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
EUROPEAN GOLDFIELDS $5.77 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 179.2 million; Market cap: $1.0 billion) has signed a joint development agreement with Ariana Resources plc of the UK to develop Ariana’s properties in northeastern Turkey, including the Ardala gold-copper project and 11 other licenses in the promising Pontides region. European Goldfields will initially acquire 51% of the joint venture properties in return for funding all development costs. However, upon completion of a bankable feasibility study on a project, its interest will rise to between 80% and 90%. European Goldfields has a 95% interest in Hellas Gold, which 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. European also owns 80% of the Certej gold/ silver exploration project in Romania....
AUTODESK, INC. $33.05 (Nasdaq symbol ADSK; SI Rating: Average) (515-507-5000; www.autodesk.com; Shares outstanding: 230.9 million; Market cap: $7.6 billion) is down 21 since late February, despite higher earnings in the fiscal fourth quarter ended January 31, 2008. Earnings per share excluding one-time items rose 13%, to $0.52 from $0.46. However, consensus expectations were for earnings of $0.54 a share. Revenues rose 20%, to $599.1 million from $497.4 million a year earlier. U.S. revenues were up just 1.5%, to $206 million from $203 million. European revenues rose 38.6%, to $262 million from $189 million. Asia/Pacific sales were up 24.8%, to $131 million from $105 million. Autodesk also lowered its earnings outlook for the current first quarter. Autodesk confirmed investor worries that U.S. sales were slowing in all industries, but especially in the construction market. Autodesk is the largest maker of design software used in construction and engineering....
TIM HORTONS $33.75 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timshortons.com; Shares outstanding: 186.8 million; Market cap: $6.3 billion) reports that revenues rose 10.5% in the three months ended December 31, 2007, to $515.4 million from $466.5 million. Canadian same-store sales rose 3.4%, and U.S. same-store sales rose 4.2%. Earnings per share rose 17.1%, to $0.41 from $0.35. The improved results came despite heavy snow in key markets in December, as well as a promotional focus on its TimCard, rather than holiday merchandise. The TimCard is a reloadable electronic payment card. The company will realize the benefits of robust TimCard sales in subsequent quarters. The company has raised its quarterly dividend by 28.6%, to $0.09 a share from $0.07. The shares now yield 1.1%....
COMPTON PETROLEUM $11.56 (Toronto symbol CMT; SI Rating: Speculative) (403-237 -9400; www.comptonpetroleum.com; Shares outstanding: 129.1 million; Market cap: $1.5 billion) will now conduct a formal review of its business plan and strategic alternatives to enhance shareholder value. This could include potential asset sales, strategic alliances, joint ventures, mergers or the sale of the company. Compton initiated the formal review in response to repeated requests from its largest shareholder, New York-based private equity firm Centennial Energy Partners. Centennial holds a 19.8% interest in Compton. A representative from Centennial has joined Compton’s board and will be a member of the special committee conducting the review. Compton will need sustained high gas prices before it reports significantly higher cash flow. Centennial’s close involvement in Compton helps highlight the value of Compton’s assets....
Here are two promising diamond exploration stocks. Both have speculative appeal, but they are buys only for highly aggressive investors. SHORE GOLD $3.80 (Toronto symbol SGF; SI Rating: Start-up) (306-664-2202; www.shoregold.com; Shares outstanding: 182.7 million; Market cap: $694.3 million) owns 100% of the Star diamond project in the Fort a la Corne area of Saskatchewan, which hosts one of the most extensive kimberlite fields in the world. Shore Gold has completed underground bulk sampling at the Star project, which returned high caratgrades of diamonds. By the end of this year, it hopes to complete a bankable feasibility study supporting a diamond mine. The company aims to complete construction of a mine by 2012....
PASON SYSTEMS $13.74 (Toronto symbol PSI) (403-301-3400; www.pason.com; Shares outstanding: 80.4 million; Market cap: $1.1 billion) rents instrumentation and provides data services to oil and gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina. Its services include data acquisition, well site reporting software, remote communications and Internet information management tools. Pason reports 1.8% lower revenues in the three months ended December 31, 2007, to $60.5 million from $61.6 million a year earlier. Earnings per share were flat at $0.19. Cash flow per share rose 3.1%, to $0.33 from $0.32. Pason’s stock price has risen lately along with higher oil and natural gas prices. However, natural gas prices will need to remain high or even rise further in 2008 to significantly revive drilling activity....
CAMECO CORP. $36.65 (Toronto symbol CCO; SI Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 352.3 million; Market cap: $12.9 billion) is making significant progress in repairing flood damage at its Cigar Lake uranium project in Saskatchewan. The mine was about 60% complete when a rockfall caused a major flood in 2006. Cameco still anticipates that production will not start up at Cigar Lake before 2011. Meanwhile, lower uranium prices and the Cigar Lake delay is holding back profits. Cameco is still a hold.
TRUE ENERGY TRUST $3.31 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.tketrust.com; Units outstanding: 79.2 million; Market cap: $262.2 million) produces oil and gas mostly in Alberta and Saskatchewan. About 72% of its production is gas. In the three months ended September 30, 2007, Trilogy’s production rose 6.4%, to 14,096 barrels of oil equivalent per day, from 13,248 barrels. However, cash flow per unit fell 57.7%, to $0.22 from $0.52 due to lower gas prices. The shares now trade at 3.8 times expected 2008 cash flow. True’s monthly distribution of $0.04 gives it a yield of 14.5%. It flows approximately 90% of its cash flow through to its shareholders. Debt is high at $238.2 million, or over three times annual cash flow....
TRILOGY ENERGY TRUST $9.34 (Torontosymbol TET.UN; SI Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Shares outstanding: 92.6 million; Market cap: $864.9 million) holds oil and gas properties in the Kaybob and Grand Prairie areas of central Alberta. Trilogy’s production is weighted approximately 78% toward natural gas and 22% to oil. In the three months ended December 31, 2007, Trilogy’s cash flow per unit fell 39.7%, to $0.41 from $0.68. Production fell 16%, to 21,044 barrels of oil equivalent per day, from 25,042 barrels. The declines came from property sales, plus lower natural gas prices. Trilogy’s monthly distribution of $0.07 gives it a yield of 9.0%. It flows approximately 62% of its cash flow through to its shareholders. Debt is high at $326.5 million, or 1.9 times annual cash flow. Trilogy now trades at around 4.4 times 2008 forecast cash flow....
BIRCHCLIFF ENERGY $8.98 (Toronto symbol BIR; SI Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 95.8 million; Market cap: $860.3 million) is focused on oil and gas exploration, development and production in northwestern Alberta’s Peace River Arch area. In September 2007, Birchcliff paid Compton Petroleum $263.3 million in cash for assets at Worsely, with 3,500 barrels of oil equivalent production per day (78% light oil and 22% natural gas). The Worsely assets have significant development potential with 80 infill drilling locations. The light oil assets also complement Birchcliff’s gas assets. It can now choose between directing spending to either light oil opportunities or natural gas, depending on market conditions. With Worsely, Birchcliff’s five core properties now make up 90% of its production. Its undeveloped land increased to 248,788 undeveloped acres from 199,097 acres, with an average 84% working interest. Birchcliff already operates three natural gas plants and has an interest in six other plants. It also has interests in 18 compressor stations. The plants and stations provide processing revenue....