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
MIRANDA GOLD $0.93 (Toronto symbol MAD; SI Rating: Start up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.8 million; Market cap: $41.7 million) is a gold exploration company focused in Nevada. Miranda has concentrated its exploration efforts on the Cortez Trend and Battle Mountain-Eureka Trend regions in Nevada, where it now has 15 properties in various stages of exploration. The regions are two of the most productive gold belts in the world. Miranda has a number of joint venture partners funding exploration in return for interests in the company’s properties. These partners include Barrick Gold, Newcrest Resources, the Cortez Joint Venture, the Buckhorn Joint Venture, Romarco Minerals and White Bear Resources. Joint ventures are crucial for junior exploration companies. These arrangements give juniors a way to raise funds for further exploration on properties where they have made initial mineral discoveries. The juniors retain an interest in the properties without resorting to dilutive share issues or taking on debt....
Today, many investors seem sure that the subprime situation and the problems associated with it will bring on a long-term market decline that could carry stock prices much lower. When a stock market prediction like this becomes widespread, the conclusion, the timing or both are often wrong. Think back to how many people agreed with former Federal Reserve Board Chairman Alan Greenspan’s famous (or notorious) “irrational exuberance” speech in December 1996. Yet, nearly four years passed before the market hit its ultimate peak. Between the Greenspan speech and the 2000 market peak, we went through a market setback in response to an economic crisis that started in Thailand in 1997....
DELPHI ENERGY $1.83 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 68.1 million; Market cap: $124.6 million) is engaged in the exploration, development and production of oil in east-central Alberta, and natural gas in northeast Alberta and northeast British Columbia. Natural gas makes up 82% of daily production. In the three months ended September 30, 2007, Delphi’s revenue rose 10.7%, to $21 million from $18.9 million. Cash flow per share rose 5.6%, to $0.19 from $0.18. The increases came from higher production and prices. Delphi’s average daily output rose 12% in the latest quarter, to 5,700 barrels of oil equivalent from 5,090 barrels. Recent exploration successes have added to production. The company ended 2007 with output of 5,900 barrels per day. Delphi forecasts that production will rise to 6,000 barrels per day in the first quarter of 2008....
RESTORATION HARDWARE, $4.49, symbol RSTO on Nasdaq, agreed this week to accept a reduced $4.50 a share buyout offer from Catterton Partners, a leading U.S. private equity firm. Restoration had previously accepted a $6.70 a share buyout offer from Catterton. Restoration accepted the lower offer after falling housing markets and a weakening U.S. economy hurt its sales. Catterton is also providing Restoration with a $25 million loan for working capital. Restoration Hardware is a U.S. specialty retailer of high-quality home furnishings. Over the nine-week holiday season ended January 5, 2008, its sales fell 1% from a year earlier. Restoration Hardware is still a hold....
MICROSOFT CORP. $30.45, Nasdaq symbol MSFT, has launched an unsolicited offer to buy Internet search provider Yahoo! Inc. for $44.6 billion in cash and stock. Microsoft will limit the cash portion to 50% of the total payout. To put the price in perspective, Microsoft earned $4.7 billion or $0.50 a share in its second fiscal quarter ended December 31, 2007. The company holds cash of $21.1 billion or $2.26 a share. The offer represents a 62% premium for Yahoo’s stockholders, so a competing bid seems unlikely. Yahoo may try to find other bidders. However, recent writedowns of subprime mortgages have limited the willingness of banks to provide financing for big takeovers like this. Microsoft feels it can save $1 billion in costs a year by combining Yahoo with its MSN online search business. The Internet advertising market is growing fast, and the combination will help Microsoft compete more effectively with market leader Google. The deal would also give Microsoft access to Yahoo’s fast-growing search businesses in Asia....
SYMANTEC, $16.38, symbol SYMC on Nasdaq, rose more than 10% this week after it reported that earnings excluding one-time items rose 16.3% in the three months ended December 31, 2007, to $291.7 million from $250.8 million a year earlier. Earnings per share rose 26.9%, to $0.33 from $0.26 on 9% fewer shares outstanding. Excluding the impact of acquisitions, revenues rose 15.3% to $1.53 billion from $1.32 billion. In the latest quarter, earnings gained from strong sales in Europe and Asia, and from the success of its Norton 360 AntiVirus software, which now accounts for 25% of its consumer sales. Symantec’s consumer business, which represents 29% of the company’s total revenues, grew 8%. Revenues from Symantec’s services business (6% of revenues) grew 40%. Security and data management sales (29% of revenues) grew 9%, and data center management sales (29% of revenues) rose 11%. In April 2007, Symantec acquired Altiris (management software) for $830 million. In December 2007, it bought Vontu (data loss prevention software) for $350 million. The company may make further acquisitions in 2008....
APPLE INC. $130.01, Nasdaq symbol AAPL, fell 15% this week after its revenue and profit predictions for the first three months of 2008 fell short of consensus forecasts. Fears that a slowing economy would hurt sales of its iPod music players and Mac computers also weighed on the stock. In its first fiscal quarter ended December 29, 2007, earnings rose 54.4%, to $1.76 a share from $1.14 a year earlier. Sales grew 35.2%, to $9.6 billion from $7.1 billion. Most of the gains came from a 44% jump in shipments of its new Mac computers. Demand for its iPhone remained strong, but sales of iPods have slowed compared to previous years. We’ve long held a high opinion of Apple and its products. But the stock’s rapid rise in the past two years limited its appeal. After the recent drop, however, we once again see Apple as a buy for aggressive investors....
Today many people seem sure that the subprime situation and associated problems will bring on a long-term market decline that could carry stock prices much lower. I think those fears are overblown, but we may be in a situation like the one that began in 1997, in response to the start of Thailand’s economic crisis that year. At that time, investors talked about the so-called “Asian contagion”, and feared the crisis would spread to the west. Instead, we got over it and many markets went on to new highs. We may be on a similar track right now. I still take a generally optimistic view of the market, but I could be wrong. So you’ll want to take a relatively conservative stance. In aggressive stocks, my advice is to focus on issues that are attractive for existing value, such as Delphi, which is our “Stock of the month” for February....
Today many people seem sure that the subprime situation and associated problems will bring on a long-term market decline that could carry stock prices much lower. When conclusions like these become widespread, the conclusion or the timing or both are often wrong. Think back to how many people agreed with former Federal Reserve Board Chairman Alan Greenspan’s famous (or notorious) ‘irrational exuberance’ speech, in December, 1996. Yet nearly four years passed before the market hit its ultimate peak. In between the Greenspan speech and 2000 market peak, we went through a market setback in response to an economic crisis that started in Thailand in 1997....
DIAMONDS NORTH RESOURCES $1.49, symbol DDN on Toronto, jumped as high as $2.05 this week, after it reported high diamond counts from the Tuktu-1 kimberlite on its 100%-owned Amaruk property in the Pelly Bay Diamond District of Nunavut. A total of 550 diamonds were recovered from an 81.75-kilogram drill-hole sample. Tuktu-1 yielded nearly seven diamonds per kilogram of kimberlite. That’s comparable to the initial results from the top diamond-producing mines in Canada. Here’s a case where we would recommend applying our sell-half rule. That’s when you sell half of a speculative stock such as Diamonds North that doubles in price for you, so you can get back your initial outlay....