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
CGI GROUP INC. $48 (Toronto symbol GIB.A; AggressiveGrowth Portfolio, Manufacturing & Industry sector; Sharesoutstanding: 313.4 million; Market cap: $15.0 billion; Priceto-sales ratio: 1.5; No dividends paid; TSINetwork Rating: ExtraRisk; www.cgi.com) is Canada’s largest computer-outsourcingprovider, helping its clients automate routine functions likeaccounting and buying supplies. That improves their efficiencyand lets them focus on their main businesses.

< p>Government agencies supply 33% of CGI’s revenue, followedby manufacturers and retailers (23%), banks and financial serviceproviders (20%), telecom firms and utilities (15%), and healthcare businesses (9%). < p>The U.S. federal government is the company’s largest singleclient, accounting for around 14% of its revenue.CGI follows what it calls its “Build and Buy”strategy....
CALIAN TECHNOLOGIES $15.94 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $116.6 million; Dividend yield: 7.0%) has two main divisions: Business and Technology Services (which supplies 70% of the company’s revenue) provides engineers, health care workers and other skilled professionals on a contract basis. Systems Engineering (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.

In the three months ended June 30, 2015, the company’s revenue rose 19.4%, to $64.3 million from $53.8 million a year earlier. Calian earned $2.5 million, or $0.34 a share, down 8.0% from $2.7 million, or $0.37, a year earlier.

Across-the-board sales gains

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DREAM OFFICE REIT $21.36 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.8 million; Market cap: $2.4 billion; Dividend yield: 10.5%) owns and manages 176 properties comprising 24.1 million square feet of office space in major cities across Canada.

In Western Canada, the trust has 16% of its total square footage in Calgary and 20% elsewhere. In Eastern Canada, it holds 23% of its square footage in downtown Toronto, 17% in suburban Toronto and 24% elsewhere. Its occupancy rate is 92.8%.

In the three months ended June 30, 2015, Dream Office’s revenue slipped 1.4%, to $201.4 million from $204.4 million a year earlier. The trust sold four properties to Dream Industrial REIT (symbol DIR.UN on Toronto) for $33.0 million in September 2014. Dream Office owns 24.2% of Dream Industrial.

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AGT FOOD & INGREDIENTS $28.27 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (306-525-4490; www.agtfoods.com; Shares outstanding: 23.1 million; Market cap: $651.5 million; Dividend yield: 2.1%) has acquired Mobil Capital Holdings for $57.5 million. This business owns a movable crop-processing plant, short-line railways, bulk-loading facilities and a grain- and pulse-trading operation. Most of Mobil’s assets are in Saskatchewan.

This acquisition follows AGT’s $22-million purchase of West Central Road & Rail’s assets in June 2015. That deal included five bulk-loading sites in Saskatchewan.

Purchases like these are important because a big part of AGT’s recent success has come from its shift to more profitable products, such as ingredients and packaged foods, as opposed to simply cleaning, splitting, sorting and bagging bulk crops.

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RESTAURANT BRANDS INTERNATIONAL $36.78 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 467.0 million; Market cap: $17.2 billion; Yield: 1.3%) is the world’s third-largest fast-food operator, after McDonald’s and Yum Brands, with 14,528 Burger King outlets and 4,776 Tim Hortons stores in 100 countries.

The company now plans to open over 150 Tim Hortons locations in Cincinnati, Ohio, over the next 10 years. A franchisee will build and operate the stores, which cuts the company’s risk.

Restaurant Brands is a hold.

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SIERRA WIRELESS $29.65 (Toronto symbol SW; TSINetwork Rating: Extra Risk)(604-231-1100; www.sierrawireless.com; Shares outstanding: 32.2 million; Market cap: $987.8 million; No dividends paid) makes modules and software that connect products, including vehicles and smart electricity meters, to the Internet. This is known as machine to machine, or more generally as the Internet of Things (IoT).

The company continues to sign up clients for its new IoT Acceleration Platform, which combines cloud computing, hardware and telecommunications networks to monitor machines remotely.

For example, Veolia Water Technologies UK, which provides water-treatment plants and systems to companies and municipalities around the world, is now using the IoT Acceleration Platform to help its customers monitor critical data, such as flow, pressure and temperature. This cuts its clients’ labour costs and lets them respond to problems as they happen.

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ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed.

These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand.

This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.

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AMERIGO RESOURCES $0.31 (Toronto symbol ARG; TSINetwork Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 173.6 million; Market cap: $55.6 million; No dividends paid) has started processing tailings from the Cauquenes tailings deposit, located near its current operations in Chile.

Cauquenes is a big growth project: Amerigo expects it to help double its production in 2016, to 90 million pounds of copper. Phase 1 is now in operation at a rate of 30,000 tonnes per day, and Amerigo expects that to rise to 60,000 by the end of this year, bringing the company’s overall output to over 70 million pounds of copper annually.

The Cauquenes expansion will cost $140 million in total. However, Amerigo has used its cash flow to pay off all of its debt over the last few years, and it currently holds cash of $18.3 million. This gave it the flexibility to arrange bank financing in Chile for Cauquenes.

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IAMGOLD $2.51 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 391.4 million; Market cap: $1.0 billion; No dividends paid) owns 41% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of the Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.

In the three months ended June 30, 2015, IAMGold’s revenue fell 2.1%, to $226.5 million from $231.4 million a year earlier. Cash flow per share dropped to $0.12 from $0.19. Lower gold prices were the main reason for the declines.

The company’s long-term production outlook is positive. Meantime, its $836.4-million U.S. of cash and gold put it in a strong position to pay down its long-term debt of $636.0 million U.S. It could also expand its existing gold projects, pay dividends, buy back shares or make timely acquisitions from distressed sellers at low prices.

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