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
TOROMONT INDUSTRIES LTD. $28.55 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 64.5 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....
IAMGOLD $8.21 (Toronto symbol IMG; SI Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 293.1 million; Market cap: $2.4 billion) has interests in eight operating gold mines: 100% of the Mupane gold mine in Botswana, 38% of the Sadiola gold mine and 40% of the Yatela gold mine, both located in Mali, 18.9% interests in both the Tarkwa and Damang gold mines in Ghana, 100% of the Doyon mine and the Sleeping Giant mine, both in Quebec, and 100% of the Rosebel mine in Suriname, South America. IAMGold also a 1% royalty interest in the Diavik diamond mine in northern Canada and 100% of the Niobec niobium mine in Quebec. It added these interests, as well as the Doyon, Sleeping Giant and Rosebel mines in the $1.3 billion all-stock takeover of TSXlisted Cambior Inc. in 2006. IAMGold also has development projects and exploration activities in Africa, North and South America....
GRAND PETROLEUM $3.78 (Toronto symbol GPP; SI Rating: Speculative) (403- 231-8400; www.grandpetroleum.com; Shares outstanding: 26.3 million; Market cap: $99.4 million) is now the subject of a $3.84 a share cash takeover offer from TSX-listed Harvest Energy Trust. Grand explores for and develops oil and natural gas in Alberta and Saskatchewan. Grand’s board of directors has approved the offer, and insiders holding 15% of the company’s shares have agreed to tender to the offer. Grand’s shares are also trading slightly below the offer, so a competing bid is unlikely....
BROADRIDGE FINANCIAL SOLUTIONS $19.11 (New York symbol BR: SI Rating: Extra risk) (201-714-3000; www.broadridge.com; Shares outstanding: 139.2 million; Market cap: $2.7 million) reported 9.8% higher revenues in the three months ended March 31, 2007 to $499.4 million from $454.7 million. Earnings per share rose 25%, to $0.30 from $0.24. Broadridge trades for just 13.8 times the $1.38 it expects to make in the fiscal year ended June 30, 2007. The company has now set its initial dividend rate at $0.06 per quarter, for a current annual yield of 1.3%. Broadridge is still a buy.
INDIGO BOOKS & MUSIC INC. $16.82 (Toronto symbol IDG; SI Rating: Speculative) (416-646-8965; www.chapters.indigo.ca; Shares outstanding: 24.6 million; Market cap: $414.6 million) is the largest book retailer in Canada. It operates stores in all 10 provinces and also sells through its Chapters and Indigo web sites. Indigo acquired money-losing Chapters Inc. in 2001. Indigo operates 88 superstores under the banners Chapters, Indigo and the World’s Biggest Bookstore, and 158 small format stores, under the banners Coles, Indigo, SmithBooks and The Book Company. Indigo also has a 50% interest in Calendar Club of Canada, which operates seasonal kiosks in shopping malls across Canada. Indigo’s superstores offer a huge selection and attractive surroundings. Indigo’s revenues in the fiscal fourth quarter ended March 31, 2007 rose 6.2%, to $201.9 million from $190.1 million a year earlier. Sales growth came in all areas, including superstores, small-format stores and its online retail operations....
DUNDEE REIT $45.35 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 41.3 million; Market cap: $1.9 billion) has announced the sale of its Ontario, Quebec and Newfoundland properties to GE Real Estate for $2.4 billion. As part of the transaction, GE Real Estate will buy $165 million of Dundee REIT units at $47.50 per unit. That will give GE Real Estate an 18% equity interest in Dundee REIT. This asset sale lets Dundee REIT focus on its more valuable properties in Western Canada. Dundee REIT will continue to pay its $2.20 annual distribution. The units currently yield 4.9%....
CIMAREX ENERGY $41.02 (New York symbol XEC; SI Rating: Extra risk) (303-295-3995; www.cimarex.com; Shares outstanding: 83.3 million; Market cap: $3.4 billion) is an oil and gas explorer and producer primarily focused in western Oklahoma, Kansas, the upper Gulf Coast areas of Texas and South Louisiana, the Permian Basin area of West Texas, plus the Gulf of Mexico. Cimarex also purchases and markets third-party natural gas production for resale, as well as providing compression, transportation, gas-gathering and gasprocessing services in Oklahoma, Texas and Kansas. Cimarex’s production averaged 441.5 million cubic feet equivalent per day in the latest quarter. Natural gas makes up 73% of production. The company expects production in the second half of this year to average 460 million cubic feet per day....
My ideal investment is what you might call a “heads-you-win, tails-you-break-even” situation. These investments can produce healthy profits, but you won’t get hurt too badly when they disappoint you. This contrasts with the traditional sucker bet, where the odds are more like “heads-you-break- even, tails-you-lose”. You may make a profit in a sucker bet. But it’s likely to be a modest profit that falls way short of justifying your risk....
AMERIGO RESOURCES $2.71 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 94.5 million; Market cap: $256.2 million) has a contract with Codelco, Chile’s state-owned copper producer, to process the tailings from El Teniente, the world’s largest underground copper mine. Tailings are the waste rock produced in the mining process. The contract runs at least through 2021. Amerigo has a further agreement with Codelco to process a supplementary source of material from the nearby Colihues tailings pond. Amerigo now produces about 30 million pounds of copper and over 900,000 pounds of molybdenum per year from the Codelco/Colihues tailings re-treatment operation. Amerigo also has a 26% interest in TSX-listed Nikos Explorations, with a market value of around $3 million. Nikos is focused on exploring for gold in the former Soviet Union....
FEDEX CORP. $109.96, New York symbol FDX, earned $1.96 a share in its fourth fiscal quarter ended May 31, 2007, up 7.7% from $1.82 a year earlier. If you disregard a one-time gain from a contract settlement, earnings in the most recent quarter would have grown 4.4%, to $1.90 a share. Revenue rose 7.6%, to $9.15 billion from $8.5 billion, thanks to an acquisition at its trucking division and higher volumes and prices at its air transport businesses. The company recently started offering overnight delivery service in China, and the costs have hurt its earnings growth. But growing economic activity in China should help shield FedEx from a possible slowdown in the United States, and from higher fuel costs. FedEx is a buy....