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
When we get questions about investing in stocks through split-share, our advice is, avoid the risk and invest in good stocks individually
RIOCAN REAL ESTATE INVESTMENT TRUST $27.64 (Toronto symbol REI.UN; Units outstanding: 304.4 million; Market cap: $8.4 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) is Canada’s largest real estate
investment trust (REIT), with interests in 340 shopping malls containing over 82 million square feet of leasable area. That total includes 47 U.S. malls with over 13 million square feet.

In the three months ended March 31, 2014, RioCan’s revenue increased 6.4%, to $299 million from $281 million a year earlier. Cash flow per unit rose 2.4%, to $0.42 from $0.41, on more units outstanding.

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TORSTAR $7.86 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $629.2 million; TSINetwork Rating: Average; Dividend yield: 6.7%; www.torstar.com) is up over 20% since early May, when it agreed to sell its Harlequin book-publishing subsidiary to News Corporation (symbol NWSA on New York), the parent company of publishing firm HarperCollins.

We’ve long pointed out that Torstar had a great hidden asset in Harlequin, especially in light of the romance publisher’s successful expansion into e-books.

In 2013, Harlequin supplied 29% of Torstar’s revenue and 32% of its earnings. The company will get $455 million from the sale, which should close by September 30, 2014.

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TELUS $42.29 (Toronto symbol T; Shares outstanding: 619.0 million; Market cap: $26.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.telus.com) gets 55% of its revenue from its 7.8 million wireless subscribers across Canada. It also has 3.3 million phone customers, 1.4 million high-speed Internet users and 815,000 TV subscribers.

In the three months ended March 31, 2014, Telus’s earnings per share rose 8.9%, to $0.61 from $0.56 a year earlier. Revenue increased 5.0%, to $2.90 billion from $2.76 billion.

Wireless revenue rose 5.6%, thanks to new wireless subscribers and rising use of smartphones, which generate higher fees than regular cellphones. Revenue gained 4.4% in the the wireline (land line) division, where an increase in Telus TV and high-speed Internet subscribers more than offset customers cancelling land lines and switching to wireless devices.

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MAPLE LEAF FOODS INC. $19 (www.mapleleaffoods.com) owned 90.0% of Canada Bread (see above), so it received $1.66 billion for its shares. That’s equal to 64% of Maple Leaf’s $2.6-billion market cap....
ENCANA CORP. $26 (www.encana.com) has completed its plan to sell shares of subsidiary PrairieSky Royalty Ltd. (Toronto symbol PSK) to the public. PrairieSky owns the oil and natural gas rights to 5.2 million acres in Alberta....
AGRIUM INC. $99 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 144.0 million; Market cap: $14.3 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.3%; TSINetwork Rating: Average; www.agrium.com) continues to benefit from its plan to expand its retail operations, which sell seed, fertilizer and other products to farmers. Steady sales from the company’s stores help offset its exposure to volatile fertilizer prices.

Agrium’s 1,400 outlets in North America, South America and Australia now supply 75% of its sales and 40% of its earnings. The remaining 25% of sales and 60% of earnings mainly comes from making fertilizers from natural gas. Agrium also operates potash and phosphate fertilizer mines.

Sales, earnings up sharply

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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) earned $36.8 million in its fiscal 2014 second quarter, which ended April 30, 2014. That’s up 12.9% from $32.6 million a year earlier. Earnings per share rose 11.9%, to $0.47 from $0.42, on more shares outstanding.

These gains are mainly due to cost savings from a restructuring plan that mostly consisted of job cuts. Revenue fell 3.8% in the latest quarter, to $498.2 million from $517.8 million, as the slow economy hurt advertising sales at the company’s newspapers and flyer-printing businesses.

These results do not include Missouri-based Capri Packaging, which Transcontinental bought for $146.1 million in May 2014. Capri, which makes plastic food containers, should add $72 million U.S. to Transcontinental’s annual revenue.

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BLACKBERRY LTD. $8.46 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 526.8 million; Market cap: $4.5 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has started selling its new Z30 touch-screen smartphone in Indonesia.

The Z30 is cheaper than Apple’s iPhone and devices that use Google’s Android software, which should help BlackBerry maintain its high share of Indonesia’s smartphone market.

The company now predicts it will probably lose money in the fiscal year ending February 28, 2015. However, it expects its recent job cuts, real estate sales and other cost-cutting measures will let it earn a profit in fiscal 2016.

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CAE INC. $15 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 263.8 million; Market cap: $4.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.6%; TSINetwork Rating: Average; www.cae.com) has a long history of developing flight simulators for Bombardier’s aircraft. This expertise will give CAE an advantage when airlines begin training their pilots to operate the new CSeries jet.

Meanwhile, the company sold a record 48 simulators in its 2014 fiscal year, which ended March 31, 2014. It ended the year with a $4.2-billion order backlog, which is equal to roughly two years’ worth of revenue.

CAE is our #1 buy for 2014.

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