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
LOBLAW COMPANIES LTD. $56 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 413.5 million; Market cap: $23.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills.

In March 2014, Loblaw bought the 1,250-store Shoppers Drug Mart chain for $12.3 billion in cash and stock.

Thanks to Shoppers, Loblaw’s sales jumped 37.1%, to $10.3 billion, in the second quarter of its 2014 fiscal year, which ended June 14. It earned $7.5 billion a year earlier.

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TRANSCANADA CORP. $56 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.9 million; Market cap: $39.6 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; 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. To put that in context, TransCanada earned $332 million, or $0.47 a share, in the three months ended June 30, 2014.

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

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MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 77.8 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.9%; TSINetwork Rating: Average; www.mts.ca) gets 60% of its revenue from its MTS division, which has 1.3 million telephone and wireless clients in Manitoba. The other 40% comes from Allstream, which sells telephone, Internet and other communication services to businesses across Canada.

In the three months ended June 30, 2014, the company’s revenue fell 1.7%, to $403.3 million from $410.1 million a year earlier.

The MTS division’s revenue rose 1.1%, as strong demand for high-speed Internet and TV services offset lower revenue from traditional telephones. Wireless revenue also fell 4.8%, as smaller carriers continue to develop their own networks, which cuts the roaming fees they pay Manitoba Telecom.

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BCE INC. $48 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 827.7 million; Market cap: $39.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone services, with 5.0 million customers in Ontario and Quebec. It also has 2.2 million high-speed Internet customers and 2.3 million TV subscribers.

BCE also sells wireless services to 7.8 million customers across Canada, and its Bell Media segment owns CTV Television, specialty channels and radio stations.

The company recently offered to buy the 56% of Bell Aliant (Toronto symbol BA) that it doesn’t already own. Bell Aliant sells phone and Internet services to 2.3 million clients in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE.

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FORTIS INC. $35 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 215.4 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.6; Dividend yield 3.7%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and P.E.I. It also distributes natural gas in B.C. and operates power plants in other parts of Canada, the U.S. and the Caribbean.

The company recently completed its purchase of UNS Energy Corp., which operates power plants and distributes electricity and natural gas to 657,000 customers in Arizona.

Fortis paid $4.5 billion U.S., which includes assuming $2.0 billion U.S. of UNS’s debt. The new operations will add $1.5 billion U.S. to Fortis’s annual revenue of $4.7 billion (Canadian). The purchase also lowers Fortis’s reliance on Atlantic Canada.

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TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless carrier, after Rogers Communications, with 7.9 million subscribers. Wireless now supplies 54% of Telus’s revenue and 66% of its earnings.

The remaining 46% of revenue and 34% of earnings come from its wireline division, which mainly consists of 3.2 million traditional phone customers in B.C., Alberta and eastern Quebec. This business also includes 1.4 million Internet users and 865,000 TV customers.

Telus’s revenue rose 18.7%, from $9.6 billion in 2009 to $11.4 billion in 2013. Revenue will probably improve to $12.0 billion in 2014.

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IMPERIAL OIL $52.18 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $44.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) has begun converting its 95-year-old refinery in Dartmouth, Nova Scotia, into a storage facility for refined petroleum products, such as gasoline, diesel and home heating oil....
ALGONQUIN POWER & UTILITIES CORP. $8.77 (Toronto symbol AQN; Shares outstanding: 208.0 million; Market cap: $2.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.4%; www.algonquinpower.com) has agreed to buy Park Water Company for $327 million U.S. Algonquin will make the purchase through its Liberty Utilities subsidiary.

Park Water owns and operates three regulated water utilities that produce, treat, store, distribute and sell water in southern California and western Montana. The three utilities collectively serve 74,000 customers and have more than 1,000 miles of distribution pipelines.

Algonquin is also buying the Odell project, a 200-megawatt wind farm in the U.S. that’s currently under construction. The project, which spans Minnesota’s Cottonwood, Jackson, Martin and Watonwan Counties, will cost an estimated $313.5 million U.S. to complete.

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LOBLAW COMPANIES $55.80 (Toronto symbol L; Shares outstanding: 413.6 million; Market cap: $23.2 billion; TSINetwork Rating: Above Average; Dividend yield: 1.8%; www.loblaw.ca) is testing a smaller version of its discount No Frills supermarkets. These stores, which operate under the Box banner, are cheaper to build than full-sized outlets and can fit in smaller strip malls. That lowers their rental costs.

The new Box stores could also help Loblaw compete with Wal-Mart, which may start opening smaller locations in Canada following successful trials in the U.S.

Loblaw is a buy.

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