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
MAJOR DRILLING. $59.65 (Toronto symbol MDI; SI Rating: Speculative) (www.majordrilling.com; 1-866-264- 3986; Shares outstanding: 23.6 million; Market cap: $1.4 billion) is one of the world’s largest drilling service companies serving the mining industry. In the three months ended October 31, 2007, Major Drilling’s revenues rose 53.3%, to a record $156.1 million from $101.8 million. Excluding one-time items, earnings rose 76.1%, to a record $22.8 million or $0.97 a share, from $13 million or $0.56 a share. Cash flow rose 58.5%, to $31.3 million or $1.33 a share from $19.8 million or $0.86 a share. Major Drilling holds cash of $15.7 million or $0.67 a share. Longterm debt is low at $13 million....
IVERNIA INC. $1.75 (Toronto symbol IVW; SI Rating: Speculative)(416-867-9298; www.ivernia.com; Shares outstanding: 146.9 million; Market cap: $257.1 million) plans to sell 14.7 million shares at $1.50 to China’s Yunnan Metallurgical Group for $22 million. That will increase Ivernia’s shares outstanding by 10%. Ivernia suspended production at its Magellan mine in Australia in April 2007 pending government investigations into bird fatalities due to lead poisoning at the Port of Esperance. Ivernia previously trucked its lead concentrate 700 kilometers to Esperance, on the south coast of Western Australia. Ivernia is now seeking approval to export its lead concentrate in sealed shipping containers through the Port of Fremantle. Ivernia believes that the government will respond positively to this request, and let it resume shipping lead next year....
TOROMONT INDUSTRIES LTD. $28.10 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 64.7 million; Market cap: $1.8 billion) operates in two business segments: the Equipment Group and the Compression Group. The Equipment Group includes one of the world’s largest Caterpillar dealerships by revenue and geographic territory in addition to rental operations. Also part of this group is Toromont Energy. Toromont Energy supplies, constructs and operates high efficiency power plants of less than 50 megawatts, using Caterpillar’s power generation technologies. Toromont’s plants are mostly fueled by natural gas, but also by landfill gas, biogas and diesel fuel in remote locations. Toromont Energy has built more than 50 power plants in the past 15 years....
VERIGY LTD. $25.64 (Nasdaq symbol VRGY; SI Rating: Extra Risk) (1-800-447-8378; www.verigy.com; Shares outstanding: 59.7 million; Market cap: $1.5 billion) reports that earnings excluding one-time charges rose 16.7% in the three months ended October 31, to $35 million or $0.58 a share from $30 million or $0.50 a share. Revenues rose 3.5%, to $209 million from $202 million. Orders rose 11.6%, to $183 million from $164 million. Strong demand for Verigy’s products boosted revenues and profits in the latest quarter. The company won new clients and increased orders from existing customers. Verigy designs and makes test systems used in the production of computer chips. The company holds cash of $424 million or $7.10 a share, and has little debt. Verigy spends around 11% of revenues on research and development....
REITMANS (CANADA) LTD. $18.37 (Toronto symbol RET.A; SI Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 70.8 million; Market cap: $1.3 billion) is Canada’s largest specialty women’s wear retailer. The company now has 952 stores in operation, consisting of 366 Reitmans, 160 Smart Set/Dalmys, 162 Penningtons, 53 RW&Co., 124 Addition Elle, 73 Thyme Maternity and 14 Cassis stores. In the three months ended November 3, 2007, Reitmans’ revenues rose 2.7%, to $265.5 million from $258.6 million. The sales increase was due to the net addition of 17 stores from a year earlier. Comparable store sales fell 3.2%, as unseasonably warm weather in the latest quarter slowed sales of winter clothing lines. As well, sales growth slowed due to some shoppers taking advantage of the high Canadian dollar to buy clothes in the U.S....
ARIAN SILVER $0.50 (Toronto symbol AGQ; SI Rating: Start up) (1-800-917-4102; www.ariansilver.com; Shares outstanding: 105.4 million; Market cap: $52.7 million) is active in silver exploration and development in Mexico. The company’s current focus is on the Calicanto and San Celso projects in Zacatecas state, the Tepal project in Michoacan State and the San José silverbase metal property in Zacatecas State. Arian has experienced management, and its properties are in regions with producing mines. All of its concessions have already undergone significant exploration work, and most have workings from former mines. Underground sampling had identified a number of high-grade silver veins at its San Jose property. Recent drilling results have also indicated a significant new copper and gold mineralized zone at Tepal. While the company’s current exploration program has yielded some promising results, it still needs work to outline a mineable deposit. But we think the company has a better than average chance of success....
Like any year, 2008 could turn out good or bad for investors. Everything I see leads me to believe it will be a year of rising stock prices. But it may be a difficult year for aggressive investors who fail to apply our risk-cutting approach to investment. First, the positives. The next U.S. presidential election takes place in November 2008. As long-time readers know, I view the U.S. presidential election year cycle as the single best indicator for North American stock prices — Canada as much as the United States. Historically, stock prices are much likelier to rise in the two years leading up to a U.S. presidential election than in the two subsequent years....
BROADRIDGE FINANCIAL SOLUTIONS $22.57 (New York symbol BR: SI Rating: Extra risk) (201-714 3000; www.broadridge.com; Shares outstanding: 139.4 million; Market cap: $3.1 million) specializes in three areas of service to the investment industry: investor communications; securities processing; and transaction clearing, trade settlements and other back office operations. Clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge began trading on April 2, 2007 after it was distributed as a dividend or spinoff to shareholders of New York-listed ADP. Broadridge has built its business over 40 years as a subsidiary of accounting industry leader ADP. As well, spinoffs often beat the average for several years after investors receive them from the parent....
BROADRIDGE FINANCIAL SOLUTIONS $22.57 (New York symbol BR: SI Rating: Extra risk) (201-714 3000; www.broadridge.com; Shares outstanding: 139.4 million; Market cap: $3.1 million) specializes in three areas of service to the investment industry: investor communications; securities processing; and transaction clearing, trade settlements and other back office operations. Clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge began trading on April 2, 2007 after it was distributed as a dividend or spinoff to shareholders of New York-listed ADP. Broadridge has built its business over 40 years as a subsidiary of accounting industry leader ADP. As well, spinoffs often beat the average for several years after investors receive them from the parent. The company distributes over one billion investor communications each year, including investor account statements, trade confirmations and tax statements. Components of its securities processing services are used by seven of the top 10 U.S. broker-dealers. Broadridge mails and processes over 70% of all proxy votes. Its fixed income business processes trades with a settlement value of $2 trillion a day....
FEDEX CORP. $94.29, New York symbol FDX, earned $1.54 a share in its second fiscal quarter ended November 30, 2007, down 6.1% from $1.64 a year earlier. Higher fuel costs and weaker profits at its domestic less-than-truckload operations offset strong overseas growth. Revenue rose 6.2%, to $9.45 billion from $8.9 billion. The company has started passing along its rising fuel costs to its customers, but it will take several weeks before these surcharges take effect. The stock now trades at 14.4 times its likely fiscal 2008 earnings of $6.55. That’s reasonable in light of its expanding international operations, particularly in Asia. FedEx is a buy....