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.
TRANSCONTINENTAL INC. $16 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.0%; TSINetwork Rating: Average; www.tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. It also publishes magazines and newspapers.

In May 2014, the company paid $133 million U.S. for Missouri-based Capri Packaging, which makes plastic bags and pouches for cheese and yogurt producers. Transcontinental feels it can use its printing expertise to make Capri more efficient. The purchase will add $72 million U.S. to its annual revenue of $2.1 billion (Canadian).

The company also recently agreed to pay $75 million for 74 community newspapers in Quebec, along with their websites. The seller is Sun Media, a subsidiary of Quebecor (Toronto symbol QBR.B).

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CGI GROUP INC. $39 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 311.7 million; Market cap: $12.2 billion; Price-to-sales ratio: 1.2; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is a leading provider of computer outsourcing services. It helps its clients automate certain routine functions, like accounting and buying supplies. That lets companies improve their efficiency and focus on their main businesses.

CGI continues to benefit from Logica plc, a U.K.-based computer-outsourcing firm it bought for $2.7 billion in 2012.

In its 2014 third quarter, which ended June 30, 2014, CGI’s earnings rose 14.7%, to $229.8 million, or $0.72 a share. A year earlier, it earned $200.4 million, or $0.63. Revenue gained 3.9%, to $2.7 billion from $2.6 billion.

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SAPUTO INC. $65 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.8 million; Market cap: $12.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.6%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also operates dairies in the U.S., Australia and Argentina.

In February 2014, Saputo paid $449.6 million for 87.92% of Warrnambool Cheese and Butter Factory, one of Australia’s largest dairy producers.

Warrnambool boosted Saputo’s revenue by 20.6% in its fiscal 2015 first quarter, which ended June 30, 2014, to $2.6 billion from $2.2 billion a year ago. Favourable currency rates and higher cheese and butter prices in the U.S. also contributed to the gain. Earnings rose 6.3%, to $145.3 million, or $0.73 a share. A year earlier, Saputo earned $136.7 million, or $0.69.

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AGRIUM INC. $100 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 144.0 million; Market cap: $14.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.3%; TSINetwork Rating: Average; www.agrium.com) gets 80% of its sales and 65% of its earnings from its retail division, which sells seed, fertilizer and other products to farmers.

Agrium mainly gets the remaining 20% of sales and 35% of earnings by making fertilizers from natural gas. It also operates potash and phosphate fertilizer mines.

The company continues to expand its retail division, as steady sales from these stores cut its exposure to volatile bulk fertilizer prices.

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MOLSON COORS CANADA INC.(Toronto symbols TPX.A $82 and TPX.B $79; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 185.1 million; Market cap: $14.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer by volume.

Beer sales are rising slowly in developed regions like North America. That’s why Molson Coors bought StarBev, which owns nine breweries in central and eastern Europe, for $3.5 billion in June 2012 (all amounts except share prices and market cap in U.S. dollars).

In the second quarter of 2014, the company’s worldwide beer volumes fell 0.9%. However, its revenue rose 0.9%, to $1.19 billion from $1.18 billion a year ago, because it raised its prices and sold more premium beers.

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ENBRIDGE INC. $56 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 846.4 million; Market cap: $47.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and natural gas from Western Canada to customers in Eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State.

New pipelines and other projects boosted Enbridge’s revenue by 164.1%, from $12.5 billion in 2009 to $32.9 billion in 2013. Earnings rose 68.8%, from $857.4 million to $1.4 billion. The company sold shares to help pay for its expansion, so per-share earnings rose at a slower pace of 50.8%, from $1.18 to $1.78.

Enbridge now plans to spend $42 billion on new pipelines and other projects over the next few years. Of that total, $37 billion of these projects already have secure commitments from oil producers, which cuts the risk of these investments. The company expects these new assets to increase its earnings per share by 10% to 12% each year through 2017.

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NEWMONT MINING $26.31 (New York symbol NEM; Shares outstanding: 498.8 million; Market cap: $13.3 billion; TSINetwork Rating: Average; Dividend yield: 0.4%; www.newmont.com) recently shut down its 48.5%-owned Batu Hijau copper/gold mine in Indonesia.

The move was in response to the Indonesian government’s ban on raw material exports, which is aimed at pushing miners to process more ore in the country.

Newmont has now agreed to develop a new smelter with Freeport-McMoRan Inc. (New York symbol FCX), which also operates a copper mine in Indonesia. In addition, Batu Hijau has signed new deals to supply copper to two Indonesian companies that plan to build their own smelters. These developments should let Batu Hijau comply with the new regulations. The mine will probably reopen in the next few weeks.

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ALLIED PROPERTIES REIT $35.76 (Toronto symbol AP.UN; Units outstanding: 69.5 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.alliedpropertiesreit.com) is selling 4.9 million units to the public at $35.30 each to raise $172.5 million.

The REIT will mostly use the funds for acquisitions, including its recent purchase of 460 King Street West in downtown Toronto for $15 million. This addition completes Allied’s ownership along the eastern and southern perimeters of a large block at King and Spadina. The REIT can now use the block for a major redevelopment project.

Allied REIT is still a buy.

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VERESEN $18.48 (Toronto symbol VSN; Shares outstanding: 220.3 million; Market cap: $4.1 billion; TSINetwork Rating: Average; Dividend yield: 5.4%) owns pipelines, power plants and gas-processing facilities across North America.

A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant, and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C. To diversify, the company is expanding into power generation, including hydroelectric facilities, wind farms and natural gas-fired plants.

Veresen continues to move ahead with its plan to ship gas from Canada to its proposed $6.8-billion Jordan Cove liquefied natural gas plant in Oregon for export to Asia. If regulators give final approval, the project could start up in 2019.

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