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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Learn the metrics that define “safe” stocks, including cash flow, payout ratios, debt, and moats, plus TFSA/RRSP tips for Canadian dividend investors.
AGRIUM INC. $90 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 147.0 million; Market cap: $13.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.agrium.com) gets just 4% of its revenue and 8% of its earnings from selling potash. As a result, the stock held up well after the break-up of a marketing alliance between two major potash producers in Russia and Belarus. The split could lead to sharply lower potash prices.

Prices for other fertilizers have also suffered recently, as coolerthan- normal weather prompted farmers to delay the spring planting season. That’s why Agrium’s earnings in the three months ended June 30, 2013 fell 14.8%, to $736 million from $864 million a year earlier (all amounts except share price and market cap in U.S. dollars). Earnings per share fell 9.7%, to $4.94 from $5.47.

However, sales rose 3.6%, to $7.0 billion from $6.8 billion, after an acquisition raised revenue at Agrium’s retail division by 6.6%.
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BLACKBERRY LTD. $11 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; No dividends paid; TSINetwork Rating: Average; www.blackberry.com) is looking at alternatives for increasing shareholder value. Options the company is examining include the sale of some or all of its operations and joint ventures with other firms.

That’s because its new smartphones, powered by its BlackBerry 10 software, continue to face intense competition from Apple’s iPhone and devices running Google’s Android operating system.

The company will probably complete this review quickly. If not, the uncertainty may prompt its corporate and government clients to switch to competing wireless email systems.
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CANADA BREAD CO. LTD. $59 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.5 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.canadabread.ca) is Canada’s secondlargest producer of fresh and frozen baked goods, after Weston Bakery. The company also makes pastas and sauces. The company’s main brands include Dempster, Tenderflake and Olivieri. Canada Bread supplies around a third of Maple Leaf’s total sales.

The company is also investing in new facilities as part of Maple Leaf’s restructuring. In 2011, Canada Bread opened a new $100-million bakery in Hamilton, Ontario. That let it close two outdated facilities in Toronto and shift their production to the new plant. Earlier this year, it closed a third Toronto bakery.

In the second quarter of 2013, Canada Bread earned $24.5 million, or $0.97 a share. That’s down 6.0% from $26.1 million, or $1.03 a share, a year earlier. Excluding unusual items, earnings per share rose 0.9%, to $1.07 from $1.06.
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MAPLE LEAF FOODS INC. $14 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $2.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.1%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Though 90.0%-owned Canada Bread (see right), the company also makes fresh and frozen bread, pastries and pasta.

Maple Leaf continues to make progress on a major restructuring plan that includes building new plants and eliminating unprofitable products. As part of this strategy, Maple Leaf recently sold its Ontario turkey farms for a combined $48.2 million under two separate deals. The company is also installing a new computer system that will give its managers more timely information.

In the three months ended June 30, 2013, Maple Leaf earned $9,000, or a loss of $0.02 a share. A year earlier, it earned $26.0 million, or $0.16 a share. If you exclude unusual items, such as severance costs and writedowns, earnings per share fell 91.3%, to $0.02 from $0.23.
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RIOCAN REAL ESTATE INVESTMENT TRUST $24 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 302.6 million; Market cap: $7.3 billion; Price-to-sales ratio: 4.5; Dividend yield: 5.9%; TSINetwork Rating: Average; www.riocan.com) owns 348 retail properties in Canada, including 15 under development. It also owns 50 malls in the U.S.

The trust continues to expand through acquisitions. In the second quarter of 2013, RioCan acquired seven properties for $460 million. As part of its plan to focus on larger cities, RioCan also sold four properties in smaller markets for $364 million. As a result, big cities now account for 72.1% of its rental revenue, up from 67.5% at the end of 2012.

These new properties are also diversifying RioCan’s portfolio beyond its suburban big-box-style malls. For example, its recent purchases include two enclosed malls in Ontario. The trust is also redeveloping certain properties in Toronto as mixed-use office, retail and residential complexes.
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CANADIAN TIRE CORP. $91 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.5 million; Market cap: $7.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 490 Canadian Tire stores, which specialize in automotive, household and sporting goods. The company owns these outlets, but franchisees operate most of them. Canadian Tire also operates 300 gas stations and 87 PartSource auto parts stores.

In the 1990s, big U.S. retailers like Wal-Mart and Home Depot expanded to Canada. In response, Canadian Tire upgraded its stores with better signage, wider aisles and brighter lighting. These improvements also made it easier for managers to move faster-selling seasonal merchandise to high-traffic areas of the store.

The company is also trying out new formats. For example, it recently opened a smaller store in Toronto. This outlet, called Canadian Tire Express, is one-third the size of a regular Canadian Tire store and mainly features items like light bulbs and plumbing parts instead of tires and lawnmowers.
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Fewer bad loans let Wells Fargo pass latest ‘stress test’
An old fashioned ‘Bank’ sign on a building exterior. Please see also: [url=file_closeup.php?id=16363514][img]file_thumbview_approve.php?size=2&id=16363514[/img][/url]
George Clerk
WELLS FARGO & CO. (New York symbol WFC; www.wellsfargo.com) set aside $652 million to cover bad loans in the three months ended June 30, 2013, down 63.8% from $1.8 billion a year earlier....
GUGGENHEIM CHINA SMALL CAP ETF $23.14 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.

The $184.3-millon fund’s top holdings are Youku Tudou, 2.0%; Tsingtao Brewery, 1.4%; Xinyi Glass Holdings, 1.3%; Sino Biopharmaceutical, 1.3%; China Everbright International, 1.2%; BYD Co., 1.2%; GCL Poly Energy International, 1.2%; Sohu- .com. 1.2%; Semiconductor Manufacturing International, 1.1%; and China Resources Gas Group, 1.1%.

As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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PENGROWTH ENERGY $5.84 (Toronto symbol PGF; Shares outstanding: 516.1 million; Market cap: $3.0 billion; TSINetwork Rating: Average; Dividend yield: 8.2%; www.pengrowth.com) has sold several of its less important oil and gas properties in Western Canada for $700 million.

Including the company’s earlier $316-million sale of its 10.02% interest in the Weyburn oil project in Saskatchewan, Pengrowth has now reached its goal of raising $1 billion through asset sales in 2013.

The cash will help Pengrowth develop its $590-milllion Lindbergh oil sands project in Alberta. It will also help the company pay down its long-term debt, which stood at $1.6 billion on June 30, 2013. That’s equal to 52% of Pengrowth’s $3.1-billion market cap. The monthly dividend of $0.04 a share still seems safe and gives the stock an 8.2% yield.
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