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
A conservative, step-by-step Canadian guide: account choice, W-8BEN, FX cost cuts, first trade, and DRIP, built for steady dividend income.
VANGUARD FTSE EMERGING MARKETS ETF $41.09 (New York symbol VWO; buy or sell through brokers) aims to track the Financial Times Stock Exchange (FTSE) Transitions Index, which is made up of common stocks of companies in developing countries. The fund’s MER is just 0.15%.

The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), China Mobile, Itau Unibanco Holding SA (Brazil: banking), China Construction Bank, Bank of China, Tencent Holdings (China: Internet), Industrial & Commercial Bank of China, Naspers Ltd. (South Africa: media); Banco Bradesco (Brazil: banking); and Hon Hai Precision Industry (Taiwan: electronics).

The $62.5-billion fund’s breakdown by country is as follows: China (24.4%), Taiwan (14.3%), India (11.7%), Brazil (10.7%), South Africa (9.5%), Mexico (5.6%), Malaysia (4.5%), Russia (3.6%), Indonesia (3.0%), Thailand (3.0%), Turkey (2.0%), Philippines (1.8%), Poland (1.8%) and others (4.1%).

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Retirement Planning
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing, and on successful retirement planning. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away.

Tip of the week: “When you work out a plan for your retirement, make sure that you aren’t basing your future income on over-optimistic calculations that will end up leaving you short.”

As the deadline for RRSP contributions approaches, many investors are confident they are taking concrete steps toward a secure retirement. But are those steps based on realistic calculations?

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GUGGENHEIM CHINA SMALL CAP ETF $25.66 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.

The $205.6-millon fund’s top holdings are Shenzhou International, 1.1%; Air China, 1.0%; Zijin Mining, 1.0%; China Everbright, 1.0%; Zhejiang Expressway, 1.0%; CSPC Pharmaceutical, 1.0%; Aluminum Corp. of China, 1.0%; Datang International Power, 1.0%; and Shanghai Electric, 1.0%.

As China’s economy matures and wages rise, domestic spending should continue to increase. As well, the country’s leaders recently announced that they will extend social services to migrant workers, and they will likely have to make further investments in programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.

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RIOCAN REAL ESTATE INVESTMENT TRUST $29.55 (Toronto symbol REI.UN; Units outstanding: 313.9 million; Market cap: $9.2 billion; TSINetwork Rating: Average; Dividend yield: 4.8%; www.riocan.com) should be able to weather Target Corp.’s decision to close its 133 Canadian stores with minimal effect on its revenue and profits.

RioCan has Target as its seventh-largest tenant, with 26 locations, but the stores account for just 1.9% of the REIT’s annualized rental revenue.

Many of the Target stores are in established malls, so RioCan should be able to rent them to new tenants, perhaps at higher rates. Meanwhile, RioCan says the leases on the 26 locations are guaranteed by the U.S. parent company, Target Corp., for more than a decade.

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CGI GROUP INC. $44 (www.cgi.com) has developed a computerized emergency response system for the Estonian government. This service gathers data from several sources and recommends the quickest way to respond to fires and other disasters....
RESTAURANT BRANDS INTERNATIONAL $48 (www.rbi.com) is the new company formed by the merger of Tim Hortons Inc. (old symbol THI) and Burger King Worldwide (old symbol BKW).

Restaurant Brands is the world’s third-largest fast-food chain, after McDonald’s and Yum Brands, with 14,000 Burger King restaurants and 4,590 Tim Hortons outlets in 100 countries. In all, these locations have annual sales of over $23 billion U.S.

Roughly 72% of Tim Hortons shareholders opted to receive 3.0879 shares of the new company for each Tim Hortons share they held. A further 26% chose the default option of $65.50 in cash plus 0.8025 of a Restaurant Brands share, while 2% picked the all-cash option of $88.50 a share.

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SUNCOR ENERGY INC. $35 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $52.5 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.2%; TSINetwork Rating: Average; www. suncor.com) gets 40% of its revenue and 65% of its earnings by producing oil and natural gas, mainly at its large Alberta oil sands projects. The remaining 60% of revenue and 35% of earnings come from its four oil refineries and 1,500 Petro-Canada gas stations.

Big merger boosted results

Suncor merged with rival Petro-Canada in 2009, increasing its revenue by 52.2%, from $25.5 billion in 2009 to $38.8 billion in 2011. Lower oil prices cut the company’s revenue to $38.5 billion in 2012. In 2013, Suncor sold most of its Western Canadian natural gas operations for $1 billion. However, higher oil prices offset the lower production, and its revenue rose to $40.3 billion.

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BOMBARDIER INC. (Toronto symbols BBD.A $4.15 and BBD.B $4.14; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.1 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.bombardier.com) has won several orders for new regional jets, business jets and turboprop planes. Assuming these customers exercise all of their options, these deals are worth a total of $1.7 billion (all amounts except share prices and market cap in U.S. dollars). That’s equal to 9% of the company’s annual revenue of $19.5 billion.

In addition, Bombardier has received an order for 42 passenger railcars from the operator of a public transit system near Paris, France. This deal is worth $484 million, and the company will begin delivering the trains in 2017.

Bombardier B stock is a buy.

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IGM FINANCIAL INC. $44 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 251.6 million; Market cap: $11.1 billion; Price-to-sales ratio: 4.0; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.igmfinancial.com) had $141.9 billion of assets under management on December 31, 2014, up 7.7% from $131.8 billion a year earlier.

The company’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings benefit when the value of these assets increases.

However, IGM’s overall mutual fund redemptions exceeded sales by $30.6 million in December. Net gains at the company’s Investors Group (up $13.3 million) and Counsel (up $19.7 million) subsidiaries failed to offset $63.1 million of net redemptions at its Mackenzie division.

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