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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Stock investment clubs can help new investors find quality stocks and develop their own investing style. But watch out for the drawbacks.
TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 622.3 million; Market cap: $24.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; 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.

The company continues to expand its wireless operations. In November 2013, it paid $229 million for Public Mobile, which had 220,000 customers. To put the price in context, Telus earned $1.4 billion, or $2.16 a share, before unusual items in 2013.

Telus is now offering $350 million for Mobilicity, which has 165,000 wireless customers. This is the company’s third attempt to buy Mobilicity, after Ottawa blocked the last two.

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p>BCE INC. $49 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 777.3 million; Market cap: $38.1 billion; Price-to-sales ratio: 1.9; Dividend yield: 5.0%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone services, with 5.1 million customers in Ontario and Quebec. It also has 2.2 million high-speed Internet customers and 2.3 million TV subscribers. Together, these services supply 47% of the company’s revenue. BCE also sells wireless services across Canada. Its 7.8 million mobile subscribers provide 28% of its revenue.

A further 13% of revenue comes from its Bell Media division, which owns CTV Television, specialty channels and radio stations. It gets the remaining 12% from its 44% stake in Bell Aliant.

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p>FINNING INTERNATIONAL INC. $30 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.1 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). The company sells these products to customers in the mining, forest-products and construction industries. Strong demand for Finning’s gear in Western Canada and the U.K. is offsetting weaker sales in South America. Finning now believes its revenue was $1.7 billion in the first quarter of 2014, up 8% from a year earlier. Sales of new equipment rose 8%, while revenue from maintenance and other support services gained 9%.

Finning is a buy.

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p>SHAWCOR LTD. $55 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.1 million; Market cap: $3.3 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) makes sealants and coatings that keep oil and natural gas pipelines from rusting. The company also makes industrial products, such as electrical wire and protective sheaths. Thanks to acquisitions and new pipeline-coating contracts in North America and Europe, ShawCor’s revenue rose 5.4% in the three months ended March 31, 2014, to $479.1 million from $454.7 million a year earlier.

However, the company’s earnings declined 12.3%, to $61.9 million from $70.6 million, due to lower profits from joint ventures and higher interest costs and taxes. Per-share earnings rose 2.0%, to $1.03 from $1.01, on fewer shares outstanding.

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PRECISION DRILLING CORP. $14 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.1 million; Market cap: $4.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract drilling services to land-based oil and gas producers, mainly in North America. The company operates 330 rigs.

Higher oil and gas prices have spurred demand for Precision’s drilling services. As a result, its revenue rose 12.8% in the first quarter of 2014, to $672.2 million from $595.7 million a year earlier. Earnings gained 8.8%, to $101.6 million from $93.3 million. Per-share earnings rose 6.1%, to $0.35 from $0.33, on more shares outstanding.

In response to stronger-than-expected drilling activity, Precision now plans to spend $833 million to build and upgrade rigs in 2014, up 31.4% from its earlier forecast of $634 million. Drillers have already signed contracts for these new rigs, which cuts the risk of this investment.

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SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 1,8%; TSINetwork Rating: Average; www.snclavalin.com) has agreed to sell AltaLink to Berkshire Hathaway (New York symbol BRK.B), the holding company controlled by billionaire investor Warren Buffett.

Wholly owned AltaLink provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 280 substations.

The company will receive $3.2 billion (or $2.9 billion after taxes). The transaction should close by the end of this year.

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p>SUNCOR ENERGY INC. $43 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $64.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.suncor.com) is Canada’s largest integrated oil company by market cap (or the value of all its outstanding shares). Suncor gets 40% of its revenue and 65% of its earnings from producing crude oil and natural gas. Its 7.7 billion barrels of proven and probable reserves should last 35 years, based on current production rates.

The oil sands account for 70% of the company’s output. It also operates offshore platforms in Atlantic Canada and the North Sea, as well as conventional wells in Libya. However, political unrest has shut down some of Libya’s ports, limiting Suncor’s crude exports from the country.

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ENBRIDGE INC. $52.89 (Toronto symbol ENB; Shares outstanding: 831.5 million; Market cap: $43.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.enbridge.com) has won approval to export some of the Canadian crude oil it ships into the U.S. to other countries.

Under the license terms, the pipeline operator must separate U.S.-produced oil from Canadian crude. The company expects exports to other markets to account for less than 2% of the volume its U.S. oil pipelines currently handle.

However, shipping oil to refineries in Europe and elsewhere would help producers collect higher prices for their crude. That would encourage them to raise their output, increasing demand for space on Enbridge’s pipelines.

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INNERGEX RENEWABLE ENERGY $10.60 (Toronto symbol INE; Shares outstanding: 95.9 million; Market cap: $1.0 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.7%; 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 Algonquin, 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 Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new facilities.

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