Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

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

Growth Stocks

Peak Gold is Still a Buy

PEAK GOLD $0.75 (Toronto symbol PIK; SI Rating: Speculative) (604-681-2802; www.peakgold.com; Shares outstanding: 558.1 million; Market cap: $418.6 6 million) has agreed to merge with Metallica Resources, symbol MR on Toronto, and with New Gold, symbol NGD on Toronto. The new company — to be called New Gold — will have a market cap of $1.6 billion. It expects to produce 297,000 ounces of gold in 2008 and 350,000 ounces in 2009. Shareholders of Peak Gold will receive 0.1 common shares of New Gold for each common share of Peak Gold held. The merged company will have $500 million in cash to expand production at Peak’s Amapari mine in Brazil, to develop Metallica’s El Moro mine in Chile and to develop New Gold’s Afton mine in British Columbia....

1 min read

Pat McKeough

Growth Stocks

Updating BROADRIDGE FINANCIAL SOLUTIONS, YAMANA GOLD, ADOBE SYSTEMS INC.

BROADRIDGE FINANCIAL SOLUTIONS $18 (New York symbol BR: SI Rating: Extra risk) (201-714- 3000; www.broadridge.com; Shares outstanding: 140 million; Market cap: $2.5 billion) fell to as low as $15.25 a share recently after Standard & Poor’s lowered its credit rating on certain of the company’s obligations. The shares have since regained all of the drop. S&P is concerned that Broadridge is taking on too much risk, especially at its Ridge Clearing subsidiary, given today’s difficult financial environment in the U.S. Broadridge offers services to the investment industry in three main areas: investor communications; securities processing; and transaction clearing. Broadridge mails and processes 70% of all proxy votes. The company stands to gain from the increasing complexity of securities regulations and increasing levels of share ownership....

2 min read

Pat McKeough

Growth Stocks

Chesapeake Adds Reserves

CHESAPEAKE ENERGY $51.03 (New York symbol CHK; SI Rating: Extra risk) (405-848- 8000; www.chkenergy.com; Shares outstanding: 534.1 million; Market cap: $27.3 billion) has announced a major unconventional gas discovery in the Haynesville shale region of Louisiana. Unconventional or tight gas formations situated in sand, coal or shale are too dense or “tight” to allow gas to flow freely to the well bore. Specialized fracturing techniques are used to release gas by cracking the sand, coal or shale with high water pressure and sand. Still, the discovery’s potential of as much as 20 trillion cubic feet equivalent of reserves makes it well worth developing. The company also announced a significant new conventional discovery in the Colony Granite Wash area in western Oklahoma’s Anadarko Basin. Chesapeake already produces 40 million cubic feet of gas equivalent per day in this area....

1 min read

Pat McKeough

Growth Stocks

ACI WORLDWIDE $22.31 Nasdaq Symbol ACIW

ACI WORLDWIDE $22.31 (Nasdaq symbol ACIW; SI Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 35.9 million; Market cap: $801.7 million) sells electronic payments systems software and services to more than 800 clients in 84 countries, including many of the world’s largest financial institutions. ACI reported 8.6% higher revenues in the three months ended December 31, 2007, to $101.3 million from $93.3 million. The company lost $2 million or $0.06 a share, compared to a profit of $2.6 million or $0.07 a share a year earlier. However, the loss was largely due to a 36.9% increase in research and development spending, to $16.4 million or a high 16.2% of revenues. Cash flow was positive in the latest quarter, at $0.15 a share. The company continues to win new contracts for its retail payment systems. It has also entered into a strategic alliance with IBM. IBM will provide ACI with technical staff and laboratory support for measuring the performance of its payments software. In addition, ACI plans to use IBM data centers globally to host its software. In exchange, IBM will profit by adding ACI systems to its customer offerings....

1 min read

Pat McKeough

Growth Stocks

Pick of the U.S. Technology Stocks - Two Niche Tech Stocks in Growing Markets

VERIGY LTD. $19.82 (Nasdaq symbol VRGY; SI Rating: Speculative) (1-800-447-8378; www.verigy.com; Shares outstanding: 60.0 million; Market cap: $1.2 billion) designs and makes test systems used in computer-chip production. Verigy’s revenues in the three months ended January 31, 2008 rose 21.2%, to $200 million from $165 million a year earlier. It earned $0.53 a share, up 140.9% from $0.22. Thanks to its balanced product portfolio, plus the addition of new customers such as Rambus, revenues and profits increased in the latest quarter, despite overall weakness in the semiconductor test industry....

2 min read

Pat McKeough

Growth Stocks

Fair Isaac Makes Cuts

FAIR ISAAC CORPORATION $25.25 (New York symbol FIC; SI Rating: Average) (415- 472-2211; www.fairisaac.com; Shares outstanding: 48.9 million; Market cap: $1.2 billion) is implementing a number of restructuring measures to boost profits. The company will sell more than a dozen non-strategic businesses. These include its government research, advertising and veterinary diagnostics businesses. Fair Isaac will also cut 420 jobs (out of 2,824 employees) and consolidate facilities. In total, Fair Isaac aims to reduce annual costs by about $100 million through the restructuring....

1 min read

Pat McKeough

Growth Stocks

Pick of the Service Providers - Two Service Providers — One Buy, One Hold

FIRSTSERVICE CORP. $24 (Toronto symbol FSV; SI Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 28.8 million; Market cap: $687.4 million) operates in the rapidly growing service sector, providing services in the following areas: commercial real estate; residential property management; integrated security services; and property improvement services. The company continues to expand profitably through acquisitions and internal growth. Both avenues still offer lots of potential for expansion in the fragmented service sector. FirstService reported 34% higher revenues in the three months ended December 31, 2007, to $502.2 million from $374.8 million a year earlier. (All figures except share price in U.S. dollars.) Excluding one time items, earnings per share rose 31.8%, to $0.29 from $0.22. Cash flow per share rose 35.3%, to $0.92 from $0.68. FirstService now trades at 6.5 times cash flow....

2 min read

Pat McKeough

Growth Stocks

Delphi is Still Cheap

DELPHI ENERGY $2.37 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; Market cap: $162.2 million) reported 5.3% higher cash flow per share in the three months ended December 31, 2007, to $0.20 from $0.19. Revenues were up 16.2%, to $26.6 million from $22.9 million. Production rose 17.8% to 5,868 barrels of oil equivalent production per day from 4,982 barrels. Gas makes up 84% of daily output. Delphi produces oil in east-central Alberta, and natural gas in northeast Alberta and northeast British Columbia. Delphi trades at less that 3.0 times cash flow....

1 min read

Pat McKeough

Growth Stocks

Pick of the Junior Mining Stocks - New Mines Will Let These Two Keep Growing

IMPERIAL METALS $9.50 (Toronto symbol III; SI Rating: Speculative) (604-669-8959; ww.imperialmetals.com; Shares outstanding: 32.7 million; Market cap: $310.5 million) is a Vancouver-based mining company that explores for and produces base and precious metals. Its producing assets are a 100% interest in the Mount Polley open pit copper/gold mine in central British Columbia, plus a 50% interest in the Huckleberry open pit copper/molybdenum mine in west central B.C. In February 2007, Imperial acquired the Red Chris copper/gold property in northwest B.C. Imperial now aims to build a $228 million open-pit mine on the property. Imperial also explores for gold at its Sterling property in Nevada. In 2007, Imperial Metals’ revenues rose 25.3%, to $265 million from $211.4 million in 2006. Cash flow per share fell 17.8%, to $1.94 from $2.36, on a lower contribution from Mount Polley....

2 min read

Pat McKeough

Growth Stocks

The Stock Pickers Digest Hotline - Friday, May 2, 2008

TOROMONT INDUSTRIES, $31.36, symbol TIH on Toronto, rose this week after it reported that revenues rose 2.6% in the three months ended March 31, 2008, to $400.6 million from $390.2 million a year earlier. That increase came despite a higher Canadian dollar, which reduced reported revenue by $47 million or 10%. Earnings per share rose 13.6%, to $0.25 from $0.22. The latest quarter include a gain realized on the sale of marketable securities. That added $0.03 to per-share earnings. In the latest quarter, equipment group revenues fell 11.5% on lower sales due to the strong Canadian dollar, adverse weather conditions and a strike in Newfoundland and Labrador. However, compression group revenues rose 23% due in part to continued strength in U.S. natural gas compression, and in North American industrial refrigeration....

5 min read

Pat McKeough

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.