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.
CARFINCO FINANCIAL $8.80 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $232.9 million; Dividend yield: 3.4%) is down sharply since mid-January from $11.25 to today’s price. The company provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In November 2014, Carfinco’s shareholders voted to accept a friendly $11.25-a-share takeover bid from Spain’s Banco Santander SA (ADR symbol SAN on New York). The company’s directors and executive officers, who collectively own a 12.9% stake, also agreed to support the sale.

But neither Carfinco nor Santander have announced anything about the $268-million deal, which was expected to close by the end of 2014 or early this year. Santander has been in the news lately with the appointment of a new executive chairman, a share issue to raise 7.5 billion euros ($10.4 billion Canadian) to shore up its capital base and a dividend cut.

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AEROPOSTALE INC. $2.78 (New York symbol ARO; TSINetwork Rating: Extra Risk)(646-485-5410; www.aeropostale.com; Shares outstanding: 79.1 million; Market cap: $220.0 million; No dividends paid) has risen over 20% since the clothing retailer said in early January 2015 that it expects to report a much smaller than expected loss in its 2014 fourth quarter.

The company now expects a fourthquarter loss of $0.25 to $0.31 share, compared to its earlier forecast of a $0.44-ashare loss. It has been cutting costs and selling more high-profit-margin clothing.

Aeropostale continues to face intense competition from other teen-clothing retailers. To restore its profitability, it plans to better market its products and keep cutting costs and refreshing its clothing lines. It’s also closing underperforming stores.

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FIRSTSERVICE CORP. $63.43 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.5 million; Market cap: $2.3 billion; Dividend yield: 0.7%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. The company has more than 24,000 employees worldwide.

In the quarter ended September 30, 2014, FirstService’s revenue rose 13.5%, to $684.6 million from $603.0 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share were $0.75, up 8.7% from $0.69.

Revenue rose at all three of FirstService’s divisions: Colliers International (commercial real estate), up 16%; FirstService Residential (residential property management), up 10%; and FirstService Brands (property services), up 12%. (FirstService Brands operates Paul Davis Restoration, California Closets and CertaPro Painters.)

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WESTJET AIRLINES $32.05 (Toronto symbol WJA; TSINetwork Rating: Extra Risk)(1-877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $4.1 billion; Dividend yield: 1.5%) serves 91 destinations in North America, Central America, the Caribbean and Europe. Its fleet of 109 modern Boeing 737s are 30% more fuel efficient than older jets.

In June 2013, the company launched WestJet Encore, its Canadian regional airline. This business now operates 14 Bombardier Q400 NextGen turboprop planes, which seat 78 passengers.

In the three months ended September 30, 2014, WestJet’s earnings, excluding one-time items, jumped 30.9%, to a third-quarter record of $85.4 million from $65.1 million a year earlier. Earnings per share gained 32.0%, to $0.66 from $0.50, on fewer shares outstanding. This was WestJet’s 38th consecutive quarter of profitability. Revenue rose 9.2%, to $1.0 billion from $924.8 million.

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GOODYEAR TIRE & RUBBER CO. $25.57 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 274.6 million; Market cap: $6.8 billion; Dividend yield: 0.9%) expects to report lowerthan- expected profits in its soon-to-bereleased 2014 fourth-quarter results.

The company now expects fourth-quarter operating income growth to be below the 10% to 15% it originally forecast in October 2014. That’s because weak European sales and a decline in foreign currencies against the U.S. dollar are hurting the value of its international sales. Warmer-than-expected weather also hurt demand for winter tires.

However, Goodyear reaffirmed its 2015 targets and expects operating income growth of 10% to 15% to resume this year. The stock trades at just 8.1 times the company’s forecast 2015 earnings of $3.15 a share.

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CALIAN TECHNOLOGIES $18.47 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $135.8 million; Dividend yield: 6.1%) operates in two areas: the business and technology services division (which supplies 70% of the company’s revenue) provides engineers, health care workers and other skilled professionals on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.

In the three months ended September 30, 2014, the company earned $2.8 million, or $0.38 a share. That’s down 6.7% from $3.0 million, or $0.41, a year earlier. Revenue declined 5.4% in the latest quarter, to $54.4 million from $57.5 million.

The business and technology services division continues to benefit from recurring orders from Canadian federal government departments, including the Department of National Defence. This division’s revenue rose 5.4%.

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SASOL LTD. (ADR) $34.47 (New York symbol SSL; TSINetwork Rating: Extra Risk)(082- 883-9697; www.sasol.com; ADRs outstanding: 650.8 million; Market cap: $22.5 billion; Dividend yield: 7.1%) has announced that it will proceed with building an $8.1-billion facility in Lake Charles, Louisiana that will convert natural gas into plastics and other products. The project, which will triple Sasol’s U.S. chemical production, will start up in 2018.

Major developments like this can add a lot of risk. But the plant will take advantage of cheap and abundant U.S. shale gas, as well as ethane-shipping infrastructure that’s already in place on the U.S. Gulf Coast.

Expanding in the U.S. will also help Sasol offset some of the political and currency risks of operating mainly in South Africa.

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CIMAREX ENERGY $102.82 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.2 million; Market cap: $8.6 billion; Dividend yield: 0.6%) produces and explores for natural gas and oil. Gas makes up 50% of the company’s output.

Cimarex’s properties are mostly in the Wolfcamp shale area of the Permian Basin in Texas and New Mexico, as well as the Cana-Woodford shale region in western Oklahoma.

In the three months ended September 30, 2014, Cimarex’s production averaged 942.4 million cubic feet of natural gas equivalent a day, up 31.5% from 716.8 million cubic feet a year earlier.

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ATLANTIC TELE-NETWORK $65.04 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.9 million; Market cap: $1.0 billion; Dividend yield: 1.8%) is entering the solar energy market by acquiring 28 solar projects in Massachusetts, California and New Jersey for $103 million.

Atlantic will now operate the assets, which have 45.7 megawatts of capacity, through its newly created Ahana Renewable subsidiary. The projects’ power-purchase agreements range from 10 to 25 years.

Before the purchase, Atlantic held cash of $395.6 million, or $24.87 a share, so it can easily afford this acquisition.

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