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
“Penny” mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that can be mined at a profit, and such finds are exceedingly rare. Because of this, it’s even more important to look for investment quality in Canadian penny stocks. It may seem contradictory to use the terms “investment quality” and “Canadian penny stocks” in the same sentence. However, there are even wider disparities in the investment quality of penny mines than in better-established companies. For instance, we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock....
BROADRIDGE FINANCIAL SOLUTIONS $15.79 (New York symbol BR: SI Rating: Extra risk) (201-714-3000; www.broadridge.com; Shares outstanding: 140.5 million; Market cap: $2.2 billion) specializes in three areas of service to the investment industry: investor communications; securities processing; and transaction clearing, trade settlements and other back office operations. Clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge has moved down lately along with most financial services stocks. However, while tight credit conditions may lead to fewer takeovers and related investor communications activity, the company’s overall business continues to grow. Broadridge distributes over one billion investor communications each year, including investor account statements, trade confirmations and tax statements. Components of its securities processing services are used by seven of the top 10 U.S. broker-dealers. Broadridge mails and processes over 70% of all proxy votes. Its fixed income business processes trades with a settlement value of $2 trillion a day....
Some investors worry that Washington’s $700 billion bailout of the banking industry is going to fall apart, and that this will lead to a rise in gold and a drop in the stock market. We think the bailout will go through. The only obstacle to it is the political bickering and posturing that is bound to go into a highly visible effort like this, all the more so just prior to a presidential election. There is always a possibility that the market will move lower from here. Meanwhile, gold will stay volatile. But we still feel stock prices will hit bottom over the next month or two, then move up for six months or more. GABRIEL RESOURCES, $2.06, symbol GBU on Toronto, now believes that the upcoming November elections in Romania will result in a positive political decision on the future of its 80%-owned Rosia Montana gold project in Romania....
Some investors worry that Washington’s $700 billion bailout of the banking industry is going to fall apart, and that this will lead to a rise in gold and a drop in the stock market. We think the bailout will go through. The only obstacle to it is the political bickering and posturing that is bound to go into a highly visible effort like this, all the more so just prior to a presidential election. There is always a possibility that the market will move lower from here. Meanwhile, gold will stay volatile. But we still feel stock prices will hit bottom over the next month or two, then move up for six months or more. WASHINGTON MUTUAL INC. $0.16, New York symbol WM, fell over 90% on Friday before the New York exchange halted trading. That’s because banking regulators have seized control of the company. Regulators subsequently sold the assets of Washington Mutual’s main banking subsidiary to J.P. MORGAN CHASE & CO. $48.24, New York symbol JPM. The purchase included branches, deposits and the loan portfolio....
Today’s rebound in the market is reassuring, but I expect stocks to remain highly volatile for a month or more. After that, we could see a six-month rebound in prices. The U.S. bailout of major financial institutions raises inflation risk over the next few years, but it heads off panic. Nobody can predict market bottoms, but I suspect we are much closer to the bottom than the top. ADOBE SYSTEMS INC. $40.94, symbol ADBE on Nasdaq, rose this week after reporting earnings that exceeded consensus expectations. Excluding one-time items, earnings per share in the three months ended August 29, 2008 rose 11.1%, to $0.50 from $0.45 a year earlier. That beat expectations of $0.46 a share. Revenues rose 4.2%, to $887.3 million from $851.7 million. In the latest quarter, stronger sales of established products such as Acrobat, Flash and Photoshop software boosted Adobe’s revenues and earnings. However, sales of its Creative Suite 3 software fell 10%, as customers delayed purchases to wait for the launch of the new Creative Suite 4. That upgrade will be available in the fourth quarter of 2008....
Today’s rebound in the market is reassuring, but I expect stocks to remain highly volatile for a month or more. After that, we could see a six-month rebound in prices. The U.S. bailout of major financial institutions raises inflation risk over the next few years, but it heads off panic. Nobody can predict market bottoms, but I suspect we are much closer to the bottom than the top. BANK OF AMERICA CORP. $37.48, New York symbol BAC, has agreed to acquire troubled brokerage firm Merrill Lynch & Co., Inc. (New York symbol MER). Based on current prices, Bank of America will pay about $49 billion in stock. That’s equal to 29% of its market cap of $170.9 billion. The addition of Merrill will greatly expand Bank of America’s retail brokerage and wealth management operations. Including Merrill’s 16,000 brokers, the merged company will be the world’s largest brokerage firm, with 20,000 brokers and $2.5 trillion in assets under management. Bank of America will probably keep the Merrill Lynch brand, and operate it as a separate division....
REITMANS, $16.28, symbol RET.A on Toronto, reports that earnings in the three months ended August 2, 2008 rose 10.3%, to $35.4 million or $0.50 a share from $32.1 million or $0.45 a share a year earlier. Sales fell 0.8%, to $289.5 million from $291.9 million. Same store sales fell 4.5%. In the latest quarter, continuing unseasonable weather, lower consumer confidence and rising gasoline prices reduced store traffic. That in turn dampened sales. However, the strong Canadian dollar and better inventory controls boosted profits. Reitmans is Canada’s largest specialty woman’s wear retailer. The company holds $230.9 million or $4.04 a share in cash. It pays a $0.18 quarterly dividend, which currently gives it a 4.4% yield....
BANK OF AMERICA CORP. $33.74, New York symbol BAC, has agreed to repurchase $4.5 billion of auction-rate securities held by 5,500 retail investors. The interest rate on these securities depends on bids that buyers submit during periodic auctions. However, demand for these securities is slowing, which hurts their liquidity. The buyback will cut Bank of America’s pre-tax earnings by $275 million. It earned $3.4 billion or $0.72 a share in the second quarter of 2008. The stock fell to $18.44 in July, 2008, but has rebounded to today’s price. However, Bank of America’s recent purchase of home mortgage lender Countrywide Financial Corp. increased its exposure to slowing housing markets....
IAMGOLD CORP., $5.93, symbol IMG on Toronto, has made an all cash offer of 1.20 euros ($1.84 Cdn) a share for Paris-based royalty company Euro Resources, symbol EUR on Toronto. The offer values Euro Resources at about 75 million euros ($114.8 million Cdn). IAMGold could fully fund the purchase from its $140 million cash on hand. Euro Resources holds a royalty on production from IAMGold’s Rosebel gold mine in Suriname (formerly Dutch Guiana). Eliminating Euro’s Rosebel royalty will reduce IAMGold’s costs at the mine by $50 U.S. an ounce to about $455 U.S. an ounce. Euro Resources’ main asset is its Rosebel royalty, though it also owns certain mineral rights to the Paul Isnard gold properties in French Guiana....
H&R BLOCK INC. $24.24, New York symbol HRB, has agreed to acquire the operator of its franchises in Texas, Oklahoma and Arkansas for approximately $278 million. Under the original franchise agreement in 1957, these offices pay just 6% of their revenues to H&R Block instead of the usual 30% that newer franchisees pay. This purchase gives H&R Block the opportunity to re-franchise these properties at the higher rate. H&R Block lost $129.4 million or $0.40 a share in its first fiscal quarter ended July 31, 2008. However, the company typically loses money in the quarter after the April 15 tax filing deadline. The latest results also included a $20.4 million increase in loss reserves and asset writedowns at its banking division. In the year-earlier quarter, it lost $109.8 million or $0.34 a share. Revenue fell 10.9%, to $339.6 million from $381.2 million. Lower revenues at its accounting and consumer finance operations offset a 7.7% gain at its tax services division. H&R Block is a buy....