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
AEROPOSTALE INC. $21.34 (New York symbol ARO; SI Rating: Extra Risk) (646-485- 5410; www.aeropostale.com; Shares outstanding: 66.8 million; Market cap: $1.4 billion) was one of the few major U.S. apparel chains to post higher sales in January. Same-store sales rose 11%, and sales of women’s and men’s clothing were strong. By comparison, same-store sales fell 20% at competitor Abercrombie & Fitch in January, 22% at American Eagle and 23% at the Gap. Fashion trends are fickle, and consumers may abruptly switch to rival brands with more stylish offerings or lower prices. However, today’s teens favour Aeropostale’s fashions, and its lower prices give its merchandise an added advantage in a difficult economy....
MAJOR DRILLING. $14.31 (Toronto symbol MDI; SI Rating: Speculative) (www.majordrilling.com; 1-866-264- 3986; Shares outstanding: 23.7 million; Market cap: $339.3 million) is a large drilling company that mainly serves the mining industry. In the three months ended October 31, 2008, Major Drilling’s revenues rose 22.4%, to $191 million from $156.1 million. Excluding one-time items, its earnings rose 28.5%, to $29.3 million, or $1.23 a share, from $22.8 million, or $0.97 a share. Cash flow rose 24.3%, to $38.9 million, or $1.64 a share, from $31.3 million, or $1.31 a share. Major Drilling holds cash of $39 million, or $1.65 a share. Long-term debt is low at $32.1 million, or 9% of market cap. The shares yield 2.7%....
Gold is now at $978 U.S. an ounce, up 36% since November 2008. That’s mainly because investors fear that low interest rates and government stimulus spending will spur inflation. Gold should also continue to gain as the credit crisis makes it harder for gold companies to fund new projects and increase production. We still think the best way to participate in the gold market is through companies with sound production, positive cash flow and strong growth prospects, like the two we analyze below. CENTERRA GOLD $5.30 (Toronto symbol CG; SI Rating: Speculative) (416-204-1953; www.centerragold.com; Shares outstanding: 216.3 million; Market cap: $1.1 billion) owns 100% of the large Kumtor gold mine in Kyrgyzstan and 100% of the Boroo gold mine in Mongolia....
HECLA MINING COMPANY $1.77 (New York symbol HL; SI Rating: Extra Risk) (208- 769-4100; www.hecla-mining.com; Shares outstanding: 206.3 million; Market cap: $365.2 million) has sold 36.6 million shares at $2.05 each to raise $75 million. Hecla has also rescheduled all 2009 debt payments to 2010 and 2011. Hecla’s debt (net of cash) of $117.3 million before the share issue was somewhat high, at 32% of market cap. But Hecla now has the flexibility to meet all of its debt payments. As well, silver prices are rising — up 23% so far this year to $14.11 an ounce. Hecla is a buy for aggressive investors.
TEMPUR-PEDIC $6.97 (New York symbol TPX; SI Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 74.9 million; Market cap: $522 million) reports that in the three months ended December 31, 2008, its earnings fell 68.2%, to $12.7 million, or $0.17 a share, from $39.9 million, or $0.52 a share, a year earlier. Sales fell 34.6%, to $189.1 million from $289 million. Tempur-Pedic needs an economic recovery to show renewed sales and profit growth. However, it enjoys strong brand recognition and a broad product lineup. The company also continues to cut costs, lower debt and improve productivity. Despite the difficult retail environment, we still like Tempur-Pedic’s long-term prospects. The stock currently trades at just 7.5 times its forecast 2009 earnings of $0.93 a share....
CALIAN TECHNOLOGIES $12.70 (Toronto symbol CTY; SI Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.8 million; Market cap: $99.1 million) operates in two areas: The business and technology services (BTS) division provides engineering, health care and other skilled professional personnel to clients on a contract basis, and generates 64% of Calian’s revenues. The systems engineering division (SED) offers a range of hardware and software systems for testing, operating and managing satellite and other communications systems, and accounts for 36% of Calian’s revenues. In the three months ended December 31, 2008, Calian’s earnings rose 52.2%, to $3.3 million from $2.2 million a year earlier. Earnings per share rose 61.5%, to $0.42 from $0.26 on a 4.5% drop in shares outstanding (due to share buybacks). Cash flow per share rose 54.8%, to $0.48 from $0.31. Revenues rose 20%, to $55.1 million from $45.9 million. In the latest quarter, the BTS division benefited from its existing long-term contracts and a steady supply of new federal government work. Rising demand, and the completion of two large contracts, boosted SED’s results....
AMAZON.COM $62.35 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.6 million; Market cap: $26.7 billion) has unveiled a thinner, faster and lighter version of its Kindle electronic reader. The Kindle 2 has seven times more storage than the first Kindle, as well as sharper images and a longer battery life. The Kindle 2 also has a text-to-speech feature that lets users listen to books or newspapers read by a computer-generated voice. The Kindle 2 costs $359 U.S., the same price as the first Kindle. (Kindle is only available in the U.S.)...
DUNDEE REIT $13.88 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 16.9 million; Market cap: $235.2 million) owns and operates seven million square feet of office, industrial and retail space, including 43 office buildings and 36 industrial properties. GE Real Estate holds a 14.3% voting interest in Dundee, and Dundee Corp. holds 16%. Revenues were $50.4 million in the three months ended December 31, 2008, up 18.1% from $42.7 million a year earlier. The best measure of operating performance for a real-estate company is cash flow, and Dundee’s cash flow per share rose 9.6%, to $0.57 from $0.52 in the latest quarter. The improved results mostly came from higher rents. Many of Dundee’s properties are coming up for renewal, and as those leases mature, it’s profiting from higher renewal rates and cash flow. Average rents increased 13% in the latest quarter, to $15.30 per square foot. The company’s properties have a high 96.7% occupancy rate....
When making investment decisions, chart reading seems much simpler than delving into and weighing the fundamentals. It appears to be a winning combo of moneymaker and time saver. Some successful investors find it helps to know a little about charts. But if you rely on charts at all, you should look on them as just one of many things to consider in making decisions. Chart-reading often seems to work, at least in small ways, but this may be an illusion. You may only remember your successful chart interpretations. More important, chart reading tends to work in spurts. You may find it leads you to make five or even 10 small wins, then steers you wrong at the worst possible moment. That next mistaken trade may cost you much more than your winnings to date....
BROADRIDGE FINANCIAL SOLUTIONS $16.27 (New York symbol BR: SI Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 140.4 million; Market cap: $2.3 billion) serves the investment industry in three main ways: investor communications; securities processing; and transaction clearing, trade settlements and other back-office operations. Broadridge’s clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge’s shares have dropped lately, along with those of most financial services stocks. But, while tight credit conditions may lead to fewer takeovers and a subsequent drop in investor-communications activity, the company’s overall business continues to grow. It’s also paying down debt and remaining profitable. Broadridge’s earnings rose 3.5% in the three months ended December 31, 2008, to $29.9 million from $28.9 million a year earlier. Earnings per share were unchanged at $0.21 on more shares outstanding. Revenues fell 1.3%, to $459.2 million from $465.1 million as the rising U.S. dollar lowered the contribution of Broadridge’s international operations. Excluding the effects of foreign currency movements, revenues rose 2%....