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
What does a diversified portfolio look like? A well-diversified portfolio balances risk by spreading investment holdings out by industry sector and other factors
ALAMOS GOLD $3.97 (Toronto symbol AGI; TSINetwork Rating: Speculative)(604-681-2802; www.alamosgold.com; Shares outstanding: 255.5 million; Market cap: $996.5 million; No dividends paid) is the company formed by the July 2015 merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold.

The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young-Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which has sharply increased its costs.

The company’s gold production rose 3.1% in the three months ended September 30, 2015, to 87,663 ounces from 85,037 a year earlier. However, lower gold prices offset the higher production, causing the company’s cash flow per share to fall to $0.02 from $0.16 (all figures except share price and market cap in U.S. dollars).

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SHERRITT INTERNATIONAL $0.79 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 293.9 million; Market cap: $226.3 million; No dividends paid) is now focused on nickel production, with operations in Cuba and Canada.

As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.

In the three months ended September 30, 2015, the company’s revenue fell 25.3%, to $76.9 million from $102.9 million a year earlier, mostly due to lower oil and gas prices. Cash flow per share fell sharply, to $0.05 from $0.16.

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AEROPOSTALE INC. $0.68 (New York symbol ARO; TSINetwork Rating: Extra Risk)(646-485-5410; www.aeropostale.com; Shares outstanding: 79.6 million; Market cap: $53.3 million; No dividends paid) recently opened its first location in Ireland, at Dublin’s Liffey Valley Shopping Centre, one of the country’s biggest malls.

The Dublin store is operated through a licensing agreement with Shuz 4 U International Ltd. Over the next five years, Aeropostale expects to open 10 more locations in Western Europe through this partnership.

The company should be able to repeat its previous success at attracting new customers, but its sales may remain weak in the near term.

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STUART OLSON INC. $6.89 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 26.4 million; Market cap: $181.4 million; Dividend yield: 7.0%) provides buildingconstruction, commercial and industrial electrical contracting, earthmoving and industrial insulation services to government and private sector clients. It mainly operates in Western Canada.

In the three months ended September 30, 2015, the company’s revenue fell 19.6%, to $281.7 million from $350.4 million a year earlier. The decline came from lower activity in Alberta, including in the oil sands. Stuart Olson is also phasing out less profitable industrial projects.

Before one-time items, Stuart Olson earned $6.4 million, or $0.24 a share, up sharply from $2.8 million, or $0.11, a year earlier. That reflects the company’s continued focus on higher-profit activities. It ended the quarter with a backlog of $2.02 billion, up 6.8% from $1.89 billion.

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RUSSEL METALS $19.08 (Toronto symbol RUS; TSINetwork Rating: Speculative)(905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.2 billion; Dividend yield: 8.0%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S.

In the three months ended September 30, 2015, Russel’s revenue fell 25.5%, to $773.4 million from $1.04 billion a year earlier. Sales mainly declined because revenue fell 40% at the company’s energy products division, which sells pipes to oil and gas drillers.

Earnings dropped sharply, to $12.8 million, or $0.21 a share, from $33.0 million, or $0.54. The latest figure included a $2-million charge related to a more than 7% cut to the company’s workforce. Russel’s earnings fell faster than revenue because steel prices moved down in the latest quarter. That hurts its profit margins and causes it to suffer losses on its inventory.

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DOREL INDUSTRIES $30.78 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-934-3034; www.dorel.com; Shares outstanding: 32.3 million; Market cap: $1.0 billion; Dividend yield: 5.1%) reports that its sales rose 0.9% in the three months ended September 30, 2015, to $679.3 million from $673.0 million a year earlier (all figures except share price and market cap in U.S. dollars).

Earnings fell 35.1%, to $0.48 a share from $0.74. However, Dorel gets half of its sales from outside the U.S., and the high U.S. dollar cut its earnings by $0.28 a share in the latest quarter. Costs related to the company’s plan to shift juvenile-product manufacturing to Asia also weighed on its earnings.

The stock trades at a low 7.9 times Dorel’s forecast 2016 earnings of $2.94 a share. It yields a high 5.1%.

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STANTEC INC. $33.13 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 94.2 million; Market cap: $3.1 billion; Dividend yield: 1.3%) sells a range of consulting, project-delivery, design and technology services.

Its clients operate in a variety of industries, including oil and gas, transportation and construction.

In the three months ended September 30, 2015, Stantec’s acquisitions and the stronger U.S. dollar boosted its revenue by 14.0%, to $620.1 million from $544.2 million a year ago. However, earnings rose just 2.8%, to $49.9 million, or $0.53 a share, from $48.6 million, or $0.52. That was mostly due to the cost of integrating recently purchased firms.

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MITEL NETWORKS $11.40 (Toronto symbol MNW; TSINetwork Rating: Extra Risk)(613-592-2122; www.mitel.ca; Shares outstanding: 120.3 million; Market cap: $1.4 billion; No dividends paid) develops and markets products centred on business telephone systems, including technology that integrates land lines and mobile phones. The company also offers call centre and videoconferencing products.

In the three months ended September 30, 2015, Mitel’s revenue rose 7.2%, to $293.7 million from $274.0 million a year earlier (all figures except share price and market cap in U.S. dollars).

However, earnings per share fell 33.3%, to $0.12 from $0.18, as the stronger dollar lowered the value of the company’s international sales. Even so, that beat the consensus estimate of $0.07 a share.

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RESTAURANT BRANDS INTERNATIONAL $36.59 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 476.4 million; Market cap: $17.4 billion; Div. Yield: 1.4%) is the world’s third-largest fast-food operator, after McDonald’s and Yum Brands, with 14,669 Burger King outlets and 4,845 Tim Hortons stores in 100 countries.

In the three months ended September 30, 2015, Restaurant Brands earned $162.7 million, up 26.8% from $128.3 million a year earlier. Earnings per share gained 25.9%, to $0.34 from $0.27, on more shares outstanding.

However, sales fell 8.4%, to $1.02 billion from $1.11 billion, as the high U.S. dollar hurt the contribution from Restaurant Brands’ overseas operations.

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