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
AUTODESK, INC. $19.14 (Nasdaq symbol ADSK; SI Rating: Average) (515-507-5000; www.autodesk.com; Shares outstanding: 228.2 million; Market cap: $4.4 billion) makes AutoCAD, the world’s top-selling computer-aided design program. About four million architects and engineers in over 100 countries use AutoCAD to design and test new buildings and products. Autodesk gets nearly 90% of its revenue from this business. The rest comes from programs that filmmakers use to create special effects. In its third quarter, which ended January 31, 2009, Autodesk’s revenue fell 18.2%, to $489.8 million from $599 million. Earnings, excluding one-time items, fell 43.3%, to $70.4 million, or $0.31 a share, from $124.2 million, or $0.52 a share. Slower construction activity has hurt demand for Autodesk’s software. In response, the company plans to lower its annual expenses by $150 million. This is in addition to the $130 million in cuts it announced in January. As part of its cost-cutting measures, Autodesk plans to lay off workers and consolidate facilities....
AMAZON.COM $77.97 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.9 million; Market cap: $33.5 billion) recently unveiled the Kindle DX, a new version of its Kindle 2 electronic reader. The Kindle DX has a 9.7-inch display. That’s about 2.5 times bigger than the Kindle 2’s screen, and makes it easier to read pages that are more detailed than those found in most books. These include newspapers, magazines, textbooks and business documents. As well, the Kindle DX’s memory will hold up to 3,500 books. That’s more than double the Kindle 2’s capacity. Amazon.com is still a buy.
TRIMBLE NAVIGATION $19.64 (Nasdaq symbol TRMB; SI Rating: Speculative) (408-481-6914; www.trimble.com; Shares outstanding: 119.5 million; Market cap: $2.3 billion) makes global positioning system (GPS) devices and technology for four main markets: engineering and construction; agriculture; fleet products to track moving vehicles; and GPS parts for major customers around the world. In the three months ended March 31, 2009, revenue fell 18.7%, to $289 million from $355.3 million. (All figures in U.S. dollars.) Excluding one-time items, earnings per share fell 30%, to $0.28 from $0.40. The company’s balance sheet remains strong, with cash of $146.8 million, or $1.23 a share. Its $151.4-million debt is just 7% of its market cap. These should help Trimble cope with the recession. The company spends a high 11% of its sales on research....
SYMANTEC CORP. $15.09 (Nasdaq symbol SYMC; SI Rating: Average) (408-517-8000; www.symantec.com; Shares outstanding: 821 million; Market cap: $12.4 billion) reports that its revenue fell 4.7% in the three months ended April 3, 2009, to $1.47 billion from $1.54 billion. The recession drove down sales of computer-security and backup software to small businesses during the quarter. This was the main reason for the company’s revenue drop. Still, profits rose despite the fall in overall sales, largely because Symantec has done a good job of controlling its costs. The company’s $2.1-billion long-term debt is a low 17% of its market cap. It also holds cash of $2 billion, or $2.40 a share....
Natural-gas prices have risen from $3.55 U.S. per thousand cubic feet at the beginning of May to $3.96 today. However, that’s still down from a high of almost $13 last June. Gas-weighted Cimarex and Devon trade at reasonable multiples to their forecast cash flows, based on today’s lower prices. Both have low debt and steady development spending, which put them in a good position to prosper when natural-gas prices rebound. CIMAREX ENERGY $30.94 (New York symbol XEC; SI Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 83.3 million; Market cap: $2.6 billion) is an oil and gas explorer and producer that mainly operates in the U.S. Natural gas makes up 69% of its production....
DELPHI ENERGY $1.10 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 79.1 million; Market cap: $87.0 million) reports 11.7% higher production in the quarter ended March 31, 2009, to 6,762 barrels of oil equivalent per day from 6,056 barrels a year earlier. Despite the higher production, Delphi’s cash flow per share fell 48%, to $0.13 from $0.25 a year earlier. That’s because of lower prices for its oil and natural gas. The company’s $96.5-million debt is a high 106% of market cap, but only 2.4 times its annualized cash flow (based on the latest quarter). The stock trades at only 2.1 times forecast 2009 cash flow of $0.53 a share....
INTERNATIONAL ROAD DYNAMICS $0.75 (Toronto symbol IRD; SI Rating: Speculative) (306-653-6600; www.ird.ca; Shares outstanding: 14 million; Market cap: $10.5 million) has resumed trading after the Toronto exchange lifted its cease-trading order. The company has filed its financial statements for its fiscal year, which ended November 30, 2008. It has also filed its statements for the quarter ended February 28, 2009. In the latest quarter, revenue rose 58.7%, to $11 million from $6.9 million a year earlier. Earnings were $0.02 a share, compared to a loss of $0.02. International Road Dynamics is a buy....
MASTERS ENERGY, symbol MSY on Toronto, has officially been taken over by ZARGON ENERGY TRUST $15.52 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 20.1 million; Market cap: $311.5 million). Zargon was able to get a majority of Masters’ shareholders to vote in favour of its cash-and-unit offer at a meeting in April. Masters shareholders got $0.37 a share in cash, plus 0.0957 of a Zargon unit. The offer was worth a total of $1.90 per Masters share, a gain of over 64% from before the offer. In all, buying Masters cost Zargon $41.4 million. Masters added 1,275 barrels of oil equivalent per day to Zargon’s production. Zargon now expects its production to average 10,200 barrels per day this year....
COMPUTER MODELLING GROUP $12.32 (Toronto symbol CMG; SI Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 18.3 million; Market cap: $211.9 million) is a software company focused on the oil and gas industry. It also provides consulting services. Computer Modelling’s software helps companies put advanced oil and gas recovery techniques to work. It has over 330 clients in 40 countries. In the three months ended December 31, 2008, Computer Modelling’s revenue rose 58.8%, to $11.7 million from $6.1 million. Earnings jumped 132.2%, to $4.9 million from $2.1 million a year earlier. Earnings per share rose 115.4%, to $0.28 from $0.13 on more shares outstanding. Cash flow per share more than doubled, to $0.31 from $0.15.
Software sells despite slowdown
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BREAKWATER RESOURCES, $0.26, symbol BWR on Toronto, reports that it lost $0.01 a share in the three months ended March 31, 2009, compared to a gain of $0.02 a share a year earlier. Cash flow per share was slightly positive, at $0.001 a share, compared to $0.005.
Breakwater is a Canadian-based company mining company focused on zinc production. It has mines in Canada, Chile and Honduras.
Despite the lower results in the latest quarter, Breakwater’s share price has almost doubled since the beginning of this month. That’s because the price of zinc has gone up, and the company has resolved its cash shortfall.
Last month, Breakwater issued 230 million units at $0.10 each, which raised a total of $23 million. Each unit included one common share and half of a warrant. Each whole warrant entitles the holder to buy one common share for $0.12 until April 9, 2014.
The new shares raised the number outstanding by 50%, or 230 million, bringing the total to799 million. Plus, another 115 million will be added if all of the warrants are exercised.
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Breakwater is a Canadian-based company mining company focused on zinc production. It has mines in Canada, Chile and Honduras.
Despite the lower results in the latest quarter, Breakwater’s share price has almost doubled since the beginning of this month. That’s because the price of zinc has gone up, and the company has resolved its cash shortfall.
Last month, Breakwater issued 230 million units at $0.10 each, which raised a total of $23 million. Each unit included one common share and half of a warrant. Each whole warrant entitles the holder to buy one common share for $0.12 until April 9, 2014.
The new shares raised the number outstanding by 50%, or 230 million, bringing the total to799 million. Plus, another 115 million will be added if all of the warrants are exercised.
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