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
AEROPOSTALE $8.14 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646- 485-5410; www.aeropostale.com; Shares outstanding: 78.5 million; Market cap: $639.7 million; No dividends paid) has adopted a shareholder rights plan. These schemes are often called poison pills, because they aim to thwart hostile takeovers by issuing many new shares to existing shareholders if someone tries to take over a company.

A number of private equity firms now hold interests in Aeropostale, and they are pushing it to put itself up for sale so one or more of them can take it private.

It’s uncertain which direction Aeropostale will take, or whether any of its private equity shareholders can force a sale. However, their involvement does highlight its underlying value and turnaround potential.
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CARFINCO FINANCIAL GROUP $12.07 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888- 486-4356; www.carfinco.com; Shares outstanding: 26.5 million; Market cap: $321.6 million; Dividend yield: 4.0%) provides car loans to consumers who can’t meet the criteria of traditional lenders, like banks.

In September 2013, Carfinco expanded into the U.S. through its $9.5-million purchase of Persian Acceptance Corp., an automotive lender that also caters to less-affluent borrowers. The acquisition boosted Carfinco’s loans outstanding by about 22%.

In the three months ended September 30, 2013, Carfinco’s revenue rose 17.7%, to $21.4 million from $18.2 million a year earlier. The company loaned a record $46.5 million in the latest quarter, up 9.2% from $42.6 million.
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INTACT FINANCIAL CORP. $68.29 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $9.0 billion; Dividend yield: 2.6%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.

In the three months ended September 30, 2013, Intact’s revenue rose 5.7%, to $1.9 billion from $1.8 billion a year earlier. The company earned $0.39 a share, down sharply from $0.90.

However, the latest results include a one-time loss of $1.52 a share related to the Lac-Mégantic rail tragedy and major rain and hail storms in Quebec, Ontario and Alberta. One-time losses amounted to $1.02 a share a year ago.
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PASON SYSTEMS $22.28 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403- 301-3400; www.pason.com; Shares outstanding: 82.1 million; Market cap: $1.8 billion; Dividend yield: 2.5%) rents equipment for monitoring and managing land-based oil and gas rigs throughout Canada, the U.S., Mexico and Argentina. It also provides communication systems to remotely collect data from drilling operations.

In the quarter ended September 30, 2013, Pason’s revenue rose 8.1%, to $104.0 million from $96.3 million a year earlier. Strong international sales and slightly higher revenue in Canada offset slower activity in the U.S. Cash flow per share jumped 51.1%, to $0.68 from $0.45.

Pason holds cash of $198.1 million, or $2.41 a share, and has no debt.
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CIMAREX ENERGY $99.54 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.9 million; Market cap: $8.7 billion; Dividend yield: 0.6%) produces and explores for natural gas and oil. Gas makes up 48% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (47% of production); the Permian Basin of western Texas and southeastern New Mexico (49%); and the Texas Gulf Coast (4%).

In the three months ended September 30, 2013, Cimarex’s production averaged 716.8 million cubic feet of natural gas equivalent per day (including oil). That’s up 12.8% from 635.1 million cubic feet a year earlier.
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DEVON ENERGY CORP. $59.34 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $24.2 billion; Dividend yield: 1.5%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 57% gas and 43% oil.

In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.

To further increase its North American output, Devon recently agreed to pay GeoSouthern Energy $6 billion for oil-producing assets and other properties in Texas’s Eagle Ford shale formation.
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DUNDEE REIT $28.18 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dundeereit.com; Units outstanding: 104.9 million; Market cap: $3.0 billion; Dividend yield: 8.0%) owns and manages 24.3 million square feet of office and retail space across Canada.

As the Canadian economy improves, interest rates will likely rise. That increase—or the anticipation of it—can push down prices of REITs and high-yielding stocks, such as utilities. That’s largely why a number of REITs, including Dundee, have declined.

When interest rates rise, REITs may suffer because they have a lot of mortgage debt, and it’s more expensive to raise money and refinance existing loans. As well, their units, which typically offer high yields, compete with fixed-income instruments for investor interest.
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TELUS CORP. $37 (www.telus.com) continues to benefit from heavy investments in wireless networks. Thanks to rising demand for smartphones and wireless data, earnings in the third quarter of 2013 rose 18.4%, to $0.58 from $0.49. Telus also increased its dividend by 5.9%....
EMERA INC. $30 (www.emera.com) earned $0.29 a share before unusual items in the three months ended September 30, 2013, down 17.1% from $0.35 a year earlier. That’s mainly due to higher income taxes and maintenance costs at its main Nova Scotia Power subsidiary....