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
CRESCENT POINT ENERGY CORP. $37.79 (Toronto symbol CPG; Shares outstanding: 386.1 million; Market cap: $14.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.3%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its output is weighted 90% toward oil and 10% to gas.

The company continues to focus on its Bakken light oil development in southeastern Saskatchewan.

In the three months ended June 30, 2013, Crescent Point’s cash flow rose 30.6%, to $504.4 million from $386.3 million a year earlier.
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BONAVISTA ENERGY $12.98 (Toronto symbol BNP; Shares outstanding: 181.5 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.5%; www.bonavistaenergy.com) explores for oil and gas in Alberta, Saskatchewan and B.C. Its production is 62% gas and 38% oil.

In the three months ended June 30, 2013, Bonavista’s cash flow per share rose 28.6%, to $0.63 from $0.49 a year earlier. Gas prices increased 67.0%, to $3.64 per thousand cubic feet from $2.18. Production rose 4.4%, to 72,554 barrels of oil equivalent a day (including gas) from 69,506.

Bonavista cut its monthly dividend by 41.7% in January 2013, to $0.07 from $0.12. That’s helping it save cash for exploration and development. The new annual rate of $0.84 a share still yields a high 6.5%. As well, Bonavista now pays out just 37% of its cash flow as dividends, so more cuts are unlikely.
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IBM $188.56 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $209.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.ibm.com) reports that its earnings per share before one time items rose 8.0% in the three months ended June 30, 2013, to $3.91 from $3.62. That easily beat the consensus forecast of $3.77.

Revenue fell 3.3%, to $24.9 billion from $25.8 billion. That fell short of the consensus estimate of $25.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, its sales would have declined by 1%.

Demand for the company’s software remains strong, because it helps businesses analyze large amounts of data and improve their efficiency. However, the uncertain economy continues to slow sales of mainframe computers and services. Still, IBM’s computer services business ended the quarter with a backlog of $141 billion, up 3% from a year earlier.
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BCE INC. $42.55 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $33.0 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%; www.bce.ca) has completed its $3.2-billion purchase of Astral Media.

Astral owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as the Movie Network, Family Channel and Teletoon.

To win approval for the takeover, BCE agreed to sell several of Astral’s specialty TV channels and radio stations. Still, the new operations should immediately add to the company’s earnings.
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POWERSHARES QQQ ETF $76.42 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares- .com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index, which consists of the 100 largest shares on the Nasdaq exchange, based on market cap.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.

The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Gilead Sciences, Comcast Corp. and Amgen.
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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $154.54 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The fund’s top holdings are IBM, ExxonMobil, Chevron, 3M, Travelers Companies, McDonald’s, Johnson & Johnson, Caterpillar, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.

SPDR Dow Jones ETF is a buy.
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SPDR S&P 500 ETF $169.18 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market cap, liquidity and industry group.

The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, IBM, Chevron, General Electric, Pfizer, Berkshire Hathaway, Google, AT&T and Wells Fargo. The fund’s expenses are just 0.10% of its assets.

If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.
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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.31 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.5%.

The fund’s top holdings are Bonterra Energy, 6.5%; CIBC, 6.3%; National Bank, 5.9%; TD Bank, 5.7%; Bank of Montreal, 5.3%; Royal Bank, 4.5%; IGM Financial, 4.4%; Telus Corp., 4.2%; Bank of Nova Scotia, 4.1%; and BCE Inc., 4.0%.

The fund holds 53.4% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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ISHARES S&P/TSX 60 INDEX FUND $17.88 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 8.2%; TD Bank, 7.1%; Bank of Nova Scotia, 6.2%; Suncor Energy, 4.5%; CN Railway, 3.9%; Bank of Montreal, 3.7%; Enbridge, 3.4%; Canadian Natural Resources, 3.2%; TransCanada Corporation, 3.0%; Manulife Financial, 3.0%; BCE, 2.9%; CIBC, 2.8%; Valeant Pharmaceuticals, 2.8%; Potash Corp., 2.3%; Cenovus Energy, 2.0%; and Goldcorp, 2.0%.
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