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
RUSSEL METALS $26.72 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.9 million; Market cap: $1.6 billion; Dividend yield: 5.2%) is one of North America’s largest metal distributors. It serves 39,000 clients at 54 locations in Canada and 12 in the U.S.

In the quarter ended June 30, 2013, revenue rose 5.5%, to $758.1 million from $718.7 million a year earlier. Revenue at the company’s metal-services business declined 13%. That’s because the slower economy pushed down steel demand.

However, the energy tubular products division, which supplies pipes for oil and gas exploration and development, saw its revenue jump 63% on higher drilling activity.
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CHEMTRADE LOGISTICS INCOME FUND $16.95 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics- .com; Units outstanding: 41.7 million; Market cap: $706.4 million; Dividend yield: 7.1%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid.

Chemtrade’s Marsulex subsidiary provides a range of environmental services, including improving air quality and treating and handling industrial waste.

In the three months ended June 30, 2013, Chemtrade’s revenue fell 4.4%, to $217.5 million from $227.6 million a year earlier. The decline mostly reflects lower prices for sulphur on international markets. However, cash flow per unit was unchanged at $0.73.
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AEROPOSTALE $8.99 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646- 485-5410; www.aeropostale.com; Shares outstanding: 78.5 million; Market cap: $705.6 million; No dividends paid) is now 8% owned by New-York based private equity firm Sycamore Partners.

Earlier this year, Sycamore Partners paid $600 million for Hot Topic, a U.S. teen retailer with over 800 mall-based stores; in early 2012, it bought Talbots, a struggling women’s wear chain, for about $400 million.

It’s far from certain that Sycamore Partners will buy Aeropostale, and the firm has a reputation for not paying a big premium above current market prices. However, Sycamore’s involvement does highlight Aeropostale’s underlying value and turnaround potential.
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BMTC GROUP $13.20 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 47.5 million; Market cap: $601.3 million; Dividend yield: 1.8%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 33 stores. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.

In March 2012, BMTC introduced a new banner, EconoMax, which offers lower-priced products. The company rebranded four outlets that had operated as Brault & Martineau liquidation centres. It has opened one new EconoMax so far this year and plans to open three more by the end of 2013.

In the three months ended June 30, 2013, BMTC’s sales fell 2.4%, to $181.4 million from $185.8 million a year earlier. Earnings per share were $0.29 in the latest quarter, unchanged from a year ago.
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REITMANS (CANADA) LTD. $6.90 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384- 1140; www.reitmans.com; Shares outstanding: 64.6 million; Market cap: $446.6 million; Dividend yield: 11.6%) owns 900 women’s clothing stores across Canada.

The chain consists of 357 Reitmans, 141 Smart Set, 153 Penningtons, 103 Addition Elle, 72 Thyme Maternity and 74 RW & Co. stores. It also has 21 Thyme Maternity boutiques in some Canadian Babies “R” Us locations, as well as 158 in U.S. Babies “R” Us stores.

In the three months ended August 3, 2013, Reitmans’ sales fell 9.3%, to $253.4 million from $279.5 million a year earlier. Same-store sales declined 6.8%.
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MAJOR DRILLING $7.38 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.2 million; Market cap: $584.2 million; Dividend yield: 2.7%) is a large contract-drilling firm that mainly serves the mining industry.

In the quarter ended July 31, 2013, Major’s revenue fell 54.4%, to $108.2 million from a record $237.6 million a year ago. Earnings also fell sharply, to $1.5 million, or $0.02 a share, from $31.9 million, or $0.40.

The latest earnings included $2.0 million of one-time restructuring charges, including layoff-related costs. Major has cut its staff by 45%, or 2,300 workers, in the past year.
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NEW GOLD $5.78 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 502.5 million; Market cap: $2.9 billion; No dividends paid) has four operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico, the Peak mine in Australia and the just-completed New Afton mine in B.C. It also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater mine in B.C.

In the quarter ended June 30, 2013, New Gold’s cash flow fell 10.0%, to $0.09 a share from $0.10 a year earlier. Lower gold prices offset new production from New Afton, which started up in late 2012.

New Gold’s $855.5 million of long-term debt is a moderate 28.5% of its market cap. It also holds cash of $562.5 million, or $1.12 a share.
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IAMGOLD $4.59 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold- .com; Shares outstanding: 376.6 million; Market cap: $1.7 billion; Dividend yield: 5.5%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.

In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld.

In the three months ended June 30, 2013, IAMGold’s revenue fell 17.4%, to $301.1 million from $364.5 million a year earlier. Cash flow per share fell 10.0%, to $0.18 from $0.20. The declines were mostly due to lower gold prices, partly offset by a 10% production increase.
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FAIR ISAAC CORP. $54.97 (New York symbol FICO; TSINetwork Rating: Average) (415- 472-2211; www.fairisaac.com; Shares outstanding: 35.2 million; Market cap: $1.9 billion; Dividend yield: 0.2%) will now sell its Falcon Fraud Manager payment-security system in Brazil through partner Total System Services (symbol TSS on New York).

Total has offered the Falcon software to its clients in other countries since 1998.

Total Systems manages several of Brazil’s most popular credit cards. The partners will initially protect nearly 1.8 million cardholders in the country with Falcon Fraud Manager.
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