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.
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Growth Stocks Library Archives
SYMANTEC CORP. $17.88 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 846.4 million; Market cap: $15.1 billion) makes software that helps protect computers from viruses and electronic attacks. Its best known product is the top selling Norton Anti-Virus program. Symantec continues to cut its reliance on sales to consumers by increasing its corporate operations. Security products and services for businesses also give it steadier revenue streams than consumer software sales. As part of this strategy, Symantec spent $13.5 billion in 2005 to acquire Veritas Software Corp., which specializes in data storage products for businesses and corporate security products. The deal was one of the biggest software industry acquisitions ever....
GARMIN $64.47 (Nasdaq symbol GRMN; SI Rating: Speculative) (913-397-8200;www.garmin.com; Shares outstanding: 216.9 million; Market cap:$14.0 billion) was one of our first GPS successes. It’s now cheap again in relation to earnings, and we think it’s ready for a surge — especially with its tie-in with Google, and with the launch later this year of its state-of the-art Nuvifone touchscreen phone with GPS capability. Garmin is already a market leader in navigation devices using GPS. This includes consumer products (80% of sales) such as GPS receivers, portable automotive navigation devices, and fixed-mount GPS/sounder products, which are used in automotive, marine, and recreation applications. Aviation products (20% of sales) include GPS and VHF navigation enabled receivers. Still, the launch of the Nuvifone is a key step forward for the company — not just to add a new product, but to maintain sales growth as smartphone makers like Nokia and Apple move toward adding GPS capabilities to their devices....
AUTODESK, INC. $31.09, symbol ADSK on Nasdaq, fell more than 15% this week, 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 to between $0.46 and $0.48 a share, excluding one-time items. That’s below consensus forecasts of $0.52 a share. 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....
AUTODESK INC. $31.09, Nasdaq symbol ADSK, fell over 15% this week after it reported earnings that fell short of earlier forecasts. In the fiscal year ended January 31, 2008, Autodesk earned $1.88 a share before unusual items, up 22.9% from $1.53 in the prior year. Revenue rose 22.2%, to $2.2 billion from $1.8 billion. The company spent 22% of its fiscal 2008 revenue on research. Autodesk gets roughly 90% its earnings from its core AutoCAD software products, which engineers and architects use to design machinery, buildings and so on. An economic slowdown, particularly in housing, could cut demand for AutoCAD, and this has weighed on the stock price. Plans to expand its salesforce will also put pressure on Autodesk’s short-term profit margins. Autodesk is still a hold....
TIM HORTONS INC., $35.47, symbol THI on Toronto, 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 1.0%....
SONY CORP. ADRs $46.77, New York symbol SNE, rose 5% this week after Toshiba Corp. said it would abandon its HD DVD high-definition video format due to declining sales and market share. Sony is the leading developer of the rival Blu-ray format, and the demise of HD DVD should lead to higher royalty income from sales of Blu-ray players and discs. The end of the format war should also fuel demand for Sony’s high-definition TV sets, as well as its PlayStation 3 video game console which includes a Blu-ray DVD player. Sony is a buy....
BAFFINLAND IRON MINES, $3.65, symbol BIM on Toronto, reached as high as $4.40 this week after it reported a near tripling of mineral reserves at its 100%-owned Mary River iron deposits on Baffin Island in Nunavut. Results from the latest exploration program now indicate total proven and probable reserves of 365 million tons, up from 120 million tons. The high grades of this deposit should let the mine achieve production grades of 66% to 67% iron for at least the first five years of its estimated 25-year life. Baffinland is still a buy for aggressive investors. CELTIC MINERALS $0.50, symbol CME on Toronto, has begun a 2,000-meter diamond drilling program at its 100%-owned Muscocho nickel-copper-cobalt-platinum property in eastern Quebec. In the 1950s, a Noranda drilling program revealed promising nickel-copper showings on this property. Results from preliminary fieldwork completed by Celtic in December, 2007 confirmed high grades of copper-nickel-cobalt mineralization....
MICROSOFT CORP. $28.42, Nasdaq symbol MSFT, has dropped $4 since it made a hostile takeover bid for Internet search provider Yahoo! Inc. (Nasdaq symbol YHOO) at the start of February. Yahoo has rejected the offer, leading to speculation that Microsoft may have to raise its bid. Concerns over Microsoft’s ability to meet cost reduction targets after the takeover have also weighed on the stock. As well, a hostile takeover could also prompt Yahoo’s programmers and other key employees to quit. Yahoo is now exploring alliances with other media and technology companies to fend off Microsoft. Regardless of the outcome, we still see Microsoft as a buy....
It was an unsettling week, but the market ended up in the middle of the range it has stayed in since its January 21 plunge. No one can predict these things consistently, but I still think we are much closer to a bottom than a top. To put it another way, if I had to choose between “buy” and ”sell”, I would definitely say “buy”. DOREL INDUSTRIES, $29.80, symbol DII.B on Toronto, is entering the premium racing and mountain bike market with its acquisition of Connecticut-based Cannondale Bicycle Corp. for $190 million to $200 million U.S. in cash. The purchase also includes Sugoi Performance Apparel, which makes high-end clothing used by cyclists, triathletes and fitness enthusiasts. The final price will depend on Cannondale’s earnings for the twelve months ended June 30, 2008. Cannondale will add as much as $0.09 a share to Dorel’s annual earnings....
It was an unsettling week, but the market ended up in the middle of the range it has stayed in since its January 21 plunge. No one can predict these things consistently, but I still think we are much closer to a bottom than a top. To put it another way, if I had to choose between “buy” and ”sell”, I would definitely say “buy”. DIEBOLD INC. $25.49, New York symbol DBD, plans to cut its workforce by 5%, mainly due to slow demand for its electronic voting machines and delays in installing a lottery system in Brazil. This latest move is in addition to Diebold’s earlier plan to cut costs by $100 million over three years. Diebold has not issued financial statements since April 2007, due to an SEC investigation into the way it recognizes revenue from sales of ATMs and surveillance systems. The company expects to catch up with its reporting in the next few months....