Pat McKeough

A professional investment analyst for more than 30 years, Pat has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.

As early as 1980, Pat was recognized as #1 in the world of published investment advice by the Washington, DC–based Newsletter Publishers Association, and he was the first multi-year winner of The Globe and Mail’s stock picking contest.

Both CBS MarketWatch and The Hulbert Financial Digest recognized Pat as one of North America’s top stock analysts. The Wall Street Journal called him “one of only four investment newsletter advisors who have managed to serve their readers well over the long haul.”

A best-selling Canadian author, he wrote Riding the Bull, his 1993 book that predicted the stock-market boom of the last half of that decade. Through his many television appearances, he is well-known to investors for his insightful analysis and his candid, unpretentious style.

Bottom line: Pat’s conservative, reduced-risk strategy is a proven approach to safe investing.

Posts by the author
The pendulum theory grew out of Sir Isaac Newton’s 17th-century studies of gravity and physics, particularly his second law of motion. Yet the theory turns up in discussions of all sorts of non-mechanical topics. This includes investors’ efforts at understanding the stock market.
TEMPUR SEALY $60.32 (New York symbol TPX; TSINetwork Rating: Speculative) (800-878-8889; www.tempursealy.com; Shares outstanding: 61.0 million; Market cap: $3.6 billion; No dividends paid) makes and distributes mattresses and neck pillows made of its patented memory foam, Tempur. Tempur Sealy’s earned $62.7 million, or $0.99 a share, in the quarter. That’s a 17.9% increase from the $53.2 million, or $0.86, a year earlier. Sales gained 2.9%, to $767.3 million from $745.5 million. North American sales (80% of the total) rose 3.8%. International sales (20%) fell 0.4%—but gained 12.1%, if you eliminate currency fluctuations....
D-BOX Technologies experienced double-digit revenue gains for each of its business lines in the last quarter, reversing an earnings shortfall.
TRANSCANADA CORP. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 702.3 million; Market cap: $35.1 billion; Priceto- sales ratio: 3.1; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 67,300- kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. This system supplies 20% of North America’s natural gas needs. In 2015, gas pipelines provided 47% of TransCanada’s revenue and 54% of its earnings. The company also owns or invests in 20 power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 13,100 megawatts of generating capacity. This business supplied 36% of its 2015 revenue and 24% of earnings. The remaining 17% of TransCanada’s revenue and 22% of earnings came from its oil-pipeline business. The operations mainly consist of the Keystone pipeline, which pumps crude from Alberta to storage terminals in Oklahoma. The oil then travels on to refineries in Illinois. Keystone accounts for 20% of Western Canada’s crude exports to the U.S....
CANADIAN PACIFIC RAILWAY LTD. $192 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 153.0 million; Market cap: $29.4 billion; Price-to-sales ratio: 4.2; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.cpr.ca) has abandoned its plan to merge with U.S.-based railway Norfolk Southern Corp. (New York symbol NSC). The combination would have created North America’s largest railway. Norfolk rejected CP’s latest offer of about $30 billion U.S. in cash and shares. In addition, U.S. transportation regulators probably would have blocked any deal no matter how CP structured the transaction. CP’s shares gained 5% on the news. That’s because big acquisitions like this usually come with substantial risk. In addition, investors feel that CP will now use some of the cash it had for the takeover to buy back shares....
EMERA INC. $47 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 148.2 million; Market cap: $7.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera.com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns or invests in power plants and natural gas pipelines in the U.S. and the Caribbean. Emera recently agreed to purchase TECO Energy (New York symbol TE). It supplies electricity and natural gas to 1.05 million customers in Tampa Bay, Florida. A separate subsidiary distributes gas to 510,000 clients in New Mexico. The company will pay $10.4 billion U.S., including TECO’s debt. Emera will probably sell new shares to help pay off the short-term loans it needs to finance the deal....
FORTIS INC. $40 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 283.1 million; Market cap: $11.3 billion; Price-to-sales ratio: 1.7; Dividend yield 3.8%; TSINetwork Rating: Above Average; www.fortisinc.com) owns electrical utilities across Canada and in the U.S. and Caribbean. It also distributes natural gas in British Columbia. In February 2016, Fortis agreed to buy ITC Holdings Corp. (New York symbol ITC), which owns 25,100 kilometres of high-voltage power lines in the U.S. Midwest. Fortis is paying $6.9 billion U.S. in cash and shares; ITC shareholders will own 27% of the combined company. Fortis will also list its shares on the New York Stock Exchange; its shares will continue to trade in Toronto....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $35 and CU.X [class B voting] $35; Income Portfolio, Utilities sector; Shares outstanding: 267.0 million; Market cap: $9.3 billion; Price-to-sales ratio: 2.8; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 15 power plants in Canada (13) and Australia (2). ATCO Ltd. (see right) owns 53.1% of the company. Due to lower power prices in Alberta and the sale of its information technology subsidiary, the company’s earnings in 2015 dropped 50.5%, to $352 million from $711 million in 2014. Per-share earnings fell 56.0%, to $1.11 from $2.52 on more shares outstanding. Without unusual items, earnings fell 16.0%. Revenue declined 9.3%, to $3.3 billion from $3.6 billion. In December 2015, the company completed and started operating a 485-kilometre power line in eastern Alberta. This is the longest transmission line in Alberta’s history. Other new projects include a gas pipeline and power plant in Mexico, and four underground gas-storage facilities in Alberta....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $39 and ACO.Y [class II voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 115.0 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.atco.com) gets most of its earnings from its 53.1% stake in Canadian Utilities (see page 44). It also owns 75.5% of ATCO Structures & Logistics, which makes temporary buildings for construction, mining and energy exploration firms; Canadian Utilities owns the other 24.5%. In December 2015, the company sold its ATCO Emissions Management subsidiary for $60 million. This business helps producers of oil, gas and electricity reduce air and noise pollution....
IMPERIAL OIL LTD. $40 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 847.6 million; Market cap: $33.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.4%; TSINetwork Rating: Average; www.imperialoil.ca) plans to expand its oil sands operations in the Cold Lake area of northern Alberta. In 2015, Cold Lake supplied 158,000 barrels a day, or 43% of Imperial’s average daily production of 366,000 barrels a day. This expansion will cost $2 billion. It should produce an additional 50,000 barrels a day by 2022. Imperial’s expertise with solvent assisted, steam-assisted gravity drainage technology should help cut its operating costs. That process also creates fewer greenhouse gasses than conventional extraction methods. Imperial Oil is a buy.