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
BAYOU BEND $0.17 (Toronto symbol BBP; SI Rating: Speculative) (416-364-8820; www.bayoubendpetroleum.com; Shares outstanding: 308.8 million; Market cap: $52.5 million) has agreed to sell all of its assets to a Houston-based company for $22.7 million in cash. After the sale, Bayou will hold $79.4 million, or $0.26 a share, in cash. It now plans to buy bargain-priced resource properties. Bayou Bend’s connection with the global Lundin Group, through its management and directors, gives it easier access to capital and experience than most small companies....
CAMECO CORP. $21.22 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 392.4 million; Market cap: $8.3 billion) is the world’s largest uranium producer. Its large, high-grade reserves and low-cost operations, significant market position and access to other supplies of uranium give it a strong competitive position. Cameco is also one of three commercial converters of enriched uranium for use in nuclear reactors in the western world. Cameco gets most of its uranium from its McArthur River and Rabbit Lake mines in Saskatchewan, and the Crow Butte and Highland mines in the U.S. Cameco owns 70% of the McArthur River mine. Through subsidiaries, Cameco has a 31.6% interest in Ontario’s Bruce Power partnership, which operates four of eight reactors at North America’s largest nuclear power complex. Cameco is also the exclusive supplier of uranium for all eight reactors....
IVERNIA INC. $0.14 (Toronto symbol IVW; SI Rating: Speculative)(416-867-9298; www.ivernia.com; Shares outstanding: 180.2 million; Market cap: $25.2 million) now has government approval to resume shipments of lead ore from its Magellan mine in western Australia. Ivernia stopped shipping ore in March 2007 after it appeared that loading the ore onto its ships in the port of Esperance caused local birds to die of lead poisoning. Ivernia will ship the lead ore in sealed double bags inside shipping containers. Shipping of stockpiled ore will continue through the rest of this year. Meanwhile, Ivernia will work on a plan to restart the Magellan mine. But the company will only restart the mine if it can operate at a profit. Magellan will probably stay closed until lead prices rise. Ivernia is still a hold, but only for aggressive investors.
MASTERS ENERGY $1.73 (Toronto symbol MSY; SI Rating: Speculative) (403-290-1785; www.mastersenergy.com; Shares outstanding: 15.4 million; Market cap: $26.6 million) jumped over 40% recently after it received a friendly $41.4-million takeover offer from ZARGON ENERGY TRUST $15.05 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 18.6 million; Market cap: $279.9 million). To fund the purchase, Zargon plans to pay out a maximum of $5.7 million in cash. It will also issue up to 1.49 million trust units. Zargon is offering Masters shareholders a cash option and a units-plus-cash option. Under the cash option, Zargon will pay $1.83 for each Masters share tendered until it reaches its maximum cash payout. Any remainder will be paid in Zargon units. Under the second option, each Masters common share may be exchanged for 0.12 of a Zargon unit. This option will also be pro-rated according to Zargon’s unit and cash maximums....
RUSSEL METALS $9.58 (Toronto symbol RUS; SI Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 59.7 million; Market cap: $571.9 million) fell recently, even though it reported improved results in the fourth quarter of 2008. Investors mainly sold the stock because the slowing global economy drove steel demand down by roughly 40% during the first two months of 2009. Russel is now working to cut costs and save cash. In the three months ended December 31, 2008, Russel’s earnings per share (excluding one-time items) more than doubled, to $0.87 from $0.37 a year earlier. Its revenues rose 40.8%, to $842.7 million from $598.4 million. In response to falling steel demand, Russel plans to cut 500 jobs (or 16.7% of its workforce), lower executive pay by 10%, and reduce its remaining employees’ working hours. Russel expects these moves to cut its annual costs by as much as $70 million....
TEMPUR-PEDIC $6.50 (New York symbol TPX; SI Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 74.4 million; Market cap: $483.6 million) 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 70 countries. In the quarter ended December 31, 2008, a slowing economy pushed down Tempur-Pedic’s earnings by 68.2%, to $12.7 million, or $0.17 a share, from $39.9 million, or $0.52 a year earlier. Sales fell 34.6%, to $189.1 million from $289 million. U.S. revenue dropped 39.4%, and international sales fell 26.7% Dividend cut will conserve cash Tempur-Pedic remains focused on paying down its debt. It paid off $99.4 million worth in the latest quarter, and the remaining $419.3 million is equal to 87% of its market cap. To conserve cash and further pay down long-term debt, Tempur-Pedic suspended its $0.08 a share dividend late last year....
ALIMENTATION COUCHE-TARD, $12.15, symbol ATD.B on Toronto, reported strong earnings in the latest quarter due to stronger-than-expected same-store sales (excluding fuel). In Canada, they rose 4.7% and in the United States 0.5%. This helped offset a 6.2% drop in the volume of U.S. gas sold. Couche-Tard’s American customers, in particular, are cutting back on their driving because of the recession. Couche-Tard has more than 3,000 convenience stores in the U.S., and is the largest convenience-store operator in Canada, with over 2,000 outlets. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K banner. Couche-Tard sells fuel at 65% of its 4,000 company-operated stores. In the three months ended February 1, 2009, Couche-Tard’s earnings rose 40.8%, to $71.1 million from $50.5 million a year earlier. (All figures except share price in U.S. dollars.) Earnings per share rose 48%, to $0.37 from $0.25 on 4.4% fewer shares outstanding. Lower gas prices in the U.S. and Canada drove down revenue by 14.8%, to $3.9 billion from $4.6 billion....
INTERNATIONAL BUSINESS MACHINES CORP., $92.51, New York symbol IBM, is in talks to buy computer-hardware maker Sun Microsystems Inc. (Nasdaq symbol JAVA). The rumoured $6.5-billion price is roughly double Sun’s market cap before the news became public. This would be a big purchase for IBM, which earned $12.3 billion, or $8.93 a share, in 2008. Sun’s appeal justifies the high price, and it’s a good fit with IBM. Both IBM and Sun make computer servers for governments and big corporations, so IBM would cut its costs and increase its market share by purchasing Sun. (IBM has about 30% of the server market, and Sun would push this up to 40%.) The move would also help IBM compete with Cisco Systems Inc., which plans to enter the server business. In addition, Sun’s software expertise and its widely used Java programming language would enhance IBM’s web-based services....
AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....
UNITED TECHNOLOGIES CORP., $40.57, New York symbol UTX, plans to cut 5% of its workforce because of slowing demand for its Pratt & Whitney jet engines and Hamilton Sundstrand aerospace equipment. United Technologies sells its products and services in the construction and aerospace industries. Along with Pratt & Whitney and Hamilton Sundstrand, it sells Carrier heating and air conditioning units and Otis elevators, among other products. Weakness in the construction industry has hurt sales at Carrier and Otis. United Technologies’ management believes the company’s 2009 revenue will fall about $2.7 billion (or 5%) short of its original forecast of $57 billion....