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
GABRIEL RESOURCES $3.51 (Toronto symbol GBU; SI Rating: Speculative) (416-955-9200; www.gabrielresources.com; Shares outstanding: 307.3 million; Market cap: $1.1 billion) shot up over 30% recently after it added a new investor with experience in permitting and building large industrial projects in Romania. That’s where Gabriel’s 80.23%-owned Rosia Montana project is located. BSG Capital Markets is investing $67.5 million in Gabriel for a 9% stake. BSG has an option to raise that to 16%. Gabriel will use the proceeds of the BSG financing to develop Rosia Montana once the stalled permitting process resumes. Meanwhile, BSG will use its experience in Romania to push the process forward....
LEON’S FURNITURE LTD. $9.86 (Toronto symbol LNF; SI Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.8 million; Market cap: $697.6 million) 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 September 30, 2009, Leon’s revenue fell 7.7%, to $187.4 million from $203.0 million. Earnings per share fell 12%, to $0.22 from $0.25. Leon’s revenue mainly fell because many consumers are putting off buying new furniture because of the weak economy. Still, the company gained market share, mainly because it advertised heavily to promote its 100th anniversary. This likely helped Leon’s keep its revenue drop small....
CAMECO CORP. $31.89 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 392.7 million; Market cap: $12.5 billion) has resumed removing water from the flooded 50%-owned Cigar Lake project. The project first flooded in 2006. The company expects that it will take six to 12 months to remove the water. Cameco is the world’s largest uranium producer. The company supplies over 18% of global production. Cigar Lake is the world’s richest unmined uranium deposit. The mine could eventually produce over 10% of annual global output. Production will now likely begin in early 2013....
AMAZON.COM $131.29 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 433.0 million; Market cap: $56.8 billion) reported sharply higher results in the three months ended September 30, 2009. Revenue rose 27.8%, to $5.4 billion from $4.3 billion a year earlier. Earnings jumped 68.6%, to $199 million, or $0.46 a share, from $118 million, or $0.28 a share. That beat the $0.33 a share that analysts were expecting. Amazon’s North American media revenue rose 13% during the quarter. Overall media sales climbed 17%, to $2.9 billion. Revenue from electronics and other general merchandise jumped 44% to $2.4 billion. Revenue in the company’s “other” category, which includes Amazon’s web-services business, rose 25%, to $163 million. The company accounts for sales of its Kindle electronic-book reader in its electronics and general merchandise segment. It includes sales of Kindle books and other content in media sales....
GARMIN $32.48 (Nasdaq symbol GRMN; SI Rating: Speculative) (913-397-8200; www.garmin.com; Shares outstanding: 200.7 million; Market cap: $6.5 billion) faces an uncertain future because selling prices for its devices are falling and competition is increasing. Motorola and Verizon Wireless recently announced the first smartphone to feature Google’s Android 2.0 operating system for mobile devices. The new phone will allow users to access Google Maps Navigation, which provides turn-by-turn voice guidance as a free feature of Google Maps. The phone will also offer additional features, such as live traffic and business information, and Google Street View, which shows users photographs of the streets they look up. Garmin makes 80% of its sales from selling consumer products, like hand-held GPS receivers, portable navigation devices for cars, and fixed-mount GPS systems that are used in cars and boats. As the announcement from Verizon and Motorola shows, this market is increasingly threatened by rapidly evolving GPS applications in smartphones, including Apple’s iPhone, Palm’s Pre and others....
COMPUTER MODELLING GROUP $14.93 (Toronto symbol CMG; SI Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 17.7 million; Market cap: $264.3 million) sells software to clients in the oil and gas industry. It also provides consulting services. Computer Modelling’s software helps companies use advanced oil-and-gas recovery techniques to raise output. It has over 360 customers in 50 countries. In the three months ended September 30, 2009, Computer Modelling’s revenue fell 5.2%, to $9.1 million from $9.6 million. Earnings fell 18.7%, to $2.4 million, or $0.14 a share. A year earlier, Computer Modelling earned $3.0 million, or $0.17 a share. Cash flow per share fell 15%, to $0.17 from $0.20.
Software helps clients boost cash flow
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KRAFT FOODS INC., $26.91, New York symbol KFT, has made a formal offer to buy U.K.-based Cadbury plc (New York symbol CBY). Cadbury is a leading maker of confectioneries, including chocolate, candy and gum. Kraft is offering roughly $16.5 billion in cash and stock. That’s equal to 42% of its $39.7-billion market cap. Cadbury has rejected the takeover, and its shares are trading slightly above the value of Kraft’s offer. That suggests investors are expecting a higher bid from Kraft or another company....
GABRIEL RESOURCES, $3.35, symbol GBU on Toronto, shot up over 30% this week after it added a new investor with experience in permitting and building large industrial projects in Romania. That’s where Gabriel’s 80.23%-owned Rosia Montana project is located. Rosia Montana contains an estimated 10 million ounces of gold reserves, and could produce over 500,000 ounces a year. This gives it the potential to become Europe’s largest producing gold mine. BSG Capital Markets, a unit of Beny Steinmetz Group, a privately owned holding company, is buying 30 million units of Gabriel at $2.25 each (or a total of $67.5 million). Aside from one common share, each unit includes a two-year warrant that entitles BSG to buy additional Gabriel stock. For the first 18 months, BSG may buy Gabriel shares for $2.50 each. The price rises to $3.00 a share for the final six months....
THE STANLEY WORKS, $49.19, New York symbol SWK, has agreed to buy rival toolmaker Black & Decker Corp. (New York symbol BDK) for $4.5 billion in stock. That’s 12.5% more than Stanley’s $4-billion market cap. Assuming both companies’ shareholders approve, the deal should close in the first half of 2010. Stanley shareholders will own 50.5% of the combined company (to be called “Stanley Black & Decker”). Black & Decker investors will own the remaining 49.5%. This looks like a good move for Stanley. Black & Decker specializes in power tools, so there’s little overlap with Stanley’s hand tools. Moreover, Black & Decker’s security products, which include door locks and keyless-entry systems, are a nice fit with Stanley’s building-security business....
DOREL INDUSTRIES, $33.04, symbol DII.B on Toronto, reports that its revenue fell 6.1 % in the three months ended September 30, 2009, to $518.5 million from $552.2 million a year earlier. (All figures except share price in U.S. dollars.). The slower economy was the main reason for the revenue drop. As well, a stronger U.S. dollar hurt the value of Dorel’s foreign sales. Despite the lower revenue, earnings rose 11.0%, to $0.91 a share from $0.82 a year earlier on falling raw-material costs. Dorel has also been cutting its expenses....