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
ROYAL BANK OF CANADA $82 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $114.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s second-largest bank, with $913.9 billion of assets.

In the three months ended July 31, 2014, the bank earned $2.4 billion, up 10.2% from $2.2 billion a year earlier. Per-share earnings rose 11.0%, to $1.62 from $1.46, on fewer shares outstanding. These figures exclude unusual items, such as a $40-million loss on the sale of its Jamaican banking operations.

Revenue jumped 25.2%, to $9.0 billion from $7.2 billion. The bank set aside $283 million to cover bad loans in the latest quarter, up 6.0%, from $267 million. That’s mainly due to higher provisions at its Caribbean and Canadian corporate-lending businesses. The strong results prompted Royal to raise its quarterly dividend by 5.6%, to $0.75 a share from $0.71. The new annual rate of $3.00 yields 3.7%.

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TORONTO-DOMINION BANK $57 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.8 billion; Market cap: $102.6 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.td.comtarget=”_blank”) is Canada’s largest bank, with $921.8 billion of assets.

TD continues to benefit from its recent deal with Aimia (Toronto symbol AIM) to become the main credit card issuer for the popular Aeroplan travelreward program. The bank’s insurance operations also benefited from a 32% drop in claims in the latest quarter.

As a result, TD’s earnings jumped 36.8% in the three months ended July 31, 2014, to $2.2 billion from $1.6 billion a year earlier. Per-share profits gained 40.2%, to $1.15 from $0.82. These figures exclude unusual items, such as costs related to the new Aeroplan business.

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ENCANA CORP. $21 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 741.1 million; Market cap: $15.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.encana.com) recently narrowed its focus from around 30 unconventional natural gas properties to just six. These fields also produce significant amounts of oil and natural gas liquids, such as butane and propane.

The company now expects that liquids will account for 75% of next year’s operating cash flow, two years ahead of its original target.

Encana’s revenue rose 31.8%, from $6.7 billion in 2009 to $8.9 billion in 2010 (all amounts except share price and market cap in U.S. dollars). It then fell to $5.2 billion in 2012. However, revenue recovered to $5.9 billion in 2013 and could reach $7.0 billion in 2014.

Earnings dropped from $2.35 a share (or a total of $1.8 billion) in 2009 to $0.54 a share (or $398 million) in 2011. They then rebounded to $1.35 a share (or $997 million) in 2012, but fell to $1.09 a share (or $802 million) in 2013.

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CENOVUS ENERGY INC. $29 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 757.1 million; Market cap: $22.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.7%; TSINetwork Rating: Average; www.cenovus.comtarget=”_blank”) gets 40% of its revenue from its oil sands projects and conventional oil and gas wells in western Canada. These properties’ reserves should last 24 years.

Refining supplies the remaining 60% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations.

Thanks to higher production and oil prices, Cenovus’s revenue increased 62.0%, from $11.5 billion in 2009 to $18.7 billion in 2013. Even with the recent oil price decline, its revenue should rise to around $20 billion in 2014.

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Investment Counsellor
Every Thursday we bring you our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster. Procter & Gamble’s sales have slowed in recent years, mainly due to competition from cheaper generic brands. In response, the company is eliminating less profitable household goods and cutting costs. It’s also doing a good job of developing new products and finding new markets for existing ones. These moves will give Procter more room to adjust its prices without hurting its profit margins. They’ll also provide more cash for share buybacks and dividend hikes....
Investment Counsellor
Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.

Maple Leaf Foods is nearing the end of its multi-year plan to unload less profitable businesses and modernize its meat-processing plants. The plan’s costs have depressed the company’s current earnings, but it greatly improves its longer-term prospects.

MAPLE LEAF FOODS INC. (Toronto symbol MFI; www.mapleleaf.ca) is Canada’s largest foodprocessing company. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands.

In May 2014, the company sold its 90.0% stake in Canada Bread, Canada’s second-largest producer of baked goods after Weston Bakery. It received $1.66 billion for this holding.

Meanwhile, Maple Leaf continues to make progress with a major restructuring of its meat-processing operations, which mainly involves closing older plants and shifting their operations to newer facilities. The company expects to complete the plan by the end of 2015.

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Investment Counsellor
Every Monday we feature “A Stock to Sell’ as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. LifeLogger Technologies (symbol LOGG on the U.S. over-the-counter market; www.lifelogger.com) is a Florida company that aims to market its gum-packet-sized LifeLogger wearable camera....
Income Investing
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away. Today’s tip: “While stock options frequently make a lot of money for brokers, but most investors are more likely to lose with options. Here are seven ways they can cost you money.”...
T. ROWE PRICE GROUP INC. $83 (www.troweprice.com) earned $1.12 a share in the third quarter of 2014, up 12.0% from $1.00 a year earlier. Revenue rose 15.4%, to $1.0 billion from $884.4 million. Assets under management have risen 5.6% since the start of 2014, to $731.2 billion....