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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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $32.88 (Toronto symbol AP.UN; Units outstanding: 68.5 million; Market cap: $2.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; 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.

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RIOCAN REAL ESTATE INVESTMENT TRUST $25.35 (Toronto symbol REI.UN; Units outstanding: 302.3 million; Market cap: $7.5 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 346 shopping malls containing over 83 million square feet of leasable area. That total includes 51 U.S. malls with over 14 million square feet.

In the quarter ended September 30, 2013, Rio- Can’s revenue rose 3.1%, to $272 million from $248 million. Cash flow rose 6.6%, to $113 million from $106 million. Cash flow per unit rose 2.8%, to $0.37 from $0.36, on more shares outstanding.

RioCan continues to see growth opportunities in Canada and the U.S. In 2012, it spent $926 million on properties. In the first three quarters of 2013, it bought 16 more for a total of $576 million.
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PENGROWTH ENERGY $7.14 (Toronto symbol PGF; Shares outstanding: 519.8 million; Market cap: $3.6 billion; TSINetwork Rating: Average; Dividend yield: 6.7%; www.pengrowth.com) plans to spend $715 million to expand and upgrade its oil and natural gas properties in 2014. That’s down 7.1% from the $770 million it probably spent in 2013.

The company ended 2013 with cash of $430 million, and it expects to generate $500 million to $540 million of cash flow this year. That should let it invest in its properties and maintain its monthly dividend of $0.04 a share, for a 6.7% yield.

Pengrowth is still a buy....

BONAVISTA ENERGY $14.96 (Toronto symbol BNP; Shares outstanding: 187.0 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.6%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 63% gas and 37% oil.

In the three months ended September 30, 2013, Bonavista’s cash flow per share gained 27.1%, to $0.61 from $0.48 a year earlier. Its production rose 12.5%, to 73,632 barrels of oil equivalent a day (including gas) from 65,464.

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ENCANA CORP. $20.83 (Toronto symbol ECA; Shares outstanding: 740.2 million; Market cap: $15.1 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.encana.com) is one of North America’s largest natural gas producers.

In the three months ended September 30, 2013, Encana’s cash flow per share fell 28.2%, to $0.89 from $1.24 a year earlier (all amounts except share price and market cap in U.S. dollars). The decline mostly came from lower realized gas prices.

Encana now plans to cut its dependence on gas. This year, it will devote 75% of its $2.4 billion to $2.5 billion of capital spending to five properties that produce oil and natural gas liquids (NGLs), such as butane and propane. The company expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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GREAT-WEST LIFECO $30.77 (Toronto symbol GWO; Shares outstanding: 999.4 million; Market cap: $30.7 billion; TSINetwork Rating: Above Average; Yield: 4.0%; www.greatwestlifeco.com) bought Irish Life Group, Ireland’s largest pension manager and life insurance provider, for $1.75 billion last year.

Excluding costs to integrate Irish Life, earnings per share rose 7.3% in the three months ended September 30, 2013, to $0.59 from $0.55 a year earlier.

The company has $705.1 billion of assets under administration.
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BANK OF NOVA SCOTIA $60.94 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $72.9 billion; TSINetwork Rating: Above Average; Div. yield: 4.1%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with assets of $743.8 billion.

In its fiscal 2013 fourth quarter, which ended October 31, 2013, the bank earned $1.30 a share, up 10.2% from $1.18 a year earlier.

Higher loan demand and an increase in deposits pushed up the Canadian banking division’s earnings by 23.3%. That includes ING Direct, which the bank bought for $3.1 billion in late 2012. This business offers a variety of no-fee banking services, mainly over the Internet. It has 1.8 million customers and $30 billion of deposits.
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SNC Lavalin eyes profit revival after quick action on scandal
SNC-LAVALIN GROUP INC. (Toronto symbol SNC; www.snclavalin.com) is a leading Canadian engineering and construction company that specializes in large-scale public works projects, such as roads, bridges, transit systems and water treatment plants. SNC has offices in over 40 countries....
Rise in tungsten prices key to breakthrough for Canadian penny stock
Pat McKeough responds to many requests from members of his Inner Circle for specific investing advice 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....