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
VERESEN $14.25 (Toronto symbol VSN; Shares outstanding: 290.0 million; Market cap: $4.3 billion; TSINetwork Rating: Average; Dividend yield: 7.0%; www.vereseninc.com) owns pipelines, power plants and gas-processing facilities across North America.

A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.

In the three months ended June 30, 2015, Veresen’s cash flow per share fell 24.1%, to $0.22 from $0.29 a year earlier.

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PEMBINA PIPELINE $37.12 (Toronto symbol PPL; Shares outstanding: 340.4 million; Market cap: $13.0 billion; TSINetwork Rating: Average; Dividend yield: 4.7%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.

Pembina also owns extensive facilities to extract, process and store NGLs.

In the three months ended March 31, 2015, the company’s cash flow per share fell 24.1%, to $0.63 from $0.83 a year earlier. That’s mainly because lower oil and gas prices cut profit margins and volumes at its NGL extraction business.

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CANADIAN PACIFIC RAILWAY LTD. $208.83 (Toronto symbol CP; Shares outstanding: 161.0 million; Market cap: $34.0 billion; TSINetwork Rating: Above Average; Dividend yield: 0.7%; www.cpr.ca) transports freight over a 22,000-kilometre rail network between Montreal and Vancouver, as well as hubs in the U.S. Midwest and Northeast.

CP continues to benefit from lower fuel prices and an aggressive cost-cutting plan, but the slowing economy is hurting its freight volumes and revenue. That has caused the shares to fall about 14% from earlier this year.

In the three months ended June 30, 2015, the railway earned $404 million, up 8.9% from $371 million a year earlier. Per-share profits jumped 16.1%, to $2.45 from $2.11, on fewer shares outstanding.

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LOBLAW COMPANIES $72.20 (Toronto symbol L; Shares outstanding: 412.6 million; Market cap: $29.4 billion; TSINetwork Rating: Above Average; Dividend yield: 1.4%; www.loblaw.ca) is Canada’s largest food retailer.

Loblaw plans to close 52 underperforming stores in the next year, including supermarkets, gas bars and stand-alone Joe Fresh clothing outlets. Following these closures, it will operate roughly 2,400 stores, including 1,250 Shoppers Drug Mart pharmacies.

The move will cut Loblaw’s yearly sales by $300 million, but it should add $35 million to $40 million to its annual gross profits. It also expects to save at least $200 million this year by merging its warehouses and other operations with Shoppers.

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Hudson bay
In response to a question by a Member of his Inner Circle, Pat McKeough looks at the prospects of one of Canada’s biggest, and oldest, retailers, Hudson’s Bay Company. With five banners in North America, including several leading luxury chains in the U.S., the company has added one of Germany’s largest department store chains. Pat examines the costs and risks of such a big acquisition, but also looks at some of the advantages this growth stock could unlock with its European takeover.
For a recent report on a Canadian growth stock that has achieved rapid growth in the past year, read AirBoss of America gets big profit bounce from rubber products.

Q: Hi, Pat: Could I have your latest recommendations on Hudson’s Bay Co.? Regards.

A: Hudson’s Bay Co. (symbol HBC on Toronto; www.thebay.com) has five main banners:

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Because it’s always important to diversify beyond Canada, a look at two Vanguard ETFs that offer a low-fee way to achieve diversification.
Our outlook for Canadian dividend stock Freehold Royalties as it maintains a high yield while buying up oil and gas properties.
Two energy exploration stocks for conservative investors—we give Peyto the edge over Bonavista right now thanks to its more secure dividend.
Our take on whether Germany’s demand for more wind power will keep cash flowing for high-yielding Canadian dividend stock Northland Power.