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
NVIDIA CORP. $12.49, Nasdaq symbol NVDA, fell over 30% this week after it cut its revenue forecast for its second fiscal quarter ending July 27, 2008, from $1.1 billion to between $875 million and $950 million. The company blames the revision on a slowing economy, competitive pricing and delays in launching a new product. Nvidia will also take a one-time charge of $150 million to $200 million to cover the costs of replacing and repairing certain graphic chips in notebook computers. Nvidia earned $211.8 million, or $0.36 a share before unusual items in the three months ended April 27, 2008. These chips use older technology than its newer models, so these problems should not affect future earnings. Nvidia continues to spend about 17% of its revenue on research, which will help it maintain its leading share of the graphic chip market. Nvidia is still a buy, but only for highly aggressive investors....
MASTERS ENERGY $3.84 (Toronto symbol MSY; SI Rating: Speculative) (403-290-1785; www.mastersenergy.com; Shares outstanding: 15.4 million; Market cap: $59.0 million) explores for and produces oil and natural gas in northern Alberta’s North Peace River Arch region and southern Alberta’s Little Bow district. Masters’ February, 2004 acquisition of Terraquest Energy for $10.8 million gave it interests in producing properties at Little Bow, Long Coulee, Grand Forks, Hector and Badger in southern Alberta. The Terraquest acquisition also provided 22,000 acres of undeveloped land for future drilling. In 2005, Masters spent $7.8 million on acquisitions of North Peace River Arch properties to create a second core producing area....
ENDEV ENERGY INC. $1.41 (Toronto symbol ENE; SI Rating: Speculative) (1-888- 739-4623; www.endevenergy.com; Shares outstanding: 88.7 million; Market cap: $125.0 million) jumped recently after receiving a buyout offer from Penn West Energy Trust, $35, symbol PWT.UN on Toronto. Endev shareholders will receive 0.041 of a Penn West unit for each Endev share held, which is equivalent to $1.44 per Endev share at the current price of Penn West shares. Penn West expects to issue 3.9 million trust units in the deal and assume $43.9 million of Endev debt, for a total value of about $170 million. Endev explores for and develops oil and natural gas in central Alberta. Production is weighted 22% toward crude oil and liquids and 78% natural gas. Endev’s primary production area at Majorville in southeastern Alberta is near existing Penn West operations....
NISSAN MOTOR CO. $17.49 (Nasdaq symbol NSANY; SI Rating: Above-average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $39.5 billion) is joining with Japanese technology giant NEC to invest $115 million over the next three years to mass-produce lithium-ion batteries for use in electric cars and gas-electric hybrid cars. Nissan will hold a 51% stake in the venture, which will start with an annual capacity of 13,000 units, increasing to 65,000 units by 2011. Nissan is still a buy. BREAKWATER RESOURCES $0.44 (Toronto symbol BWR; SI Rating: Speculative) (416-363-4798; www.breakwater.ca; Shares outstanding: 446.4 million; Market cap: $196.4 million) has moved lower lately on weaker financial results and lower zinc prices....
AUTODESK, INC. $38.63 (Nasdaq symbol ADSK; SI Rating: Average) (515-507-5000; www.autodesk.com; Shares outstanding: 223.9 million; Market cap: $8.7 billion) reported revenues in the three months ended April 30, 2008 (its fiscal 2009 first quarter) of $598.8 million, up 17.7% from $508.6 million a year earlier. Earnings per share excluding one-time items rose 13.6%, to $0.50 from $0.44. In the latest quarter, Europe, Middle East and Africa revenues rose 25% (11% excluding currency gains). Asia Pacific sales rose 27% (18% excluding currency). Revenues from the Americas rose only 4%, reflecting the slower U.S. economy. Autodesk now trades at just 18.2 times this year’s forecast earnings of $2.12 a share. That’s reasonable in light of its growth prospects, and its high research spending (24% of revenue)....
EUROPEAN GOLDFIELDS $5.06 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 179.3 million; Market cap: $907.0 million) owns properties in Greece and Romania. The company is headquartered in the UK. European Goldfields holds a 65% interest in Hellas Gold. Hellas owns three gold and base metal deposits in Northern Greece. The deposits are the Stratoni zinc/ lead/silver property, the Olympias gold/zinc/lead/silver project and the Skouries copper/gold property. Production started at Stratoni in September 2005. Permits to develop the Skouries and Olympias projects are moving steadily forward....
TRILOGY ENERGY TRUST $14 (Toronto symbol TET.UN; SI Rating: Speculative) (403- 290-2900; www.trilogyenergy.com; Shares outstanding: 95.4 million; Market cap: $1.3 billion) recently raised its monthly distribution per unit by 42.9%, to $0.10 from $0.07. The new rate gives it a current yield of 8.6%. In the three months ended March 31, 2008, Trilogy’s cash flow per unit fell 21.1%, to $0.56 from $0.71 a year earlier. Revenues fell 17.4%, to $69.9 million from $84.6 million. However, the declines were due to the 2007 second-quarter sale of the trust’s Marten Creek property, and the 2007 thirdquarter sale of certain assets in southern Alberta. Trilogy’s cash flow in the latest quarter was up 36.6% from $0.41 a share in the fourth quarter of 2007. The increase came from higher oil and natural gas prices. The trust’s production mix is currently about 77% natural gas and 23% oil....
MAJOR DRILLING. $50.73 (Toronto symbol MDI; SI Rating: Speculative) (www.majordrilling.com; 1-866-264- 3986; Shares outstanding: 23.7 million; Market cap: $1.2 billion) is one of the world’s largest drilling service companies serving the mining industry. In the three months ended April 30, 2008, Major Drilling’s revenues rose 34.1%, to a record $170 million from $129 million. Excluding one-time items, earnings rose 42.1%, to a record $25.3 million or $1.07 a share, from $17.8 million or $0.77 a share. Cash flow rose 40.5%, to $35.3 million or $1.49 a share from $25.1 million or $0.86 a share. Major Drilling holds cash of $15.7 million or $1.08 a share. Long-term debt is low at $28.3 million....
TIM HORTONS $31.37 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timshortons.com; Shares outstanding: 186.2 million; Market cap: $5.8 billion) continues to implement its management restructuring program. Some senior managers will take on additional responsibilities. Others will leave the company. Tim Hortons will take a $3.8 million charge for the restructuring, although it should result in cost savings of $1.5 million a year. The long-term outlook for Tim Hortons is positive. But the company faces a number of challenges, including weaker consumer spending and higher operating costs. High gas prices may well cut road traffic, a major source of customers for the company. The company also faces higher labor costs, particularly in Ontario, where it has about half of its 2,800 Canadian stores....
ATLANTIC TELE-NETWORK $29.39 (Nasdaq symbol ATNI; SI Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.2 million; Market cap: $447.6 million) gets 57% of its revenue from its 80% interest in Guyana Telephone and Telegraph Company (GT&T). The rest comes from its wireless interests in the Caribbean and its expanding telecom interests in the United States. GT&T is the sole local, long distance and international telephone service provider in Guyana, on the northeast coast of South America. Atlantic also owns Choice Communications, which offers wireless services in the U.S. Virgin Islands. Atlantic’s other interest in the Caribbean is 58% of Bermuda’s largest provider of cellular voice and data services. Atlantic continues to expand in the U.S. through Commnet Wireless, which provides voice and data wireless roaming services for U.S. and international carriers in rural areas in the United States. As well, its SoVerNet subsidiary provides wireline voice and data services to businesses and homes in New England....