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
Focusing on natural gas production is riskier than diversifying between gas and oil, because gas can stay depressed for much longer. However, gas has begun rising lately. If that trend continues, it could pay off hugely for gas-focused stocks like these two. DELPHI ENERGY $1.68 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 92.3 million; Market cap: $155.1 million) explores for oil and gas in Alberta and B.C. Natural gas makes up 87% of its overall daily output. In the three months ended June 30, 2009, Delphi’s average daily output rose 9.8%, to 6,809 barrels of oil equivalent (this measurement includes natural gas) from 6,202 barrels....
CHESAPEAKE ENERGY $28.83 (New York symbol CHK; SI Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 641.7 million; Market cap: $18.5 billion) now expects next year’s gas production to rise by 8% to 10% over 2009, to between 882 billion cubic feet and 902 billion cubic feet. Roughly 92% of Chesapeake’s production is natural gas. In its first forecast for 2011, Chesapeake expects gas production to rise by 12% to 14% over 2010....
Higher commodity prices and an improving global economy have caused many junior-resource stocks to rebound. Here are three penny stocks that have cash to sustain themselves, whichever way commodity prices go. We think they have a better-than-average chance of long-term success. MIRANDA GOLD $0.44 (Toronto symbol MAD; SI Rating: Start-up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.9 million; Market cap: $19.5 million) explores for gold, mainly in the Cortez Trend and Battle Mountain-Eureka regions of Nevada. Miranda has 13 properties in various stages of production in these areas, which are two of the world’s most productive gold belts. The company takes part in a number of joint ventures. These are crucial for junior-exploration firms, as they give them a way to fund further exploration on properties where they have already discovered minerals. The agreements also let juniors retain an interest in the properties without taking on debt or resorting to dilutive share issues....
ALARMFORCE INDUSTRIES $5.46 (Toronto symbol AF: SI Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $66.7 million) made $0.12 a share in the three months ended July 31, 2009. That’s up 140.0% from $0.05 a share a year earlier. The home security firm’s revenue rose 12.5%, to $8.5 million from $7.6 million. AlarmForce mainly attracts new customers by aggressively promoting itself through radio and TV advertising. In the U.S., subscriptions jumped 54.4%, to 12,200 from 7,900 a year earlier. Canadian subscriptions rose 8.7%, to 86,500 from 79,600. In all, the company had 98,700 subscribers at the end of the most recent quarter, up 12.8% from 87,500 a year earlier....
FAIR ISAAC CORPORATION $22.22 (New York symbol FICO; SI Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 48.9 million; Market cap: $1.1 billion) sells products and services that help businesses around the world make better decisions on customer creditworthiness. Its main business is its FICO software, which lets creditors use a customer’s information to calculate a credit score. The lender can then use that score to decide if they should give the customer a mortgage, a credit card or any other type of loan. Fair Isaac’s major clients include banks, credit-card issuers, insurers, retailers, telecom providers and government agencies. In the three months ended June 30, 2009, Fair Isaac’s revenue fell 14.9%, to $156 million from $183.3 million. Tight credit markets have hurt the financial institutions that are its main customers. Fair Isaac offset some of the revenue drop with cost-cutting measures, including layoffs....
GOODYEAR TIRE & RUBBER CO. $17.35 (New York symbol GT; SI Rating: Extra Risk) (www.goodyear.com; 330-796-2121; Shares outstanding: 241.9 million; Market cap: $4.2 billion) expects to save $555 million over four years as a result of concessions from its labour union. In return, Goodyear has agreed to spend $600 million over four years on upgrading plants represented by the union. To offset falling tire sales to carmakers, Goodyear is focusing on selling more replacement tires, which generate higher profit margins. However, the overall U.S. car and truck market remains weak. This will likely limit the company’s growth prospects in the near future. Goodyear remains a hold.
TIM HORTONS $30.52 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 181 million; Market cap: $5.6 billion) has opened a new coffee-and-donut shop at the Fort Knox U.S. Army base in Kentucky. The base is next to the famous gold bullion depository. This is the company’s first store on a U.S. military base; it currently operates outlets on seven Canadian bases, and a restaurant in Kandahar, Afghanistan. In total, Tim Hortons has around 3,000 locations in Canada, and more than 500 in the U.S. The Fort Knox location should help Tim Hortons expand to more U.S. military bases....
RUGGEDCOM INC. $20.76 (Toronto symbol RCM; SI Rating: Speculative) (1-888-264-0006; www.ruggedcom.com; Shares outstanding: 12.1 million; Market cap: $251.3 million) has purchased Israel-based WiNetworks for $9.0 million U.S. WiNetworks is a privately owned company that designs WiMAX equipment. WiMAX is a telecommunications technology that can provide wireless broadband access at a distance of up to 50 kilometres from fixed stations, and five to 15 kilometres from mobile stations. In contrast, most of today’s Wi-Fi networks are limited to only 30 to 100 metres. RuggedCom makes computer-networking equipment that is used in harsh environments. The company has already developed a line of WiMAX products for use in such places....
TEMPUR-PEDIC $21.15 (New York symbol TPX; SI Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 74.9 million; Market cap: $1.6 billion) makes and distributes Swedish mattresses and neck pillows made from its own Tempur material. The material conforms to the body to provide support and help alleviate pressure points. Tempur-Pedic sells its products in over 80 countries. In the quarter ended September 30, 2009, Tempur-Pedic’s earnings rose 6.7%, to $25.7 million, or $0.34 a share, from $24.1 million, or $0.32, a year earlier. The gain came despite an 11.4% drop in revenue, to $224.1 million from $252.8 million. Earnings benefited from improved efficiencies at its plants, and lower raw-material costs.
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INTEL CORP., $20.18, Nasdaq symbol INTC, reported better-than-expected third-quarter earnings and sales this week. In the three months ended September 26, 2009, the computer-chip maker’s earnings fell 7.8%, to $1.9 billion from $2 billion a year earlier. Earnings per share fell 5.7%, to $0.33 from $0.35, on fewer shares outstanding. However, the latest earnings were 83.3% higher than Intel’s second-quarter earnings of $0.18 a share. They also beat the $0.28 a share that analysts were expecting. Sales fell 8.1%, to $9.4 billion from $10.2 billion a year earlier. However, that was better than the consensus forecast of $9 billion. Moreover, the latest sales were up 18% from the second quarter....