter users criticizing the old pizza, saying its “crust tasted like cardboard,” it was “totally void of flavor,” it was “worse than microwave pizza,” and the sauce was “like ketchup.”...