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
CENTERRA GOLD $5.19 (Toronto symbol CG; SI Rating: Speculative) (416-204-1953; www.centerragold.com; Shares outstanding: 216.3 million; Market cap: $1.1 billion) is still negotiating with the government of Kyrgyzstan over Centerra’s Kumtor gold mine. The parties are negotiating the size of the government’s stake in Kumtor, as well as a new tax regime for the mine. The country’s finance minister, Marat Sultanov, recently told the Kyrgyz media that the government expects to sign a new agreement with Centerra next month. Centerra still has long-term potential, but its focus on central Asia and Mongolia involves considerable risk. The stock has risen 419% since October on higher gold prices, as well as optimism on the possible settlement, but the government of Kyrgyzstan may want to reopen negotiations with Centerra in the future. We think now would be a good time to get out. Centerra Gold is now a sell.
IVERNIA INC. $0.15 (Toronto symbol IVW; SI Rating: Speculative)(416-867-9298; www.ivernia.com; Shares outstanding: 180.2 million; Market cap: $27 million) is no longer the subject of a takeover bid by Griffin Mining (symbol GFM on London). Griffin Mining’s cash offer was worth $27 million (Canadian), or $0.15 per Ivernia share. Ivernia develops and explores for minerals. Its main asset is its Magellan lead mine in western Australia, which is currently closed. On April 1, Ivernia amended the terms of $20 million U.S. worth of convertible notes held by Sentient Global Resources Fund II. It also issued new notes, which raised $15 million U.S. in cash. Ivernia plans to use the proceeds that these deals generated to restart the Magellan mine. But the company will only restart the mine if it can operate it at a profit, and lead currently trades at a low $0.60 U.S. per pound. This means Magellan will likely remain closed until lead prices rise....
ALARMFORCE INDUSTRIES $4.18 (Toronto symbol AF: SI Rating: Speculative) (1-800-267-2001; www.alarmforce.com; Shares outstanding: 12.1 million; Market cap: $50.6 million) reports that in the three months ended January 31, 2009, its cash flow per share jumped 50%, to $0.15 from $0.10. Revenue rose 16.7%, to $8.3 million from $7.1 million. AlarmForce continues to add subscribers, especially in the U.S., where subscriptions jumped 62.7%, from 5,900 to 9,600. Alarm-Force now has 93,200 subscribers, up 12.8% from 82,600 a year earlier. Canadian subscriptions rose 8%, to 82,800 from 76,700. AlarmForce is still a buy.
COMPTON PETROLEUM $0.80 (Toronto symbol CMT; SI Rating: Speculative) (403-237-9400; www.comptonpetroleum.com; Shares outstanding: 125.6 million; Market cap: $100.5 million) explores for oil and natural gas in western Canada. Its $829.3-million debt is over eight times its $100.5-million market cap. However, most of its debt is not due until 2013, so it shouldn’t face liquidity problems until then. Compton will cut its capital spending and production until natural gas prices improve. Even so, it expects to generate cash flow of $65 million, or $0.50 a share, this year. The company still has lots of reserves and drilling prospects, so it will be in a good position to boost its output and pay down its debt when gas prices rebound. Compton Petroleum is still a hold....
DUNDEEWEALTH INC. $5.69 (Toronto symbol DW; SI Rating: Speculative) (1-800-301-6745; www.dundeewealth.com; Shares outstanding: 118.3 million; Market cap: $673.4 million) manages investments and operates a brokerage business. It also provides financial-planning and investment advice. DundeeWealth reported a loss of $126.3 million, or $0.89 a share, in the three months ended December 31, 2008. It made $48.1 million, or $0.32 a share, a year earlier. The loss was mainly caused by a $117.2-million writedown of the value of its investment portfolio caused by falling stock markets. The stock market decline also meant that Dundee collected fewer management fees from its mutual funds during the quarter. Its revenue fell 47.3%, to $171.7 million from $325.6 million....
PULSE DATA $1.18 (Toronto symbol PSD; SI Rating: Speculative) (403-237-5559; www.pulsedatainc.com; Shares outstanding: 53.2 million; Market cap: $62.8 million) reports that in the three months ended December 31, 2008, revenue rose 7.1%, to $12.3 million from $11.5 million. Cash flow per share rose 13.3%, to $0.17 from $0.15. Despite the improved results, the company has temporarily suspended its dividends. The move was spurred by lower oil and gas prices, which it expects will push down clients’ exploration spending this year. Lower exploration spending hurts Calgary-based Pulse Data’s seismic data library sales. Suspending the dividend will save Pulse $2.6 million each quarter. Directors and senior managers are also cutting their pay and lowering the company’s administrative costs....
CHIPOTLE MEXICAN GRILL $63.45 (New York symbol CMG.B; SI Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 32.9 million; Market cap: $2 billion) is a Denver-based Mexican-restaurant chain. Founded in 1993, Chipotle (pronounced chi-POATlay) charges slightly higher prices than fast-food chains, but offers higher quality food, including naturally raised meat, and better decor and service. In the three months ended December 31, 2008, Chipotle’s revenue rose 19.5%, to $345.3 million from $288.9 million a year earlier....
BROADRIDGE FINANCIAL SOLUTIONS $19.17 (New York symbol BR: SI Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 140.4 million; Market cap: $2.7 billion) has expanded its securities-processing and transaction-clearing services to include Japanese equities, convertible bonds and subscription rights processed by Japanese broker-dealer operations. Through its new Japanese services, Broadridge can generate confirmations and processing reports in both English and Japanese. These services will further broaden its customer base; the Tokyo exchange is the world’s second-largest after New York. Broadridge is still a buy.
WYNDHAM WORLDWIDE, $8.92, symbol WYN on New York, announced this week that it is adding two new hotels in China. Wyndham currently has 170 hotels in the country, all of which are run by franchisees. The 1,000-room Ramada Hotel & Suites in Hainan Province will open in December 2010. Wyndham will also open the eight-storey, 548-room Ramada Hotel in the city of Huangshan, in Anhui Province. The Yellow Mountains, a major tourist draw, are located in Anhui. Wyndham is one of the world’s largest hospitality companies, with 7,000 franchised hotels worldwide. It owns a number of quality brands, including Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Wingate by Wyndham, Baymont Inn & Suites, Microtel Inns & Suites, Hawthorn Suites, Howard Johnson, Travelodge, Knights Inn and AmeriHost Inn....
FIRSTSERVICE CORP. $11.16 (Toronto symbol FSV; SI Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.1 million; Market cap: $313.3 million) operates in the following areas of the real estate services market: commercial real estate; residential property management; and property improvement. FirstService has more than 17,000 employees worldwide. In the three months ended December 31, 2008, FirstService’s revenue fell 6.7%, to $417.9 million from $447.6 million a year earlier. (All figures except share price in U.S. dollars.) Excluding one-time items, the company lost $0.18 a share, compared to a profit of $0.49. Cash flow per share was positive, at $0.68, although it was down 38.1% from $1.10 a year earlier. A 28% drop in revenue at FirstService’s commercial real estate division held back overall revenue. However, that was partially offset by revenue gains of 15% at its residential property management division, and 35% at its property-improvement division....