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.

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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
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.

Extendicare Inc. (symbol EXE on Toronto; www.extendicare.com) is one of North America’s largest retirement- and nursing-home operators. Its 259 long- and short-term senior-care facilities can house 28,401 residents.

The stock fell sharply in November 2014, from over $8, when Extendicare announced an agreement to sell most of its U.S. business for $870 million U.S. in a deal with two investment firms, Formation Capital and an affiliate of Safanad Inc.

These operations generated $868.9 million U.S. of revenue in the first nine months of 2014—more than half of Extendicare’s $1.6-billion U.S. total in that period.

The company will keep 10 nursing homes in the U.S. for now, but it intends to sell them. It will also hold on to two other U.S. businesses: Virtual Care Provider, which supplies computer support and consulting to long-term care providers, and Laurier Indemnity, which insures against liability risks.

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MANITOBA TELECOM $24.73 (Toronto symbol MBT; Shares outstanding: 78.1 million; Market cap: $1.9 billion; TSINetwork Rating: Average; Dividend yield: 6.9%; www.mts.ca) earned $0.31 a share in the three months ended December 31, 2014. That’s a big improvement over the year-earlier quarter, when writedowns and other unusual charges led to a loss of $1.25 a share. Overall revenue fell 0.9%, to $404.8 million from $408.5 million. The company is now conducting a strategic review to spur long-term profit growth. This could lead to asset sales or other moves, including cutting its $1.70-a-share dividend, which yields 6.9%....
IMPERIAL OIL $47.96 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $41.2 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) expects to spend $4.0 billion on capital projects in 2015, down 29.8% from $5.7 billion in 2014. Most of that will go toward expanding its 71%-owned Kearl oil sands project, as well as its Cold Lake oil sands property. These two projects will last decades, so the recent drop in oil prices will have little impact on their long-term prospects. Imperial Oil is a buy.
ENCANA CORP. $15.20 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $11.6 billion; TSINetwork Rating: Average; Dividend yield: 2.3%; www.encana.com) produced 416,700 barrels a day (74% gas, 26% oil) in the three months ended December 31, 2014. That’s down 20.4% from 523,400 barrels a year earlier. As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91. Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion....
ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $17.39 (New York symbol ESR; buy or sell through brokers) has 65.6% of its assets invested in Russia, followed by Poland at 27.2%; Czech Republic, 3.6%; and Hungary, 3.2%. The fund’s top holdings are Gazprom (Russia: gas utility), 13.4%; Lukoil (Russia: oil), 11.2%; Magnit PJSC (Russia: retailing), 5.7%; Sberbank (Russia: bank), 5.3%; MMC Norilsk Nickel (Russia: mining), 4.5%; and Novatek (Russia: natural gas), 3.5%. The iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.67%....
ISHARES MSCI BRAZIL INDEX FUND $33.26 (New York symbol EWZ; buy or sell through brokers) is an ETF that is designed to track the Brazilian stock market. Its top holdings are Cia Itau Unibanco Holding (banking), 10.3%; AmBev SA (beer and beverages), 8.6%; Banco Brandesco SA, 8.0%; Petrobras (oil and gas), 6.3%; Vale do Rio Doce (mining), 5.6%; BRF SA (food), 4.6%; and Cielo SA (payment processing), 3.4%. The ETF was launched on July 10, 2000. It has a 0.62% expense ratio....
ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $40.95 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange. The fund’s top holdings are S.A.C.I. Falabella (retail), 10.6%; Enersis SA (electricity), 9.6%; Empresas Copec SA (conglomerate), 7.9%; Empresa Nacional de Electricidad (electricity), 7.2%; LATAM Airlines, 5.0%; Banco Santander Chile (banking), 4.9%; Empresas CMPC (pulp and paper), 4.9%; Banco de Chile, 4.4%; Cencosud SA (retailer), 4.2%; and Quimica y Minera de Chile (mining), 4.1%. The fund’s industry breakdown is: Utilities, 28.3%; Financials, 18.1%; Materials, 11.8%; Consumer Discretionary, 11.4%; Consumer Staples, 9.3%; Industrials, 8.2%; Energy, 7.7%; Telecommunications, 2.2%; and Information Technology, 2.2%....
ISHARES MSCI GERMANY FUND $29.42 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership. The ETF’s top holdings are Bayer (diversified chemicals), 9.9%; Daimler (autos), 7.5%; BASF (chemicals), 7.3%; Siemens (engineering conglomerate), 7.9%; Allianz (insurance), 8.2%; SAP (software), 5.3%; Deutsche Telekom, 4.7%; Deutsche Bank AG, 3.7%; BMW AG, 3.4%; and Volkswagen AG, 3.1%....
Stock Investing
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday. This week an Inner Circle member asked about a company whose rental trucks are a familiar sight on North American highways. Ryder System makes the bulk of its revenue leasing truck fleets under long-term deals. It extends its service to helping clients manage warehousing and distribution. The company has also entered into a venture with a clean energy firm to develop a truck to run on compressed natural gas, potentially a money-saver when gasoline prices are higher. Pat examines the company’s financial situation and assesses its growth prospects. ...