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
Despite a stream of nerve-rattling financial news, starting with the failure of the first Congressional bailout package, the Dow Industrials and the S&P 500 managed to hold above Monday’s lows this week until just before Friday’s close. It’s a mistake to read too much into this, of course. But it is encouraging to see both indexes move sideways in this depressing news environment. Market turnarounds often occur in times of high volatility and bad news. Our advice is to resist any urge you may feel to sell good-quality stocks, just because you fear they may go lower. WACHOVIA CORP. $6.21, New York symbol WB, has agreed to merge with WELLS FARGO & CO. $34.56, New York symbol WFC. Wachovia stockholders will receive 0.1991 of a Wells Fargo common share for each Wachovia share they hold. The deal requires stockholder and regulatory approvals....
VERIGY LTD. $17.90 (Nasdaq symbol VRGY; SI Rating: Speculative) (1-800-447-8378; www.verigy.com; Shares outstanding: 58.9 million; Market cap: $1.1 billion) designs and makes test systems used in the production of computer chips, flash memory and high-speed memory. Verigy’s revenues in its fiscal third quarter ended July 31, 2008 fell 12.3%, to $204 million from $179 million a year earlier. It earned $0.30 a share, down 40% from $0.50. The company now forecasts fourth-quarter earnings per share of $0.12 to $0.17 on $155 million to $165 million in revenues. The computer chip market is highly cyclical, and strong price competition has prompted Verigy’s customers to spend less on new equipment. Joint ventures among chipmakers have also hurt demand for Verigy’s products....
DOREL INDUSTRIES $34.01 (Toronto symbol DII.B; SI Rating: Extra Risk) (514-731- 0000; www.dorel.com;Shares outstanding: 33.4 million; Market cap: $1.1 billion) is reopening its idled Dowagiac plant in Michigan on increased demand for its Ameriwood ready-to-assemble furniture. Despite the difficult U.S. retail home furnishings market, ready-to-assemble furniture sales are strong. As well, a low U.S. dollar has made Chinese furniture imports more expensive for American consumers. That has made U.S.-produced ready-to-assemble furniture easier to sell. Dorel reported higher sales and earnings in the three months ended June 30, 2008. Sales rose 29.3%, to $593.7 million from $459 million a year earlier. (All figures except share price in U.S. dollars.) Excluding onetime items, earnings rose 61.1%, to $31.9 million or $0.96 a share from $19.8 million or $0.59 a share....
CAMECO CORP. $24.07 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 344.6 million; Market cap: $8.3 billion) has paid $28 million U.S. for an 11% stake in Govi High Power Exploration. Govi explores for uranium in Niger in west Africa. Cameco’s interest could rise to 48% by 2012 if it invests a further $212 million U.S. Govi Exploration holds exploration properties near the existing Arlit mine in Niger, as well as 2,400 square kilometers near Agadiz. Niger is among the world’s top five uranium producing countries. Cameco is already the world’s largest uranium producer, through its operations in the Athabasca Basin. The Niger acquisition lets it diversify in a small way outside that area....
BAFFINLAND IRON MINES $1.04 (Toronto symbol BIM; SI Rating: Start-up) (416-364- 8820; www.baffinland.com; Shares outstanding: 148.0 million; Market cap: $153.9 million) has made its first trial shipment of iron ore from its Mary River iron ore deposits on Baffin Island to Europe. The cargo will also undergo final testing of iron grades to firm up contracts already signed with European buyers. Baffinland recently entered into an agreement to sell up to 1.8 million tonnes of iron ore per year to Italian steel producer Riva Fire SpA. Baffinland has now signed five letters of intent with European steelmakers for 8 million tones of ore. That’s half of the 16 million tonnes it plans to sell in the European market. Baffinland plans to start building an open-pit mine in 2010, with completion scheduled for 2014. It then hopes to produce 18 million tonnes of ore per year for over 21 years. The only on-site processing it needs at the mine will be crushing and screening....
CELTIC MINERALS $0.31 (Toronto symbol CME; SI Rating: Start-up) (403-261-2890; www.celticminerals.com; Shares outstanding: 73.8 million; Market cap: $22.9 million) has as its main asset a 100% interest in the Kingurutik property, 85 kilometers northeast of Vale Inco’s Voisey’s Bay nickel mine and property in Labrador. In addition, Celtic holds other interests in the area plus other nickel prospects in Quebec and Newfoundland. Celtic is still a long way away from outlining a mineable deposit. However, nickel formations typically appear in clusters, so the proximity of Celtic’s Labrador properties to the Vale Inco deposits adds to its speculative appeal. The company recently raised $4.7 million in a stock issue at $0.55 a share, so it has lots of funds for its exploration programs. Celtic is still a buy, but for highly aggressive investors only....
CENTERRA GOLD $4.02 (Toronto symbol CG; SI Rating: Speculative) (416-204-1953; www.centerragold.com; Shares outstanding: 216.3 million; Market cap: $869.6 million), continues to negotiate with the government of Kyrgyzstan over the size of the government’s proposed stake in Centerra’s Kumtor mine, as well as the mine’s tax regime. Centerra and Cameco (which owns 53% of Centerra) and the Kyrgyz government were scheduled to meet with an international arbitrator, but Centerra and the Kyrgyz government have agreed to postpone international arbitration. This will allow for further negotiations to reach an acceptable investment agreement on the Kumtor concession. Gold production at Kumtor has continued uninterrupted. Centerra is still a hold....
AMAZON.COM $71.54 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 425.9 million; Market cap: $30.5 billion) has purchased bookoriented, social-networking website www.shelfari.com. Shelfari lets users catalogue online the books they own or have read. It also lets users organize book groups, plus post profiles of their literary tastes. Readers with similar interests can then interact and share book recommendations. Amazon’s investments in increasingly popular social-networking websites will complement the company’s Kindle electronic ebook reader, launched in November, 2007. Users can download newspapers, magazines and books to the Kindle. Amazon.com is a buy.
Gold hit a high of $850 an ounce in 1980, then worked its way downward for 25 years. It began rising again in 2002, and rose to a record high of $1,011 in March 2008. Gold moved down after that March high, to a recent low of $750. That, in turn, pushed gold mining stocks down. However, gold recently jumped $66 in one day, to $851, due to turmoil in financial market, This had a positive impact on gold mining stocks. We’re not convinced that gold prices will move significantly higher, or even hold their recent gains. However, some of the conditions that typically accompany higher gold prices are present. U.S. economic growth has slowed and stock markets have dropped. That’s keeping interest rates down. Those lower rates, plus still-high energy prices, could push inflation up....
Here are two of the most promising early stage diamond stocks. Both have speculative appeal, but they are buys only for highly aggressive investors. STORNOWAY DIAMOND CORP. $0.22 (Toronto symbol SWY; SI Rating: Start-up) (1-888-338-2200; www.sornowaydiamonds.com; Shares outstanding: 227.2 million; Market cap: $50.0 million) holds interests in over 14 diamond exploration properties in Canada and one in Botswana. TSE-listed Agnico-Eagle holds a 17.7% interest in the combined company. Global mining giant Rio Tinto Limited holds an 11.2% interest. Stornoway’s projects include a 50% interest in the Renard diamond project in Quebec, which has the potential to become Quebec’ s first diamond mine. Bulk sampling has produced promising carat-grade recoveries. The project is now in the pre-feasibility stage to define a total resource estimate....