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
INNERGEX RENEWABLE ENERGY $10.66 (Toronto symbol INE; Shares outstanding: 100.1 million; Market cap: $1.1 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.6%; www.innergex.com) operates 25 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. Innergex gets 73% of its power from hydroelectric plants. Wind supplies 26%, and solar generates 1%.

In contrast to Brookfield Renewable, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, it is developing or building five projects.

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. $31.75 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $8.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.5%; www.brpfund.com) owns 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 6,500 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 June 30, 2014, revenue fell 2.1%, to $474 million from $484 million a year earlier. However, cash flow gained 5.9%, to $198 million, or $0.74 a share, from $187 million, or $0.71. The increase was due to the contribution of new acquisitions.

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CANADIAN PACIFIC $202.20 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $35.7 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) reports that its earnings jumped 47.2% in the three months ended June 30, 2014, to $371 million, or $2.11 a share. A year earlier, the company earned $252 million, or $1.43 a share.

The higher earnings mainly resulted from CP’s plan to improve its efficiency with new locomotives, better tracks and software that optimizes train loads and speeds. Revenue rose 12.3%, to $1.7 billion from $1.5 billion.

The company’s operating ratio improved to 65.1% from 71.9% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) CP now feels it can cut its full-year operating ratio to 63% or lower in 2014.

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MARKET VECTORS VIETNAM ETF $21.48 (New York symbol VNM; buy or sell through brokers) holds shares of Vietnamese companies or foreign firms that get a significant amount of their revenue from Vietnam.

The ETF’s top holdings are Saigon Thuong Tin Commercial Bank, 7.8%; Bank for Foreign Trade of Vietnam, 7.4%; Masan Group (food, resources and banking conglomerate), 7.3%; Vincom Corp. (real estate), 6.3%; PetroVietnam Fertilizer & Chemical, 5.7%; Baoviet Holdings (finance and insurance), 5.6%; and PetroVietnam Technical Services (oilfield services), 5.4%.

Market Vectors Vietnam ETF’s industry breakdown is as follows: Financials, 35.8%; Energy, 23.4%; Industrials, 12.6%; Consumer Staples, 11.6%; Consumer Discretionary, 8.3%; Materials, 5.7%; and Utilities, 1.3%. Its expense ratio is 0.72%.

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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $40.21 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest, most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on New York.

The fund’s top holdings are Tencent Holdings, 10.2%; China Construction Bank, 8.4%; China Mobile, 8.3%; Industrial & Commercial Bank, 6.9%; Bank of China, 5.4%; China Overseas Land & Investment, 4.3%; China Life, 4.0%; Ping An Insurance, 4.0%; China Shenhua Energy, 3.9%; PetroChina, 4.2%; China Merchants Bank, 3.7%; and CNOOC Ltd., 3.7%.

The fund’s holdings give it the following industry breakdown: Financials, 54.1%; Telecommunications, 14.4%; Oil and Gas, 12.1%; Technology, 10.1%; Basic Materials, 4.0%; Industrials, 1.8%; and Consumer Goods, 1.7%. Its expense ratio is 0.73%.

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PENN WEST $8.14 (Toronto symbol PWT; Shares outstanding: 492.6 million; Market cap: $4.0 billion; TSINetwork Rating: Average; Divd. yield: 6.9%; www.pennwest.com) appointed former Suncor CEO Rick George as chairman in May 2013 to bring in much-needed measures to shore up its finances and boost its value.

The company’s shares traded at $10 when George took over, down from a peak of $47 in 2006. The shares moved up to as high as $13.50 last year, but had moved back down to $10 in mid-July 2014. That’s when they dropped a further 19%, to today’s price, after the company announced it was re-examining its
accounting practices going back several years.

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CENOVUS ENERGY $33.41 (Toronto symbol CVE; Shares outstanding: 756.9 million; Market cap: $25.3 billion; TSINetwork Rating: Average; Dividend yield: 3.2%; www.cenovus.com) gets 40% of its output from its Alberta oil sands projects. Conventional oil and gas supplies 60%.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects.

In the quarter ended June 30, 2014, cash flow per share jumped 36.5%, to $1.57 from $1.15 a year ago.

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ENCANA CORP. $22.86 (Toronto symbol ECA; Shares outstanding: 741.0 million; Market cap: $16.9 billion; TSINetwork Rating: Average; Dividend yield: 1.3%; www.encana.com) is one of North America’s largest natural gas producers.

Encana continues to benefit from its new plan to focus on six main properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico), the Tuscaloosa Marine Shale (Louisiana) and Texas’s Eagle Ford oil shale.

These fields produce oil and natural gas liquids (NGLs), such as butane and propane, and should last decades. That cuts Encana’s natural gas exposure.

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IMPERIAL OIL $54.20 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $45.9 billion; TSINetwork Rating: Average; Div. yield: 1.0%; www.imperialoil.ca) recently opened the first phase of its massive Kearl oil sands project in Alberta, and the second phase should start up next year. This project will help the company double its production, to 600,000 barrels a day, by 2020.

Oil sands projects are harder to operate than conventional properties, and they need high oil prices to earn a profit. However, Imperial’s refineries help shield it from a drop in oil prices because they pay less for the crude they need.

The stock trades at a moderate 12.2 times Imperial’s likely 2014 earnings of $4.45 a share.

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