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
TFSA showdown: penny stocks vs blue-chip dividends. Compare risk, tax, liquidity, and compounding so Canadians can choose safely.
ISHARES DEX UNIVERSE BOND INDEX FUND $31.05 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 821 bonds in the portfolio have an average term-to-maturity of 10.13 years. The fund’s MER is 0.33%.

The bonds in the index are 68.2% government and 31.8% corporate.

The fund yields 3.1%, compared to the Short-Term Bond Fund’s 2.6%. Its yield-to-maturity is 2.37%, 0.79% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.

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ISHARES DEX SHORT-TERM BOND INDEX FUND $28.63 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investmentgrade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 386 bonds with an average term to maturity of 2.98 years. The bonds in the index are 60.7% government and 39.3% corporate. The fund’s MER is 0.28%.

iShares DEX Short-Term Bond Index Fund yields 2.6%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.

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BCE INC. $48.88 (Toronto symbol BCE; Shares outstanding: 777.3 million; Market cap: $38.0 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%; www.bce.ca) has agreed to pay $3.95 billion in cash and stock for the 56% of BELL ALIANT $30.88 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $7.0 billion; TSINetwork Rating: Average; Dividend yield: 6.2%; www.bellaliant.ca) that it doesn’t already own. The deal should close by November 30, 2014.

Merging the two firms will make it easier for BCE to expand its high-speed wireless and Fibe TV networks in Atlantic Canada.

Bell Aliant shareholders will have three options when they tender their shares: $31.00 in cash; 0.6371 of a BCE share (worth $31.14 at today’s price for BCE); or $7.75 in cash plus 0.4778 of a BCE share ($31.10).

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TRANSCANADA CORP. $54.00 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $38.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S.

In the three months ended June 30, 2014, TransCanada’s revenue rose 11.2%, to $2.2 billion from $2.0 billion a year earlier. Excluding one-time items, earnings per share fell 7.8%, to $0.47 from $0.51. That was mostly due to maintenance outages at its Bruce Power plant in Ontario and weaker power prices in Alberta.

The company completed $6.1 billion worth of growth projects in 2013 and another $1.7 billion in the first half of this year. It plans to complete $36 billion of additional projects secured by long-term contracts by 2018 (an amount almost equal to its current $38.2-billion market cap). That includes $3.0 billion more for Keystone XL.

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international stock markets
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice on a wide range of topics, including strategies for international stock markets. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Foreign investments can give your portfolio greater strength and diversity and we recommend three ways you can do this with less risk.” We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification. And growing markets like China and India have positive long-term outlooks. Their populations are generally younger than those in North America, and rising incomes are helping more of them advance into the middle class....
SHAWCOR LTD. $59 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.2 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.0%; TSINetwork Rating: Average; www.shawcor.com) recently completed a big pipeline-coating job at a liquefied natural gas project in Australia. As a result, its revenue fell 3.5% in the second quarter of 2014, to $441.4 million from $457.3 million a year earlier. Earnings per share declined 12.2%, to $0.79 from $0.90. However, new contracts have increased ShawCor’s order backlog. On June 30, 2014, it stood at $684 million, up 10.9% from the start of the year. ShawCor is also bidding on over $1 billion worth of new contracts and should win many of them. ShawCor is a buy.
AMERICAN EXPRESS CO. $89 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $89.0 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.2%; TSINetwork Rating: Average; www. americanexpress.comtarget=”_blank”) started up in 1850 and is now one of the world’s largest issuers of payment cards, with 109.9 million cards outstanding in over 130 countries. Billionaire investor Warren Buffett owns 14.3% of the company.

Amex issues two types of cards: charge cards, which have no preset spending limit and must be paid in full each month; and traditional credit cards, which let users carry a balance.

High-quality clientele cuts risk

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PROCTER & GAMBLE CO. $83 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.7 billion; Market cap: $224.1 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.pg.comtarget=”_blank”) plans to sell just over half of its brands over the next two years.

That will let the company focus on its 70 to 80 most popular products, which together account for over 90% of its sales. These include 25 global brands, such as Head & Shoulders shampoo, Gillette razors, Tide detergent and Pampers diapers, that each generate over $1 billion in annual sales.

Meanwhile, Procter’s sales rose 0.6% in its 2014 fiscal year, which ended June 30, 2014, to $83.1 billion from $82.6 billion in fiscal 2013. Higher sales volumes (up 3%) and selling prices (up 1%) offset the negative impacts of currency exchange rates (down 2%) and low-margin products (down 1%). Before writedowns and unusual items, earnings rose 5.0%, to $4.22 a share from $4.02.

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FAIR ISAAC CORP. $57 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 32.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.7; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness.

The company recently repurchased $150.0 million of its shares under a buyback plan that ended in July 2014. Under its new authorization, it can buy back up to $250.0 million of shares. That’s equal to 14% of its market cap. There is no time limit for these buybacks.

Fair Isaac is a hold.

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