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
FORTIS INC. $38 (www.fortisinc.com) has purchased additional shares in Caribbean Utilities Co. Ltd., the main provider of electricity in the Cayman Islands. That increased its stake to 60.4% from 58.9%....
TELUS CORP. $42 (www.telus.com) continues to benefit from strong demand for wireless services. As of March 31, 2015, it had 8.3 million wireless subscribers, up 3.1% from a year earlier. In addition, more of these users are upgrading to smartphones under long-term contracts, which generate higher profits for Telus than regular cellphones....
HOME CAPITAL GROUP INC. $43 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 70.2 million; Market cap; $3.0 billion; Price-to-sales ratio: 5.2; Dividend yield: 2.0%; TSINetwork Rating: Average; www. homecapital.com) provides mortgages to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. Clients include self-employed people and recent immigrants with limited credit histories.

Low interest rates continue to fuel mortgage demand. As a result, Home Capital’s revenue rose 47.6%, from $687.2 million in 2010 to $1.01 billion in 2014. Earnings jumped 86.4%, from $154.8 million to $288.4 million, while per-share profits gained 84.2%, from $2.22 to $4.09. In the first quarter of 2015, the company’s revenue rose 0.5%, to $249.2 million from $247.9 million a year earlier. Earnings gained 3.7%, to $72.3 million, or $1.03 a share, from $69.7 million, or $1.00.

Humans beat computers

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PENGROWTH ENERGY CORP. $3.74 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 538.0 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 6.4%; TSINetwork Rating: Average; www.pengrowth.com) recently started up its Lindbergh oil sands project in eastern Alberta, which should produce 16,000 barrels a day by the end of 2015.

The company has shut down less profitable wells in response to weak oil and gas prices. That’s why its average production fell 7.7% in the first quarter of 2015, to 69,334 barrels a day (52% oil and liquids, 48% gas) from 75,102 a year earlier. Without unusual items, Pengrowth earned $64.8 million, compared to a loss of $2.8 million. Cash flow per share fell 22.2%, to $0.21 from $0.27.

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.

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SHAWCOR LTD. $38 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.5 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.6%; TSINetwork Rating: Average; www.shawcor.com) has won two contracts to coat pipelines that will pump natural gas to various locations in northeastern Argentina.

The total value of these deals—$55 million U.S.—is equal to 3% of the company’s 2014 revenue of $1.9 billion (Canadian). ShawCor expects to complete these jobs in early 2016.

ShawCor is a buy.

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BANK OF NOVA SCOTIA $65 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $78.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.scotiabank.com) has now completed its purchase of 51% of the credit card operations of Cencosud S.A., Chile’s largest retailer.

The deal makes the bank Chile’s third-largest credit card issuer, with 2.5 million cards in use and $1 billion U.S. in loans outstanding.

Bank of Nova Scotia paid $280 million U.S. for this business, which is equal to 20% of the $1.7 billion (Canadian), or $1.35 a share, the bank earned in the three months ended January 31, 2015.

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THOMSON REUTERS CORP. $48 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 784.8 million; Market cap: $37.7 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.thomsonreuters.com) (All amounts except share price and market cap in U.S. dollars) now plans to buy back up to $1 billion worth of its shares by the end of 2016.

Meantime, the company’s revenue fell 2.7% in the three months ended March 31, 2015, to $3.0 billion from $3.1 billion a year earlier. Without the effect of the high U.S. dollar, revenue rose 2%.

Earnings per share declined 4.3%, or $0.44 from $0.46, but gained 8.7% if you disregard changes in currency exchange rates. Banks and brokerages are buying more of Thomson’s information products. Sales to tax, accounting and legal professionals also remain strong.

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SUNCOR ENERGY INC. $36 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $54.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.1%; TSINetwork Rating: Average; www.suncor.com) has started work on its Fort Hills oil sands project in northern Alberta. Suncor owns 40.8% of Fort Hills; France’s Total SA holds 39.2%, while Teck Resources owns the remaining 20.0%. This $13.5-billion project (Suncor’s share is $5.5 billion) should start up in late 2017, and its reserves should last 50 years.

The company produced 602,400 barrels a day in the first quarter of 2015, up 10.5% from 545,300 a year earlier. That’s mainly because shut downs for maintenance hurt last year’s output.

However, lower oil prices cut Suncor’s earnings by 90.2%, to $175 million, or $0.12 a share, from $1.8 billion, or $1.22. Cash flow per share fell 48.0%, to $1.02 from $1.96.

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IMPERIAL OIL LTD. $49 (Toronto symbol IMO; Conservative Growth and Income Portfolios; Resources sector; Shares outstanding: 848.0 million; Market cap: $41.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) produced an average of 333,000 barrels of oil equivalent a day (93% oil and 7% natural gas) in the first quarter of 2015, up 0.9% from a year earlier.

Excluding properties Imperial sold in the past year, production gained 5.7%. The increase is mainly due to rising output at the Kearl oil sands project in Alberta. Imperial owns 71% of Kearl; Exxon- Mobil (New York symbol XOM) holds the other 29%. Exxon also owns 69.9% of Imperial.

However, a 50% drop in crude oil prices cut Imperial’s revenue by 32.8%, to $6.2 billion from $9.2 billion. Earnings fell 55.5%, to $421 million, or $0.50 a share. A year earlier, the company earned $946 million, or $1.11. Cash flow per share dropped 39.9%, to $0.86 from $1.43.

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