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.
Read More
Close
Growth Stocks Library Archives
VERIGY LTD. $10.98 (Nasdaq symbol VRGY; SI Rating: Extra Risk) (1-800-447-8378; www.verigy.com; Shares outstanding: 58.3 million; Market cap: $639.9 million) 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. The company 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 new-system sales, which have been slowed by the recession. Verigy lost $25 million, or $0.44 a share (before one-time items), in the three months ended April 30, 2009. Still, that was a lot better than the $0.65 a share that analysts were expecting. The company earned $13 million, or $0.22 a share, in the year-earlier quarter. These figures exclude non-recurring items, particularly costs related to an 18% cut Verigy made to its workforce last year. Revenue fell 56.2%, to $71 million from $162 million....
Many junior resource stocks have rebounded lately, along with commodity prices. As well, it’s getting easier for many juniors to raise funds for exploration and development. Here are four penny stocks that have promising prospects and cash to sustain themselves, whichever way commodity prices go. We think they have a better-than-average chance of long-term success. MIRANDA GOLD $0.40 (Toronto symbol MAD; SI Rating: Start-up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.9 million; Market cap: $18.0 million) is a gold exploration company mainly focused on Nevada....
COMPUTER MODELLING GROUP $14.63 (Toronto symbol CMG; SI Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 18.3 million; Market cap: $267.7 million) reports that its earnings more than doubled in the three months ended March 31, 2009, to $6.1 million from $3 million. Earnings per share jumped 94.4%, to $0.35 from $0.18, on more shares outstanding. Revenue rose 60.4%, to $14.4 million from $9 million. Computer Modelling has no long-term debt, and holds cash of $34.7 million, or $1.90 a share. The company has raised its quarterly dividend by 20%, to $0.18 from $0.15, starting with June’s payment. The shares yield 4.9%, based on the new rate. Due to its strong results, the company will also pay a $0.22 special dividend in June. Computer Modelling is a buy.
PULSE SEISMIC $1.36 (Toronto symbol PSD; SI Rating: Speculative) (403-237-5559; www.pulsedatainc.com; Shares outstanding: 53.1 million; Market cap: $72.3 million) is Pulse Data’s new name. The stock symbol is unchanged. Pulse changed its name because it is now focused on buying, marketing and licensing two- and three-dimensional seismic data to companies in the western Canadian energy sector. To this end, Pulse sold its Terrapoint airborne digital-mapping business for $6.5 million in May 2008. Pulse Seismic is still a buy for aggressive investors....
ATLANTIC TELE-NETWORK $38.82 (Nasdaq symbol ATNI; SI Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.2 million; Market cap: $591.2 million) is up over 38% since it announced that it plans to buy more than 800,000 wireless accounts from Verizon Wireless for $200 million in cash. These subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. Atlantic is paying just $250 per subscriber. That’s much less than the $1,567 per subscriber that AT&T paid when it bought wireless accounts from Verizon last month. (AT&T’s purchase was also related to the Alltel acquisition.) These new accounts will bring Atlantic’s total number of wireless subscribers above one million, up from 200,000 today, and make it one of the largest wireless carriers in the U.S. Right now, Atlantic gets about 49% of its revenue from its 80% interest in Guyana Telephone and Telegraph Company (GT&T). The rest comes from its wireless interests in the Caribbean and Bermuda, and from small holdings in the U.S....
RUSSEL METALS $23.07 (Toronto symbol RUS; SI Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 59.7 million; Market cap: $871.6 million) is one of North America’s largest metal distributors. Russel serves its roughly 18,000 customers through a network of 58 Canadian and 12 U.S. locations. In the three months ended March 31, 2009, Russel reported a loss of $55 million, or $0.92 a share. A year earlier, the company posted a profit of $29 million, or $0.46 a share. The latest quarter included a $94-million, pre-tax writedown of inventory caused by the continued sharp drop in steel prices. During the quarter, the slowing global economy drove down steel demand by roughly 37%. Without the writedown, Russel would have made $0.10 a share. Revenue fell 9.8%, to $642.2 million from $712.3 million....
ATLANTIC TELE-NETWORK, $38.46, symbol ATNI on Nasdaq, jumped 50% this week after it announced plans to buy more than 800,000 wireless accounts from Verizon Wireless for $200 million in cash. The subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. Verizon had to sell these accounts as part of the regulatory approval for its recent purchase of Alltel. Competition regulators still need to approve the deal, but it should close by the end of this year. Atlantic is paying just $250 per subscriber. That’s much less than the $1,567 per subscriber that AT&T paid when it bought wireless accounts from Verizon last month. (AT&T’s purchase was also related to the Alltel acquisition.)...
GENERAL MILLS INC., $54.92, New York symbol GIS, rose 4% this week after the company announced that it expects to report earnings of $3.87 to $3.89 a share in its latest fiscal year, which ended May 31, 2009. That’s slightly higher than its previous forecast of $3.78 to $3.83. These figures exclude unusual items, mainly gains and losses on hedging contracts that General Mills uses to lock in prices for wheat, corn and other raw materials. General Mills is the second-largest cereal maker in the United States, after Kellogg. It also makes other foods, including yogurt, baking mixes and canned and frozen vegetables. The company raised its selling prices last year in response to rising raw-material costs. These costs have since stabilized, so General Mills will now look to new products to increase its sales instead of relying on higher prices. For example, the company continues to develop healthier versions of its foods, such as low-sodium soups and gluten-free cereals for people who can’t digest wheat. This shift in focus was the main reason for the higher earnings forecast....
BHP BILLITON LTD., $60.29, New York symbol BHP, rose 6% on Friday after it agreed to merge its iron-ore mining operations in Western Australia with those of Rio Tinto Ltd. (New York symbol RTP) into a 50/50 joint venture. The partners will split the output equally, and each will sell it through their own marketing divisions. BHP is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. As part of the deal, BHP will pay Rio Tinto an additional $5.8 billion because its Australian iron-ore operations are not as valuable as Rio Tinto’s. To put this figure in context, BHP earned $6.1 billion, or $2.20 per ADR, in the six months ended December 31, 2008. (Each BHP American Depositary Receipt represents two BHP common shares). Australian competition regulators need to approve the merger, but it should close in mid-2010....
AMERICAN WOODMARK $22.58, symbol AMWD on Nasdaq, jumped almost 16% today after it reported an unexpected profit (before one-time items) in the latest quarter. American Woodmark is a major U.S. maker of cabinets for kitchens and bathrooms. It sells these under the American Woodmark, Timberlake and Shenandoah brands. In the three months ended April 30, 2009, American Woodmark lost $2.9 million, or $0.21 a share. A year earlier, it earned $36,000, or nil per share. But if you exclude one-time restructuring charges, the company would have earned $0.22 a share in the latest quarter. That’s much higher than the loss of $0.06 a share that analysts were expecting. Sales fell 1.8%, to $140.7 million from $143.3 million....