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
NCR CORP. $10 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 159.2 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) will cut 2,200 jobs, or 10% of its workforce, by the end of this year. Because of the recession, banks are buying fewer of its automated teller machines (ATMs). As well, retailers have cut spending on new cash registers. The layoffs should help NCR cut its annual costs by up to $250 million by the end of 2011. If you exclude severance and other unusual costs, NCR earned $30 million, or $0.19 a share, in the third quarter of 2009. That’s down 67.4% from $92 million, or $0.55 a share, a year earlier. Sales fell 17.7%, to $1.1 billion from $1.4 billion. Despite the slower sales, the long-term outlook for ATMs remains strong, particularly in China and India. As well, demand for new technologies, such as self-serve check-out terminals and kiosks, should rise. That’s because they help retailers lower their costs....
J.C. PENNEY CO. INC. $33 (New York symbol JCP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 235.9 million; Market cap: $7.8 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) has entered into a 10-year alliance with clothing maker LIZ CLAIBORNE INC. $5.69 (New York symbol LIZ; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 95.1 million; Market cap: $541.1 million; Price-to-sales ratio: 0.2; WSSF Rating: Extra Risk). Under the terms of the deal, J.C. Penney will become the only U.S. department store selling Liz Claiborne’s women’s clothing brands. The deal also includes accessories, shoes, household products and men’s clothing. J.C. Penney will start selling these lines next fall. This arrangement should help draw traffic to J.C. Penney’s stores, and cut Liz Claiborne’s risk. J.C. Penney is a buy. However, Liz Claiborne is still a hold.
CHEVRON CORP. $76 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $152.0 billion; Price-to-sales ratio: 0.8; WSSF Rating: Above Average) is the second-largest integrated oil company in the U.S. by market cap, after Exxon-Mobil. Chevron gets about 85% of its earnings from producing oil. The remaining 15% comes from its refineries, its petrochemicals business and its 22,000 gasoline stations, which operate under the Chevron, Texaco and Caltex banners. Chevron has increased its oil and natural-gas reserves by roughly 1 billion barrels a year for the past seven years. At the end of 2008, it directly controlled 7.9 billion barrels, plus an additional 3.3 billion through joint ventures and affiliated businesses. The company produces about 920 million barrels a year.
Rising reserves spurred growth
...
TENNANT CO. $29 earned $0.27 a share in the three months ended September 30, 2009. That’s down 52.6% from $0.57 a year earlier. These figures exclude tax-related gains and other unusual items. The cleaning-equipment maker continues to benefit from lower commodity costs. However, sales will likely remain weak until the economy is well on its way to a full recovery. Hold. TIM HORTONS INC. $29 has opened a new coffee-and-donut shop at the Fort Knox U.S. Army base in Kentucky. This is its first store on a U.S. base. The company has outlets on seven Canadian bases, and this new store should help it expand to more U.S. bases. Buy. LIMITED BRANDS INC. $17 expects to break even or lose up to $0.04 a share in its most recent quarter, which ends October 31, 2009. The clothing retailer had earlier predicted a loss of $0.07 to $0.12 a share. Limited Brands is opening fewer new stores, freezing salaries and cutting spending on advertising. These cost cuts are helping it offset slow sales growth. Buy.
APPLE INC., $203.94, Nasdaq symbol AAPL, rose 9% this week after it reported quarterly earnings and sales that were much higher than expected. The company also launched new versions of its iMac computers in time for the Christmas shopping season. Apple earned $1.82 a share in its fourth quarter, which ended September 26, 2009. That’s 44.4% above the $1.26 a share that it earned a year earlier. Sales rose 25.0%, to $9.9 billion from $7.9 billion. Analysts were expecting Apple to earn $1.42 a share on revenue of $9.2 billion. The gains were mainly driven by high demand for the latest version of Apple’s iPhone smartphone and strong computer sales during the back-to-school shopping season....
AMAZON.COM INC., $118.49, symbol AMZN on Nasdaq, shot up 26.8% today after reporting sharply higher results in the latest quarter. In the three months ended September 30, 2009, Amazon’s 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....
ZARGON ENERGY TRUST $18.07 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 23.0 million; Market cap: $415.4 million) produces oil and gas in Alberta, Manitoba, Saskatchewan and North Dakota. In the three months ended June 30, 2009, Zargon’s production rose 3.0%, to 9,520 barrels of oil equivalent per day (this measurement includes natural gas) from 9,239 barrels. The company’s output is weighted 50% toward natural gas and 50% to oil. This diversification between gas and oil helps cut Zargon’s risk. Despite the higher production, Zargon’s cash flow per share fell 41.3%, to $0.91 from $1.55 a year earlier. Lower oil and gas prices were the reason for the drop....
We had to analyze hundreds of penny mines to find three buys. That’s because we weigh pennies against many risk factors, including these: 1. Political stability. Penny investing is risky enough without the threat of expropriation or onerous taxes. 2. Cash reserves. If pennies need to sell shares at low prices, it dilutes the interests of existing investors....
AMERIGO RESOURCES $0.79 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 132.6 million; Market cap: $104.8 million) has jumped 173.3% since May on higher copper prices. Copper is up 49.0% during that period, to $2.98 U.S. a pound. Amerigo processes copper and molybdenum from the waste rock, or “tailings,” from Chile’s El Teniente, the world’s largest copper mine. In the three months ended June 30, 2009, Amerigo’s revenue fell 42.0%, to $18.1 million from $31.2 million a year earlier. (All figures except share price in U.S. dollars.) Metal prices rose during the quarter, but copper prices were still 45.8% below their 2008 highs of $3.80 a pound. Molybdenum prices were 73.4% off their 2008 highs. Amerigo’s cash flow was $0.013 a share in the latest quarter, compared to $0.065 a share a year earlier....
EUROPEAN GOLDFIELDS $6.05 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 179.9 million; Market cap: $1.1 billion) has won preliminary approval to build mines at its Skouries copper/gold property and its Olympias gold/zinc/lead/silver project. Both are located in Greece. European Goldfields holds a 65% interest in Hellas Gold, which owns three gold and base-metal deposits in the country’s north: Skouries, Olympias and the Stratoni zinc/lead/silver project. Production started at Stratoni in September 2005. If European Goldfields wins final approval, Olympias would start up in mid-2010, followed by Skouries in 2012. The mines would boost European Goldfields’ annual gold production from 70,000 ounces to over 420,000. The prospect of increased output could make the company a takeover target....