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.
PENGROWTH ENERGY $4.36 (Toronto symbol PGF; Shares outstanding: 528.1 million; Market cap: $2.2 billion; TSINetwork Rating: Average; Dividend yield: 11.0%; www.pengrowth.com) produces oil and natural gas in Western Canada and off the Nova Scotia coast. Gas accounts for 46% of its production; the other 54% is oil.

In the three months ended September 30, 2014, Pengrowth produced 72,472 barrels a day (including gas), down 13.0% from 83,275 barrels a year earlier. That’s mainly because it sold several less important oil and gas properties in Western Canada.

Pengrowth is investing the proceeds from these sales in more promising projects, like its Lindbergh oil sands development in Alberta’s Cold Lake region. Lindbergh should start up in early 2015 and produce 12,500 barrels a day. Future phases will raise the project’s daily output to 50,000 barrels.

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TRANSCANADA CORP. $56.86 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $39.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.transcanada.com) recently completed the purchase of three more Ontario solar power plants from Canadian Solar Inc. (Nasdaq symbol CSIQ).

TransCanada now owns seven of the nine solar farms it agreed to buy from Canadian Solar in 2011. It will probably take possession of the remaining two in 2015. In all, it will pay about $500 million.

The company has 20-year deals to sell the power from these solar farms, which cuts this investment’s risk.

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ISHARES DEX UNIVERSE BOND INDEX FUND $31.03 (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 833 bonds in the portfolio have an average term-to-maturity of 10.03 years. The fund’s MER is 0.33%.

The bonds in the index are 68.2% government and 31.8% corporate.

The fund yields 3.0%, compared to the Short-Term Bond Fund’s 2.5%. Its yield-to-maturity is 2.37%, 0.80% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.

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ISHARES DEX SHORT-TERM BOND INDEX FUND $28.55 (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short- Term Bond Index.

This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 400 bonds with an average term to maturity of 2.86 years. The bonds in the index are 61.0% government and 39.0% corporate. The fund’s MER is 0.27%.

iShares DEX Short-Term Bond Index Fund yields 2.5%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.

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GLOBAL X SILVER MINERS ETF $8.23 (New York symbol SIL; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

This index includes 25 international companies that mine, refine or explore for silver. It was developed by Germany-based Structured Solutions AG.

Canadian firms make up 58.9% of the fund’s holdings, but it also includes miners in the U.S. (13.6%) and Mexico (4.2%). Its MER is 0.65%.

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ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $8.06 (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index.

This index is made up of 40 gold stocks from Canada and around the world. The iShares S&P/TSX Global Gold Index Fund’s MER is 0.61%. It began trading on March 23, 2001.

The fund’s top holdings are Goldcorp at 16.2%; Barrick Gold, 14.7%; Newmont Mining, 9.9%; Franco Nevada, 7.8%; Randgold Resources (ADR), 5.7%; Agnico-Eagle Mines, 5.3%; Eldorado Gold, 4.2%; Royal Gold, 4.0%; Yamana Gold, 3.7%; and AngloGold Ashanti (ADR), 3.5%.

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BANK OF NOVA SCOTIA $67.34 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $81.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%, www.scotiabank.com) may be planning to sell its 35 bank branches and related operations in Puerto Rico. That’s because the island’s sluggish economy and high unemployment continue to hurt loan demand.

Selling this business could raise $600 million U.S., which is equal to 1.0% of Bank of Nova Scotia’s $81.7-billion (Canadian) market cap (or the value of all of its outstanding shares).

The bank would probably invest the proceeds from the sale of the Puerto Rican assets in more promising areas of Latin America, such as Chile and Colombia.

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INNERGEX RENEWABLE ENERGY $10.80
(Toronto symbol INE; Shares outstanding: 100.4 million; Market cap: $1.1 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.6%; 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 Brookfield, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, it has five projects under construction.

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

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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $34.33 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $9.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.1%; www.brookfieldrenewable.com) owns 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 6,700 megawatts of generating capacity.

Roughly 31% of that capacity is in Canada, with another 52% in the U.S. and 17% in Brazil.

In the quarter ended September 30, 2014, Brookfield’s cash flow per share fell 46.3%, to $0.22 from $0.41 a year earlier. That’s because below-normal rainfall slowed the company’s hydroelectric production. However, rainfall averages out over time: in the nine months ended September 30, cash flow per share fell just 4.1%, to $1.65 from $1.72.

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