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
TRANSCANADA CORP. $45.56 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $32.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.0%; www.transcanada.com) has announced two major new pipeline projects.

First, the company says it will proceed with its $12-billion Energy East oil pipeline now that it has received enough support from producers. When completed, this new system will pump crude oil from Western Canada to refineries in Quebec and New Brunswick.

In addition, TransCanada will spend $1.5 billion to expand its gas pipeline network in B.C. This will help it pump more natural gas from northeastern B.C. to a planned liquefied natural gas terminal near Prince Rupert.
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CANADIAN REIT $41.04 (Toronto symbol REF.UN; Units outstanding: 68.5 million; Market cap: $2.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.creit.ca) owns 194 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain over 19.7 million square feet of leasable area. The trust’s occupancy rate is 94.9%.

In the three months ended June 30, 2013, Canadian REIT’s revenue rose 7.9%, to $93.2 million from $86.4 million a year earlier. Cash flow per unit gained 18.9%, to $0.63 from $0.53.

Canadian REIT added $197.6 million worth of new buildings in the latest quarter and $11.3 million worth in the first quarter. That followed property purchases totalling $401.9 million in 2012, including a 50% stake in Calgary Place, a 575,000-square-foot office and retail complex, for $156.0 million.
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H&R REIT $20.96 (Toronto symbol HR.UN; Units outstanding: 268.3 million; Market cap: $5.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.hr-reit.com) owns stakes in 41 office buildings, 112 industrial properties and 165 shopping malls across Canada. The trust has a 98.7% occupancy rate.

In March 2013, H&R finished building The Bow, a $1.33-billion, two-million-square-foot office complex in Calgary. Encana Corp. has already leased the entire building for 25 years.

H&R recently completed the purchase of 27 properties from Primaris REIT for about $3.1 billion. These assets include the aging 567,000-square-foot Dufferin Mall in Toronto’s west end, which has huge redevelopment potential. As well, eight of the 27 properties will have Target stores as their main tenants by the end of this year.
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MANITOBA TELECOM $33.90 (Toronto symbol MBT; Shares outstanding: 67.8 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.mts.ca) recently sold its Allstream subsidiary for $405 million in a deal that closes later this year.

Without Allstream, Manitoba Tel earned $28.2 million, or $0.42 a share, in the three months ended June 30, 2013. That’s down 12.7% from $32.3 million, or $0.49, a year earlier.

However, revenue rose 0.2%, to $247.4 million from $246.8 million, as strong demand for wireless and Internet services offset lower revenue from the company’s regular telephone services.
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VERESEN $11.74 (Toronto symbol VSN; Shares outstanding: 199.9 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Yield: 8.5%) owns pipelines, power plants and gas-processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%. Veresen also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable NGL plant.

In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.

To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. This includes hydroelectric facilities, wind farms, natural gas fired plants and waste-heat facilities.
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PEMBINA PIPELINE $32.36 (Toronto symbol PPL; Shares outstanding: 310.3 million; Market cap: $10.1 billion; TSINetwork Rating: Average; Div. yield: 5.2%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil output, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil production.

In the quarter ended June 30, 2013, Pembina’s revenue rose 34.9%, to $1.2 billion from $870.9 million a year earlier. In April 2012, the company paid $3.2 billion for rival Provident Energy, which extracts, transports and stores NGLs. Provident was the main reason for the higher revenue.

Cash flow rose 60.9%, to $144.0 million from $89.5 million. Cash flow per share gained 51.6%, to $0.47 from $0.31, because Pembina issued more shares to pay for Provident.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $19.09 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.

The stocks held by most emerging market ETFs have weakened this year, but the iShares S&P India Fund has been hit especially hard.

That’s because the Indian currency, the rupee, has fallen sharply. It’s down more than 31% against the U.S. dollar since January of this year. That fall cuts the value of declining Indian stocks even further for foreign investors.
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ENCANA CORP. $18.09 (Toronto symbol ECA; Shares outstanding: 737.9 million; Market cap: $13.3 billion; TSINetwork Rating: Average; Dividend yield: 4.6%; www.encana.com) is one of North America’s largest natural gas producers.

In the three months ended June 30, 2013, Encana’s cash flow per share fell 16.7%, to $0.90 from $1.08 a year earlier (all amounts except share price and market cap in U.S. dollars). The decline came from lower realized gas prices.

The company continues to expand its hedging program, which helps shield it from volatile gas prices. For the rest of 2013, it has hedged roughly 75% of its expected output at $4.37 per thousand cubic feet, 19% higher than today’s price of $3.67. For 2014, Encana has hedged 55% of its forecast production at $4.19.
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High-yielding timber firm looks to profit from U.S. housing recovery
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks to buy 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....