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
Learn which Canadian sectors have historically delivered more dependable dividends—and why. This safety-first guide explains the cash-flow mechanics, key risks (rates, regulation, credit cycles), and how to build a balanced income mix without chasing yield.
THOMSON REUTERS CORP. $42 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 803.7 million; Market cap: $33.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.thomsonreuters.com) sells information products in four areas: financial (55% of revenue, 37% of earnings); legal (27%, 41%); tax (10%, 12%); and intellectual property and science (8%, 10%). The Americas supply 60% of its revenue, followed by Europe (29%) and Asia (11%).

Thomson’s revenue rose 6.2%, from $13.0 billion in 2009 to $13.8 billion in 2011 (all amounts except share price and market cap in U.S. dollars). That’s partly due to acquisitions, particularly in developing markets like Brazil. These new businesses helped offset lower sales at its main financial division as banks and brokers cut their spending after the 2008/2009 financial crisis.

Asset sales hurt revenue growth

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ANDREW PELLER LTD. $15 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $214.5 million; Price-to-sales ratio: 0.7; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.andrewpeller.com) is Canada’s second-largest producer of wines, after Vincor International. The company has wineries in Nova Scotia, Ontario and British Columbia.

In the first quarter of its 2015 fiscal year, which ended June 30, 2014, Peller’s sales rose 9.3%, to $79.5 million from $72.7 million a year earlier. That’s partly because it started selling its Wayne Gretzky wines in Western Canada. It also launched several new products, such as skinnygrape spritzers and Panama Jack cocktails.

However, strong price competition and higher sales of lessprofitable brands cut Peller’s earnings by 19.4%, to $4.1 million, or $0.30 a share, from $5.1 million, or $0.37.

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GREAT-WEST LIFECO INC. $33 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 998.8 million; Market cap: $33.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) has paid an undisclosed amount for J.P. Morgan Chase’s (New York symbol JPM) pension plan recordkeeping operations.

The deal lets Great-West earn steady fees from these pension funds, and gives it an opportunity to profit from the performance of their investments.

Great-West is a buy.

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FORTIS INC. $34 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 215.4 million; Market cap: $7.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.fortis.ca) is expanding its Tilbury Island liquefied natural gas (LNG) facility in Delta, B.C.

The company is spending $400 million on this project, which is equal to 1.1 times its 2013 earnings of $353 million, or $1.74 a share.

This expansion will help the company meet rising demand as trucking companies convert to natural gas, which is up to 40% cheaper than diesel fuel. Fortis has also signed an agreement to sell LNG to Hawaii’s main electrical utility, which further cuts this project’s risk. Fortis is a hold.

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TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats.

The company recently paid an undisclosed sum for ZRx Prescriber, an app that lets doctors write prescriptions through their tablet computers and smartphones. The app can also access a patient’s drug insurance information, which speeds up claims and cuts down on errors. Over 520 clinics in Ontario and Quebec use ZRx Prescriber to process 400,000 prescriptions a month.

Telus is a buy.

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FINNING INTERNATIONAL INC. $33 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.2 million; Market cap: $5.7 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells heavy equipment made by other firms.

Finning’s clients are mainly in the mining, forest products and construction industries.

In the three months ended June 30, 2014, the company’s overall revenue rose 9.1%, to $1.8 billion from $1.6 billion a year earlier.

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BOMBARDIER INC. (Toronto symbols BBD.A $3.72 and BBD.B $3.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.2 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.bombardier.com)had to ground its new CSeries passenger jet in May 2014 due to an engine malfunction. The engine’s manufacturer fixed the fault, and Bombardier has resumed
test flights.

The company has firm orders for 203 CSeries planes, plus options for an additional 310. If buyers exercise all of these options, the entire order of 513 aircraft would be worth roughly $34 billion U.S. That’s equal to 1.9 times Bombardier’s 2013 revenue.

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CENOVUS ENERGY INC. $34 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 757.0 million; Market cap: $25.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.1%; TSINetwork Rating: Average; www.cenovus.com) owns 50% of the Foster Creek and Christina Lake oil sands projects in Alberta; ConocoPhillips (New York symbol COP) owns the other 50%.

The partners are now developing a third property called Narrows Lake. The project’s first phase should start up in 2017 and will add 22,500 barrels to Cenovus’s daily oil production, which averaged 201,688 barrels in the latest quarter.

Cenovus is also developing two other 100%-owned oil sands projects: Telephone Lake and Grand Rapids. In all, these properties could produce up to 100,000 barrels a day.

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BANK OF MONTREAL $84 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 646.4 million; Market cap: $54.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.bmo.com) earned $1.15 billion in the three months ended July 31, 2014, up 3.6% from $1.11 billion a year ago. Per-share earnings rose 4.2%, to $1.73 from $1.66, on fewer shares outstanding.

Earnings from Canadian retail banking (43% of the total) rose 8.0%, as low interest rates spurred demand for mortgages and business loans. The U.S. retail banking division (14%) reported a 6.2% gain in profits, mainly due to improving business loan demand. The bank’s trading division (25%) saw its earnings rise
13.8% on higher volumes and more stock-underwriting deals. However, wealth management earnings (18%) fell 5.4%, due to a one-time charge at its insurance business.

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