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
INTERNATIONAL ROAD DYNAMICS $0.60 (Toronto symbol IRD; SI Rating: Speculative) (306-653-6600; www.ird.ca; Shares outstanding: 14.0 million; Market cap: $8.4 million) continues to win new customers. For example, it recently won a $2-million U.S. contract with the Indiana Department of Transportation to supply, install and maintain systems to weigh trucks in motion on highways, rather than at lessefficient roadside weigh stations. International Road also recently won a contract in Hong Kong to supply and install a weigh-in-motion system for bridge monitoring and protection on the Stonecutters Bridge. The contract value is $806,400. The company has also been awarded a three-year, $1-million contract with the Hawaii Department of Transportation for a continuous traffic monitoring data collection system. To put these contracts into perspective, International Road’s revenues were $10.2 million in the latest quarter and $39.8 million in fiscal 2007. The company made $0.03 a share in the latest quarter, up from $0.02 a year earlier....
OILEXCO $0.08 (Toronto symbol OIL; SI Rating: Speculative) (403-262-5441; www.oilexco.com; Shares outstanding: 223.8 million; Market cap: $17.9 million) recently announced that its UK Oilexco North Sea subsidiary intends to file for bankruptcy protection. The UK subsidiary holds almost all of Oilexco’s assets. In December 2008, The Royal Bank of Scotland, Oilexco’s main lender, provided $47.5 million U.S. in bridge financing that was due January 31, 2009. This gave Oilexco just over a month to restructure. However, Oilexco said that it needed incremental short-term financing in addition to the bridge loan. In late December 2008, The Royal Bank of Scotland informed Oilexco that lenders were not prepared to provide any further financing, prompting the bankruptcy petition. Petro-Canada, BG Group plc and Talisman Energy have reportedly expressed interest in some of Oilexco’s assets. However, after seeking bankruptcy protection, Oilexco’s assets are likely to be sold at discount prices, leaving little for shareholders....
KINGSWAY FINANCIAL SERVICES $6.60 (Toronto symbol KFS; SI Rating: Speculative) (905-629-7888; www.kingswayfinancial. com; Shares outstanding: 55.1 million; Market cap: $363.5 million) plans to make a number of changes that it hopes will reduce annual its costs by $20 million U.S. The measures include job cuts, salary freezes and corporate overhead reductions. To further cut costs Kingsway will merge four of its U.S. subsidiaries. It will also eliminate unprofitable businesses and increase insurance rates in an effort to restore profitability. Kingsway’s initiatives are in large part a response to pressure from New York-based money manager The Stilwell Group, which owns 8.4% of Kingsway. Stilwell wants Kingsway to quickly reduce costs and focus on its core businesses in order to increase long-term shareholder value....
NORTHGATE MINERALS CORP. $1.24 (Toronto symbol NGX; SI Rating: Speculative) (604-681-4004; www.northgateminerals.ca; Shares outstanding: 255.7 million; Market cap: $317.0 million) owns and operates the Kemess South open-pit mine in north-central B.C. However, Northgate expects to exhaust the ore at Kemess South in late 2010. To replace production from Kemess South, Northgate bought Australian gold miner Perseverance Corp. last year for $257 million U.S. Perseverance produces approximately 225,000 ounces of gold a year from two mines. Northgate aims to continue increasing output and cutting costs at Perserverance’s mines. Northgate now forecasts total gold production from all of its mines in 2009 of 392,000 ounces at a cash cost of $461 U.S. per ounce. Cash flow for 2009 is forecast at $0.45 U.S. a share....
CHIPOTLE MEXICAN GRILL $46.69 (New York symbol CMG.B; SI Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 33 million; Market cap: $1.5 billion) is a Denver-based chain of Mexican restaurants. Founded in 1993, Chipotle (pronounced chi- POAT-lay) operates in the fast/casual dining segment, offering higher quality food, including naturally raised meat, and better decor and service than fast-food chains, at slightly higher prices. In the three months ended September 30, 2008, Chipotle’s revenues rose 18.9%, to $340.5 million from $286.4 million a year earlier. Most of the revenue growth came from new restaurant openings, although comparable same-store revenues were up 3.1%, as well. Same-store growth resulted mostly from menu price increases....
REITMANS (CANADA) LTD. $11.50 (Toronto symbol RET.A; SI Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 70.8 million; Market cap: $814.2 million) reports that same-store sales fell 5.4% in the five weeks ended January 3, 2009, from a year earlier. That included holiday sales. A recent Retail Council of Canada survey found that 60% of Canadian retailers had lower same-store sales in December, 2008. However, with its strong balance sheet and sound inventory controls, Reitmans is well positioned to withstand a difficult retail market. Reitmans is still a buy.
NISSAN MOTOR CO. $7.03 (Nasdaq symbol NSANY; SI Rating: Above-Average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $15.9 billion) plans to reduce production in Japan by 78,000 vehicles in the first quarter of 2009. The company will cut production by slowing production lines, implementing one-day shutdowns and cutting shifts. The cuts will keep inventory levels low, so Nissan can sell its vehicles without costly incentives. Nissan is well positioned to profit when vehicle markets recover....
Oil and gas trusts are mostly down lately, along with crude oil and natural gas prices. These three trusts are now cheap in relation to their forecast 2009 cash flows, which are based on those lower oil and gas prices. ZARGON ENERGY TRUST $14.87 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 18.4 million; Market cap: $274.1 million) has oil and gas production assets in Alberta, Manitoba, Saskatchewan and North Dakota. Output is weighted 53% toward natural gas and 47% to oil....
AUTODESK, INC. $16.77 (Nasdaq symbol ADSK; SI Rating: Average) (515-507-5000; www.autodesk.com; Shares outstanding: 226.3 million; Market cap: $3.8 billion) has completed the acquisition of ALGOR Inc. for $34 million. ALGOR makes computer-aided simulation software used for product design in the auto, aerospace, medical, consumer products, defense, energy and utilities industries. The acquisition adds advanced simulation capabilities to Autodesk’s software, including mechanical-event simulation and fluid flow. This lets engineers virtually test and predict the impact of simultaneous conditions, such as heat and pressure, on product designs. Autodesk is a buy.
BMTC GROUP $18.08 (Toronto symbol GBT.A; SI Rating: Extra Risk) (514-648-5757; No web site; Shares outstanding: 26.8 million; Market cap: $484.5 million) is one of the largest retailers of furniture, electronic goods and household appliances in Quebec through its affiliates Brault & Martineau Inc. and Ameublements Tanguay. BMTC has a network of 20 large stores in the Montreal, Quebec City, Repentigny, Laval, Saint- George, Sainte-Therese, Chicoutimi, Trois-Rivieres, Sherbrooke, Rimouski, Riviere-du-Loup and Gatineau areas of Quebec. It also has seven liquidation centres, six Sleep Gallery stores and two distribution centres. Sales in the three months ended September 30, 2008 rose 3.9%, to $232.1 million from $223.4 million. Earnings per share excluding one-time items rose 17.9%, to $0.66 from $0.56. The higher earnings came partly from cost cuts....