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
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $40 and ACO.Y [class II voting] $40; Income Portfolio, Utilities sector; Shares outstanding: 115.1 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.atco.com) holds 53.2% of Canadian Utilities and 75.5% of ATCO Structures & Logistics, which makes temporary buildings for construction, mining and energy-exploration firms. Canadian Utilities owns the other 24.5%.

< p>In the three months ended June 30, 2015, ATCO earned $8 million, or $0.06 a share, down 87.9% from $66 million, or $0.57. Revenue declined 15.0%, to $947 million from $1.1 billion. < p>Excluding unusual items, earnings were flat at $57 million. Based on current prices, you can buy an ATCO share for $40 and get roughly $45 worth of Canadian Utilities. You might say this means you get the structures business, which provides around 20% of ATCO’s earnings, for free....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $37 and CU.X [class B voting] $37; Income Portfolio, Utilities sector; Shares outstanding: 265.2 million; Market cap: $9.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.canadian utilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. owns 53.2% of the company.Between 2015 and 2017, Canadian Utilities plans to spend $5.8 billion on its utility operations, including building a 485- kilometre power line in eastern Alberta. This $1.8-billion project should start up by the end of 2015.

< p>Other projects include a new gas pipeline and power plant in Mexico and four underground gas-storage facilities in Alberta. Meanwhile, lower gas prices and demand cut Canadian Utilities’ revenue by 8.9% in the three months ended June 30, 2015, to $780 million from $856 million a year earlier. < p>Overall earnings dropped 62.6%, to $43 million from $115 million, while per-share profits declined 69.2%, to $0.12 from $0.39, on more shares outstanding....
TORSTAR CORP. $4.12 (Toronto symbol TS.B; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 80.3 million; Market cap: $330.8 million; Price-to-sales ratio: 0.4; Dividend yield: 12.7%; TSINetwork Rating: Average; www.torstar.com) has purchased 56% of VerticalScope, a private firm that operates over 600 online forums and a variety of websites, including AutoGuide.com, Motorcycle.com, ATV.com and PetGuide.com. This purchase should help Torstar offset slowing advertising revenue at its newspapers as advertisers shift their spending to the Internet.

< p>The company paid $200 million, but VerticalScope plans to pay a distribution to its shareholders later this year. That would cut Torstar’s purchase price to $178 million. Meantime, Torstar recently launched a digital version of The Toronto Star, its flagship newspaper, for tablet computers. In addition to newspaper content, this free app, called Star Touch, gives users quick access to related information like photos, maps and videos.

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TRANSCONTINENTAL INC. $20 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.4%; TSINetwork Rating: Average; www.tctranscontinental.com) recently purchased Brooklyn, New York-based Ultra Flex Packaging, a privately held maker of flexible plastic packages for candy, coffee and other foods.Transcontinental paid $80 million U.S. for Ultra Flex, which will add $72 million U.S. to its annual revenue and $12 million to its gross profits. This purchase looks like a good fit with U.S.-based Capri Packaging, which makes plastic bags and pouches for cheese and other dairy products. Transcontinental paid $146.1 million for Capri in May 2014.

< p>Meanwhile, the company’s earnings rose 30.5% in its 2015 third quarter, which ended July 31, 2015, to $48.8 million, or $0.62 a share. A year earlier, Transcontinental earned $37.4 million, or $0.48 a share. < p>Revenue slipped 0.2%, to $481.9 million from $483.0 million. Contributions from acquisitions offset lower revenue from printing advertising flyers, particularly after Target closed its 133 Canadian stores. The lower Canadian dollar also boosted the value of its U.S. sales....
TRANSCANADA CORP. $45 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 709.0 million; Market cap: $31.9 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.transcanada.com) is buying the Ironwood gas-fired power plant in Lebanon, Pennsylvania. The facility is close to the Marcellus shale region, which gives it access to large supplies of cheap natural gas.

< p>The company will pay $654 million U.S. when it completes the purchase in early 2016. The plant will add $90 million U.S. to $110 million U.S. to TransCanada’s annual gross profits; in 2014, its gross profits totalled $5.5 billion (Canadian). < p>TransCanada is a buy....
PENGROWTH ENERGY CORP. $1.41 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 540.7 million; Market cap: $762.4 million; Priceto- sales ratio: 0.8; Dividend yield: 2.8%; TSINetwork Rating: Average; www.pengrowth.com) continues to sell less important properties and focus on more promising operations like its Lindbergh oil sands project in Alberta.

< p>The company has now agreed to sell its Bodo project in eastern Alberta for $95 million. Including this deal, it has now sold $260 million worth of properties in 2015 and expects to reach its full-year goal of $600 million in asset sales. < p>Pengrowth will use the proceeds to pay down its long-term debt, which stood at $1.9 billion on June 30, 2015. That’s a high 2.5 times its currently depressed market cap....
< p> MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 78.9 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.5%; TSINetwork Rating: Average; www.mtsallstream.com) gets 60% of its revenue from its MTS division, which has 1.3 million telephone, wireless and TV customers in Manitoba. < p>The other 40% comes from Allstream, which sells phone and Internet services to businesses across Canada. < p>As part of a plan to make Allstream more profitable, Manitoba Telecom aims to cut 25% of the subsidiary’s workforce and reduce its capital spending by 20% to 30%. These moves should save $50 million annually by the end of 2016 and make it easier for Manitoba Telecom to sell this business....
ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 860.1 million; Market cap: $48.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.enbridge.com) gets 85% of its revenue from pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The remaining 15% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State.The company recently completed the major reorganization it announced in December 2014.

< p>Under the plan, Enbridge transferred some of its assets to 19.9%-owned affiliate Enbridge Income Fund Holdings Inc. (Toronto symbol ENF). This company owns 42% of Enbridge Income Fund (Enbridge Inc. owns the remaining 58%), which holds oil and gas pipelines and solar and wind farms. The transfer included pipelines that pump oil sands crude to the U.S., along with wind farms in Alberta and Quebec. < p>Transactions like this, called drop-downs, free up cash the parent company can use for new projects. The affiliate also benefits, because the new assets’ cash flow helps it maintain or raise its distributions to investors. The reorganization freed up more cash for dividends: Enbridge raised its quarterly payout by 32.9% with the March 2015 payment, to $0.465 a share from $0.35; the new annual rate of $1.86 yields 3.3%. The company now aims to pay out 75% to 85% of its adjusted annual earnings as dividends, up from its old target of 60% to 70%....
SUNCOR ENERGY INC. $37 (Torontosymbol SU; Conservative Growth Portfolio,Resources sector; Shares outstanding:1.5 billion; Market cap: $55.5billion; Price-to-sales ratio: 1.5; Dividendyield: 3.1%; TSINetwork Rating:Average; www.suncor.com) is takingadvantage of low oil prices with its allstocktakeover offer for Canadian OilSands (Toronto symbol COS).

< p>Canadian Oil Sands’ main asset isits 36.74% stake in the massiveSyncrude oil sands development nearFort McMurray, Alberta. It alsooperates the project. Suncor alreadyowns 12.0% of Syncrude, so thispurchase would give it effectivecontrol, with a 48.74% stake. < p>Equipment failures and other problemshave hurt Syncrude’s productionin the past few years, and Suncorfeels its expertise running similarprojects will make Syncrude moreefficient and profitable. In the secondquarter of 2015, Suncor’s cash costsin the oil sands were $28.15 a barrel,compared to $54.45 at Syncrude....