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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If you want to ensure a higher (and safer) rate of return for your retirement portfolio, then it’s important to know what not to invest in after retirement
SHERRITT INTERNATIONAL $3.64 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.1 billion; Yield: 1.1%) has cut its dividend to $0.01 a share from $0.043. It now yields 1.1%.

In the quarter ended December 31, 2013, Sherritt’s revenue fell 16.7%, to $108.6 million from $130.3 million a year earlier. It lost $0.13 a share, compared to a loss of $0.01.

Sherritt’s long-term debt is $2.1 billion, or a high 2.3 times its market cap. But after the upcoming sale of its coal business, it will hold cash of $1.5 billion, or $5.05 a share.
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YAMANA GOLD $10.77 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www.- yamana.com; Shares outstanding: 753.3 million; Market cap: $8.1 billion; Dividend yield: 1.5%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development.

In the three months ended December 31, 2013, Yamana’s revenue fell 33.2%, to $420.7 million from $629.5 million a year earlier (all figures except share price and market cap in U.S. dollars).

Gold production declined 6.0%, to 303,768 ounces from 322,990. Prices for gold, copper and silver also fell. (Copper and silver are significant by-products of the company’s gold mining.) Yamana’s cash flow per share declined 45.0%, to $0.22 from $0.40.
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NEW GOLD $6.24 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 503.3 million; Market cap: $3.1 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.

New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.

In the three months ended December 31, 2013, New Gold’s cash flow per share fell 17.4%, to $0.19 from $0.23 a year earlier. Prices of gold, copper and silver fell, as did production from Cerro San Pedro, which is scheduled to close next year.
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LEON’S FURNITURE $15.75 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243- 7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $1.1 billion; Div. yield: 2.5%) has steadily opened new stores, growing from 27 stores in 2003, to 75 today.

But the company more than quadrupled in size overnight with the March 28, 2013 purchase of its main rival, The Brick, for $700 million. The Brick operates 234 outlets across Canada. Leon’s and The Brick will continue to operate as separate chains.

As a result of the acquisition, Leon’s sales jumped to $523.0 million in the three months ended December 31, 2013, from $188.5 million a year earlier. Earnings rose 61.5%, to $26.0 million, or $0.37 a share, from $16.1 million, or $0.23.
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ALIMENTATION COUCHE-TARD $91.36 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard. com; Shares outstanding: 179.4 million; Market cap: $17.3 billion; Dividend yield: 0.4%) grew from just 630 stores in Quebec in 1998 to 1,612 in 1999, mostly through the purchase of Silcorp Ltd. and its 980 Mac’s and Becker’s stores in Ontario and western Canada. Couche-Tard then continued to expand through profitable acquisitions, including buying 2,290 stores in the U.S. in 2003 from ConocoPhillips.

The company made another big acquisition in June 2012 with the $2.7-billion purchase of Norway’s Statoil Fuel & Retail chain of gas stations (all figures except share price in U.S. dollars).

In Europe, Couche-Tard now operates 2,263 outlets across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia. That’s in addition to its 6,221 stores throughout North America operating under the Couche- Tard and Circle K banners.
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Aecon seeks to keep profits rising with new infrastructure contracts
Pat McKeough responds to many requests from members of his Inner Circle for specific advice and stock tips as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....
Volatile natural gas prices spark different strategies for Encana and Bonavista
Natural gas prices rebounded recently after almost three years of depressed prices. In those years, warm winters cut into gas used for heating, and that’s a major part of total gas use. As a result, gas in storage grew and prices stagnated. A glut of shale gas due to improved drilling technology also held prices down....
POWER CORP. $29.88 (Toronto symbol POW; Shares outstanding: 411.4 million; Market cap: $12.2 billion; TSINetwork Rating: Above Average; Div. yield: 3.9%; www.powercorporation.com) is a diversified holding company. It holds its financial assets through 65.8%-owned Power Financial.

These financial assets include 68.1% of Great- West Lifeco, one of Canada’s largest life insurers (see column on page 9), and 58.7% of IGM Financial, a leading Canadian mutual fund provider.

Power Financial also owns 50% of holding company Parjointco, which holds 55.6% of Switzerland- listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez Environnement (energy, water and waste services) and Lafarge (cement and building materials). Power Corp. also has investments in Asia.
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GLOBAL X COPPER MINERS ETF $8.80 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes 20 to 40 international companies that mine, refine or explore for copper. Germany-based Structured Solutions AG created this index.

Canadian firms make up 41.9% of the fund’s holdings. It also includes companies based in Australia (14.2%), Poland (4.7%), Peru (4.9%) and Mexico (5.0%). Global X Copper Miners ETF’s MER is 0.65%.

Its top holdings are Imperial Metals at 6.5%; Turquoise Hill Resources, 5.7%; Grupo Mexico, 5.1%; Lundin Mining, 5.1%; Glencore International, 5.1%; First Quantum Minerals, 5.1%; Hudbay Minerals, 5.0%; Capstone Mining, 5.0%; Antofagasta plc, 5.0%; and Southern Copper, 5.0%.
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