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.

FIRSTSERVICE CORP. $43.10 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $1.6 billion; Dividend yield: 1.2%) completed the spinoff of its Colliers International subsidiary (see below) on June 2, 2015, by handing out Colliers shares to its investors. Shareholders only become liable for capital gains taxes on the transaction when they sell their FirstService or Colliers shares.

Now that the spinoff is complete, FirstService is carrying on with its residential property management and property-improvement operations. In the three months ended June 30, 2015, First- Service’s revenue gained 11.7%, to $326.3 million from $292.2 million a year earlier (all figures except share price and market cap in U.S. dollars). If you set aside one-time items, earnings per share jumped 37.9%, to $0.40 from $0.29. These results exclude Colliers.

The spinoff adds to FirstService’s appeal. In our experience, and in most academic studies of the subject, both the parent and spinoff generally do better than comparable firms for at least several years after they split.

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CHESAPEAKE ENERGY $7.87 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chk.com; Shares outstanding: 665.4 million; Market cap: $5.5 billion; No dividends paid) stopped paying dividends earlier this year to conserve cash in the face of low oil and gas prices. The cut will save Chesapeake $240 million annually.

Now the company has announced that it is laying off 740 employees, or 15% of its workforce. About 560 of these workers are from its headquarters in Oklahoma City. Chesapeake will incur a one-time charge of $55.5 million for the layoffs.

Meanwhile, the company expects its output to rise 1% to 3% in 2015, to an average of 640,000 to 650,000 barrels of oil a day. The stock trades at just 2.1 times Chesapeake’s annual cash flow of $3.68 a share, based on the latest quarter.

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CIMAREX ENERGY $114.82 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 94.5 million; Market cap: $10.9 billion; Dividend yield: 0.6%) produces and explores for natural gas and oil. Gas makes up 64% of the company’s output; the remaining 36% is oil.

Cimarex’s properties are mostly in the Wolfcamp shale area of the Permian Basin in Texas and New Mexico, as well as the Cana-Woodford shale region in western Oklahoma.

In the three months ended June 30, 2015, the company’s production averaged 1.03 billion cubic feet of natural gas equivalent a day, up 22.4% from 838.7 million cubic feet a year earlier.

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DEVON ENERGY CORP. $43.90 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 411.0 million; Market cap: $18.8 billion; Dividend yield: 2.2%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 40% gas and 60% oil.

The company narrowed its focus with its July 2014 sale of some of its properties to Linn Energy for $2.3 billion. The deal included holdings in the Rockies, the onshore Gulf Coast and the Mid-Continent region (which includes Oklahoma, Kansas and Texas).

The sale let Devon focus on what it views as low risk/ high-reward properties, especially the oil producing assets it bought in Texas’s Eagle Ford shale formation for $6.0 billion in 2013.

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MITEL NETWORKS $10.54 (Toronto symbol MNW; TSINetwork Rating: Extra Risk)(613- 592-2122; www.mitel.ca; Shares outstanding: 120.2 million; Market cap: $1.3 billion; No dividends paid) recently jumped after activist investor Elliott Management disclosed stakes in Mitel and Polycom Inc. (symbol PLCM on Nasdaq).

Elliott is urging the companies to merge to increase their combined profits in a very competitive market. The firm now holds 6.6% of Polycom and 6.3% of Mitel.

Mitel develops products centred on business telephone systems. Polycom makes business communications systems that combine data, video and voice in one product. It also makes teleconferencing systems.

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ACI WORLDWIDE $22.54 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative)(402-390-7600; www.tsainc.com; Shares outstanding: 117.8 million; Market cap: $2.7 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud.

In the three months ended June 30, 2015, ACI’s revenue rose 4.3% to $265.8 million from $254.8 million a year earlier. Earnings jumped to $30.0 million, or $0.26 a share, from $14.0 million, or $0.12. Cost cuts were the main reason for the higher profits.

ACI is benefiting from the introduction of technology for the shift to chip-and-PIN debit and credit cards, which sped up with the EMV (EuroPay, Master- Card and VISA) payment networks’ liability shift, which came into effect in the U.S. on October 1, 2015.

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CHIPOTLE MEXICAN GRILL $665.67 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.1 million; Market cap: $22.0 billion; No dividends paid) has hired Curt Garner as its first chief information officer. The company hopes Garner will improve its mobile presence, including the ability to order and pay through smartphones and tablets.

Mobile apps have already paid off very successfully for fast-food and fast-casual chains like Domino’s, Panera Bread, Starbucks and Taco Bell.

Previously, Garner spent 20 years at Starbucks in various technology roles, including CIO. The coffee chain recently finished rolling out its mobile ordering and payment app at its more than 7,400 U.S. outlets.

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GOODYEAR TIRE & RUBBER CO. $32.49 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 269.4 million; Market cap: $8.8 billion; Dividend yield: 0.9%) is the world’s largest tire maker, with 50 plants in 22 countries.

In the three months ended June 30, 2015, Goodyear’s revenue fell 10.4%, to $4.17 billion from $4.66 billion a year earlier. The rising U.S. dollar lowered the value of the company’s foreign sales (particularly in Europe and Brazil) by $401 million. Earnings rose 1.8%, to $229.0 million, or $0.84 a share, from $225.0 million, or $0.80 a share.

Goodyear will likely report profits of $3.10 a share this year, and it trades at just 10.5 times that estimate. Earnings should jump 21%, to $3.75, in 2016, and the stock trades at only 8.7 times that forecast.

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Canada’s kimberlites have created Canadian diamond mines that offer investors huge potential, but also huge risk