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
Many Stock Pickers Digest recommendations pay no dividends. But some do provide significant income, along with capital-gains possibilities. In fact, dividends may generate up to a third of your long-term return. That’s why we now post the dividend yield (dividend rate divided by share price) in the basic information we present for each company we analyze. We’ll also tell you if a stock has never paid a dividend. (If it formerly paid dividends, we’ll tell you when it quit.)...
MAJOR DRILLING $28.70 (Toronto symbol MDI; SI Rating: Speculative) (www.majordrilling.com; 1-866-264-3986; Shares outstanding: 23.7 million; Market cap: $680.9 million; Dividend yield: 1.4%) is a large contract-drilling company that mainly serves the mining industry. Major Drilling’s shares have moved up from $23 in mid-December, even though the company reported lower revenue and earnings in the latest quarter. In the three months ended October 31, 2009, Major Drilling’s revenue fell 60.5%, to $75.5 million from $191.0 million a year earlier. However, drilling markets are recovering: the latest quarter’s revenue was up 21% from the quarter ended July 31....
CAMECO CORP. $33.01 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 392.7 million; Market cap: $13.0 billion; Dividend yield: 0.7%) has agreed to sell its 48.5% stake in Centerra Gold (Toronto symbol CG) for $872 million. Cameco currently holds 113.9 million Centerra shares. It will sell 88.6 million of these to the public for $10.25 each. It will then transfer the remaining 25.3 million shares to the government of Kyrgyzstan. That fulfills a condition of a deal that Centerra reached with the government on its Kumtor gold mine earlier this year. Combined with Cameco’s current cash holdings, the Centerra sale will give the company about $1.5 billion. It may use these funds to buy properties or other companies related to its core uranium and nuclear-power businesses....
DUNDEE REIT $19.45 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 21.2 million; Market cap: $412.7 million; Dividend yield: 11.3%) owns and manages 6.7 million square feet of office, industrial and retail space, including 43 office buildings and 34 industrial properties. GE Real Estate owns a 15% voting interest in Dundee REIT, and Dundee Corp. owns 21%. Dundee reported revenue of $47.7 million in the three months ended September 30, 2009. That’s up 3.0% from $46.3 million a year earlier. The best way to measure a real-estate company’s operating performance is by looking at its cash flow, and Dundee’s cash flow per share rose 8.0%, to $0.54 from $0.50 a year earlier. The company raised its rents an average of 5.5% in the latest quarter, to $15.72 per square foot. As well, its occupancy rate rose to 94.9% from 94.2%. These were the main reasons for the gains....
PRT FOREST REGENERATION INCOME FUND $1.91 (Toronto symbol PRT.UN; SI Rating: Speculative) (250-381-1404; www.prtgroup.com; Shares outstanding: 9.7 million; Market cap: $18.5 million; Dividends suspended in January 2009) is the largest producer of container-grown forest seedlings in North America. It grows its seedlings in 12 greenhouses and open outdoor compounds. In the three months ended September 30, 2009, PRT’s revenue dropped 19.6%, to $5.6 million from $6.9 million a year earlier. Cash flow per unit was negative $0.07, compared to negative $0.03. The fund paid a $0.02 monthly distribution in January 2009, and then suspended distributions to conserve cash....
VERIGY LTD. $11.97 (Nasdaq symbol VRGY; SI Rating: Extra Risk) (1-800-447-8378; www.verigy.com; Shares outstanding: 58.8 million; Market cap: $704.3 million; No dividends paid) designs and makes test systems that are used in the production of computer chips. Verigy’s technology helps chipmakers cut down on errors and improve the reliability of their products. It has installed more than 4,500 of its systems worldwide. Verigy gets about 45% of its revenue from consulting and support services. These include start-up assistance and system calibration and repair. This business helps lower the company’s reliance on system sales, which have been slowed by the weak economy. The company lost $7 million, or $0.12 a share (before one time items) in its fourth quarter, which ended October 31, 2009. Still, that was a lot better than the $0.25-a-share loss that analysts were expecting. Verigy lost $36 million, or $0.60 a share, in the year-earlier quarter. Revenue fell 35.3%, to $97 million from $150 million. Orders rose 17% during the fourth quarter....
DEVON ENERGY CORP. $67.87 (New York symbol DVN; SI Rating: Speculative) (405-235-3611; www.devonenergy.com; Shares outstanding: 444.1 million; Market cap: $30.1 billion; Dividend yield 0.9% ) plans to sell its properties in the Gulf of Mexico, as well as its international assets. After taxes, Devon expects the sales to generate between $4.5 billion and $7.5 billion. The properties make up about 7% of its proven reserves of 2.8 billion barrels of oil equivalent. But they are high-risk and costly to develop, and they consume over 30% of Devon’s spending. Their potential is huge, but they would take many years and billions of dollars more to develop. The sales will let Devon focus on its onshore North American properties. Apart from conventional production, these include shale oil in Texas and oil sands in Canada. The company also plans to cut its debt from $5.8 billion to as low as $2.5 billion....
Here are two of the most promising early-stage diamond stocks. Both have speculative appeal, but they are buys for highly aggressive investors only. DIAMONDS NORTH RESOURCES $0.28 (Toronto symbol DDN; SI Rating: Start-up) (1-866-802-2010; www.diamondsnorthresources.com; Shares outstanding: 77.3 million; Market cap: $21.6 million; No dividends paid) has interests in seven exploration projects covering over four million acres in Nunavut and the Northwest Territories. Its prospects range from early- to advanced-stage exploration. The company funds its exploration programs with its $5 million of cash holdings. Diamonds North’s leading prospect is its 100%-owned Amaruk project in Nunavut. To date, the company has discovered 29 kimberlites at the site....
CANALASKA URANIUM $0.16 (Toronto symbol CVV; SI Rating: Start-up) (1-800-667-1870; www.canalaska.com; Shares outstanding: 137.8 million; Market cap: $22.0 million; No dividends paid) has announced an exploration budget of $15 million for 2010. So far in 2009, CanAlaska has spent $6.8 million. The company’s joint-venture partners funded $4.8 million of that total. These include Japan’s giant Mitsubishi Corp., Chinese mining firm East Resources Inc. and a consortium of Korean companies that consists of Hanwha Corporation, Korea Electric Power, Korea Resources and SK Energy. CanAlaska owns a large amount of land that contains lots of drilling prospects. Moreover, it has personnel with expertise in exploration and mine building, specifically in the Athabasca Basin region....
ALARMFORCE INDUSTRIES $6.66 (Toronto symbol AF: SI Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $81.3 million; No dividends paid) continues to hit all-time highs as it adds subscribers. The company reports that it had 102,000 subscribers as of October 31, 2009. That’s up 12% from a year earlier. AlarmForce mainly attracts new customers by aggressively promoting itself through radio and television advertising. Demand for security systems remains steady, and AlarmForce’s balance sheet is strong. These factors will let the company continue to profit from the economic recovery. AlarmForce is a buy....