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
PENGROWTH ENERGY CORP. $3.74 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 538.0 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 6.4%; TSINetwork Rating: Average; www.pengrowth.com) recently started up its Lindbergh oil sands project in eastern Alberta, which should produce 16,000 barrels a day by the end of 2015.

The company has shut down less profitable wells in response to weak oil and gas prices. That’s why its average production fell 7.7% in the first quarter of 2015, to 69,334 barrels a day (52% oil and liquids, 48% gas) from 75,102 a year earlier. Without unusual items, Pengrowth earned $64.8 million, compared to a loss of $2.8 million. Cash flow per share fell 22.2%, to $0.21 from $0.27.

For the remainder of 2015, the company has hedged 78% of its oil production at $93.87 (Canadian) a barrel, well above today’s price of $60.16 U.S. It has also hedged 57% of its gas output at $3.72 (Canadian) per thousand cubic feet, compared to the current price of $2.94 U.S. The company’s hedges were worth $354.3 million as of March 31, 2015.

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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $34.29 (Toronto symbol AP.UN; Units outstanding: 68.7 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.1%; www.alliedpropertiesreit.com) owns 133 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.

The trust bought $400 million worth of properties in 2012. In 2013, it added $182.4 million more.
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IBM $193.55 (New York symbol IBM; Shares outstanding: 1.0 billion; Market cap: $200.5 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.ibm.com) continues to expand its cloud computing businesses.

Cloud computing involves storing data and software on one or more centralized computer networks. Users access these programs or files over the Internet or through some other computer network.

IBM recently paid an undisclosed sum for Cloudant, a private firm that creates large databases on remote servers. IBM feels Cloudant’s technology will also enhance its analytics services, which help businesses analyze large amounts of data and improve their efficiency. That’s a big growth area.
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TRANSCANADA CORP. $51.57 (Toronto symbol TRP; Shares outstanding: 707.5 million; Market cap: $36.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines in Canada and the U.S. It also has interests in over 11,800 megawatts of power generation, including the Bruce Power nuclear plant.

In the three months ended December 31, 2013, TransCanada’s revenue rose 11.6%, to $2.3 billion from $2.1 billion a year earlier. Earnings per share rose 28.9%, to $0.58 from $0.45.

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ENBRIDGE INC. $51.24 (Toronto symbol ENB; Shares outstanding: 831.5 million; Market cap: $42.5 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.enbridge.com) operates the world’s longest crude oil and liquids pipeline system. It also distributes natural gas to consumers in Ontario, Quebec, New Brunswick and New York State. As well, Enbridge has interests in 1,800 megawatts of renewable and alternative energy.

In the three months ended December 31, 2013, the company’s revenue rose 18.4%, to $8.3 billion from $7.0 billion a year earlier. Before one-time items, earnings per share rose 4.8%, to $0.44 from $0.42.

In 2013, Enbridge brought 17 projects, worth a total of $5 billion, into service. It plans to start up a further $29 billion worth over the next four years. That includes a $7-billion replacement of part of its Mainline system, which pumps crude oil from Edmonton, Alberta, to Superior, Wisconsin.
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BCE INC. $48.01 (Toronto symbol BCE; Shares outstanding: 777.0 million;Market cap: $37.2 billion; TSINetwork Rating: Above Average; Dividend yield: 5.2%; www.bce.ca) reports that in the three months ended December 31, 2013, its earnings per share rose 16.7%, to $0.70 from $0.60 a year earlier. Revenue increased 4.3%, to $5.4 billion from $5.2 billion.

BCE added 93,700 new wireless subscribers, net of cancellations, in the latest quarter (it now has 7.8 million users across Canada). That’s 10.8% fewer than it added a year earlier, but 73% of its subscribers under long-term contracts now use smartphones, up from 62%. That’s good news, because smartphones generate higher fees for BCE than regular cellphones. Average revenue per user rose 2.1%.

BCE has just raised its quarterly dividend by 6.0%, to $0.6175 a share from $0.5825. The shares now yield 5.2%. As well, the stock trades at 15.1 times this year’s forecast earnings.
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MARKET VECTORS VIETNAM ETF $21.72 (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 Masan Group (food, resources and banking conglomerate), 7.9%; Vincom Corp. (real estate), 7.6%; Bank for Foreign Trade of Vietnam, 6.9%; Baoviet Holdings (finance and insurance), 5.8%; PetroVietnam Fertilizer & Chemical, 5.7%; PetroVietnam Technical Services (oilfield services), 5.7%; and Oil & Natural Gas Corp. (an Indian oil and gas firm), 4.8%.

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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $35.84 (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 China Construction Bank, 9.0%; Tencent Holdings, 8.8%; China Mobile, 7.6%; Industrial & Commercial Bank, 6.9%; Bank of China, 6.2%; PetroChina, 4.2%; China Shenhua Energy, 4.1%; Agricultural Bank of China, 4.0%; China Life, 4.0% and China Petroleum, 4.0%.

The fund’s holdings give it the following industry breakdown: Financials, 56.2%; Telecommunications, 13.8%; Oil and Gas, 12.2%; Technology, 8.8%, Basic Materials, 4.1%; Consumer Goods, 2.4%; and Industrials, 2.4%. Its expense ratio is 0.74%.
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TORSTAR $6.54 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $462.4 million; TSINetwork Rating: Average; Dividend yield: 8.0%; www.torstar.com) continues to attract the interest of Fairfax Financial (Toronto symbol FFH). Fairfax now owns 22.7% of Torstar’s class B non-voting shares, up from 19.3%. Insiders still control Torstar’s class A voting shares.

Fairfax’s CEO, Prem Watsa, has a reputation as a shrewd investor, and this move draws attention to Torstar’s value. Moreover, rising stock markets have cut the deficit in the company’s pension plan, so it won’t have to contribute as much this year. The extra cash will let it keep paying quarterly dividends of $0.13125 a share, for an 8.0% annualized yield.

Torstar is still a buy.

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