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
If you want to find out how to hire a stock broker who meets your needs, you need to watch out above all for conflicts of interest
ISHARES MSCI SOUTH KOREA INDEX FUND $56.70 (New York symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 19.8%; SK Hynix Semiconductor, 4.6%; Hyundai Motor, 3.9%; Shinhan Financial, 2.8%; Naver (Internet), 2.7%; Posco (steel), 2.5%; KB Financial, 2.5%; Hyundai Mobis (auto parts), 2.4%; AmorePacifi

c (cosmetics), 2.0%; and Kia Motors, 2.0%. The fund’s industry breakdown is as follows: Information Technology, 36.1%; Consumer Discretionary, 15.7%; Financials, 14.0%; Industrials, 11.6%; Materials, 7.8%; Consumer Staples, 7.6%; Utilities, 2.1%; Energy, 1.8%; Telecommunication Services, 1.2%; and Health Care, 1.0%.

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ISHARES MSCI EMERGING MARKETS INDEX FUND $40.91 (New York symbol EEM; buy or sell through brokers) aims to track the MSCI Emerging Markets Index. The fund’s geographic breakdown includes China, 24.8%; South Korea, 14.6%; Taiwan, 12.9%; South Africa, 7.4%; Brazil, 7.2%; India, 7.0%; Mexico, 4.6%; Russia, 3.9%; Malaysia, 3.3%; Indonesia, 2.5%; Thailand, 2.1%; and Turkey, 1.5%.

Its top holdings are Samsung Electronics (South Korea), 3.2%; Taiwan Semiconductor (computer chips), 2.9%; Tencent Holdings (China: Internet), 2.6%; China Mobile, 2.0%; China Construction Bank, 1.8%; Industrial & Commercial Bank of China, 1.6%; Naspers (South Africa: media and Internet), 1.4%; Hon Hai Precision Industry (Taiwan), 1.0%; and Ping An Insurance of China, 1.0%.

Its industry breakdown includes Financials, 28.1%; Information Technology, 19.0%; Consumer Discretionary, 9.3%; Consumer Staples, 8.0%; Energy, 7.8%; Telecommunication Services, 7.3%; Materials, 7.0%; and Industrials, 6.8%.

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PENGROWTH ENERGY $3.26 (Toronto symbol PGF; Shares outstanding: 534.6 million; Market cap: $1.8 billion; TSINetwork Rating: Average; Dividend: 7.4%; www.pengrowth.com) has started up its Lindbergh oil sands project in Alberta, which should produce 16,000 barrels a day by the end of 2015. Excluding Lindbergh, Pengrowth produced 69,334 barrels of oil equivalent a day in the first quarter of 2015.

As well, for the remainder of 2015, the company has hedged 78% of its oil production at $93.87 (Canadian) a barrel, well above today’s price of $60.16 U.S. It has also hedged 57% of its gas output at $3.72 (Canadian) per thousand cubic feet, compared to the current price of $2.94 U.S. The company’s hedges were worth $354.3 million as of March 31, 2015.

Pengrowth is still a buy.

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INNERGEX RENEWABLE ENERGY $11.65 (Toronto symbol INE; Shares outstanding: 101.1 million; Market cap: $1.2 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.3%; www.innergex.com) operates 26 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. The company gets 73% of its power from hydroelectric plants. Wind supplies 26% and solar generates 1%.

In contrast to Algonquin, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, the company has five projects under construction.

But like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new plants.

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ALGONQUIN POWER & UTILITIES CORP. $9.58 (Toronto symbol AQN; Shares outstanding: 238.9 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.9%; www.algonquinpower.com) has nearly tripled in size over the past three years through acquisitions. It plans to expand further with more purchases.

The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. In addition, its hydroelectric, thermal energy, solar and wind facilities generate 1,150 megawatts, up from 460.

Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 21.0% of Algonquin.

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CRESCENT POINT ENERGY CORP. $28.03 (Toronto symbol CPG; Shares outstanding: 449.5 million; Market cap: $12.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.9%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan.

The company is now buying heavily indebted Legacy Oil + Gas (Toronto symbol LEG) for $563 million plus the assumption of $967 million in debt. Activist investors put a lot of pressure on Legacy to complete a deal.

The move will add about 22,000 barrels of oil a day to Crescent Point’s current output of 150,000 barrels. About 15,000 barrels of Legacy’s output is in Crescent Point’s core Bakken area.

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IMPERIAL OIL $49.32 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $41.9 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates three refineries and 1,700 Esso gas stations.

Oil prices hit a high of $147 U.S. a barrel in July 2008, but then plummeted to a low of $32 in December 2008 as the recession took hold. Prices climbed back to over $100 in 2010, and remained near there until mid-2014 when oil plunged from $110 to less than half that price by the end of the year. Oil is now at $60 a barrel.

Strong oil prices for most of 2014 let Imperial report cash flow of $5.3 billion, or $6.26 a share. This year, low oil prices will likely push cash flow down by more than half, to $2.6 billion, or $3.02 a share.

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There are two basic approaches to investing in stocks: bottom-up and top-down. Bottom-up investing is the better of the two by far.
Stock Investing
Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time. Today an organic food store operator that has been among the most active stocks in the past year—but has seen its share price tumble.

Sprouts Farmers Market Inc. (symbol SFM on Nasdaq; www.sprouts.com) opened its first organic and natural food store in Arizona in 2002. It now has 200 outlets, mainly in the western U.S.

Sprouts first sold shares to the public at $18.00 each and began trading on Nasdaq in August 2013.

The company has grown quickly in the past few years. In 2011, it merged with Henry’s Holdings, which operated 43 stores. It later purchased 37 outlets operating under the Sunflower Farmers Market banner.

In addition to acquisitions, Sprouts continues to add new stores, opening 10 in the three months ended March 29, 2015. That increased its sales by 18.7% in the quarter, to $857.6 million from $722.6 million a year earlier. Same-store sales (which exclude recently opened and closed outlets) gained 4.8%.

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