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.

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When we get questions about investing in stocks through split-share, our advice is, avoid the risk and invest in good stocks individually
BOMBARDIER INC. (Toronto symbols BBD.A $3.88 and BBD.B $3.83; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.5 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.6%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer.

In the three months ended March 31, 2014, Bombardier’s earnings fell 3.2%, to $151 million from $156 million a year earlier (all amounts except share prices and market cap in U.S. dollars). Earnings per share were unchanged at $0.08. Revenue rose 0.3%, to $4.35 billion from $4.34 billion.

Revenue at the railcar division (52% of the total) rose 8.8%, as the company continues to win orders from public transit systems. This business ended the quarter with a record backlog of $38.4 billion, up 18.5% since the start of 2014.

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TELUS CORP. $41 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 618.9 million; Market cap: $25.4 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) has dropped its $350-million bid for wireless carrier Mobilicity.

The company was more interested in Mobilicity’s wireless frequencies, or spectrum, than its 165,000 wireless customers (Telus has 7.8 million wireless subscribers across Canada).

However, Ottawa opposed the deal. As well, if Telus had refused to drop the takeover, Ottawa would probably have blocked it from bidding on new spectrum at an auction planned for April 2015.

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ANDREW PELLER LTD. $14 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 11.3 million; Market cap: $158.2 million; Price-to-sales ratio: 0.7; Dividend yield: 3.0%; 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 its 2014 fiscal year, which ended March 31, 2014, Peller’s sales rose 3.0%, to $297.8 million from $289.1 million in fiscal 2013. That’s mainly because it launched several successful products. Demand for its premium wines also remains strong.

However, strong competition in Western Canada and the Maritimes, as well as higher costs for wine and juice from overseas suppliers, cut Peller’s earnings by 3.4%, to $14.0 million from $14.5 million. Per-share earnings fell 2.9%, to $1.01 from $1.04. Without unusual items, such as losses on hedging contracts, earnings would have risen 4.5%.

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MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $78; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 184.8 million; Market cap: $14.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.1%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer.

In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.

The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.

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CANADIAN IMPERIAL BANK OF COMMERCE $97 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.4 million; Market cap: $38.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.cibc.com) took control of FirstCaribbean, which offers banking services in 17 Caribbean countries, in December 2006. CIBC now holds a 91.7% stake. The region’s slow growth and high unemployment have prompted CIBC to write down the value of this investment by $420 million.

Due to this charge, as well as costs to launch a new loyalty plan for travellers after it lost the Aeroplan contract, CIBC’s earnings in the quarter ended April 30, 2014 fell 64.5%, to $306 million, or $0.73 a share. If you exclude all unusual items, the bank earned $887 million, or $2.17 a share. A year earlier, CIBC earned $862 million, or $2.09 a share.

Revenue rose just 1.4%, to $3.17 billion from $3.12 billion, mainly due to the loss of the Aeroplan deal.

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TRANSCANADA CORP. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $35.4 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 68,500-kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2013, they provided 51% of TransCanada’s revenue and 53% of its earnings.

The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.

In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.

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ENBRIDGE INC. $51 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 834.8 million; Market cap: $42.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The company’s pipelines also handle 53% of Canada’s crude oil exports to the U.S.

Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.

In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.

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METRO INC. $67 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 87.0 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw (also in this issue) and Sobeys. It now has 600 supermarkets and 250 drugstores.

To cut its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.

Since then, Metro has mainly focused on improving the profitability of its stores. Lower costs will give the company more flexibility to adjust its prices, and cope with the recent 7.3% increase in Ontario’s minimum wage.

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BANK OF NOVA SCOTIA $64 (www.scotiabank.com) earned $1.32 a share in its fiscal 2014 fourth quarter, which ended October 31, 2014. That figure excludes several unusual items, mainly severance costs related to the closure of 120 branches at its international division and the consolidation of some Canadian offices....