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
TELUS CORP. $31 (Toronto symbol T; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 654.1 million; Market cap: $20.3 billion; Priceto- sales ratio: 2.0; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.telus.com) plans to build a new 58-storey office tower, called Telus Sky, in downtown Calgary. In addition to offices, the building will include retail stores and residential units. Telus will be the main tenant, occupying 20% of the building’s overall floor space.

This project will cost $400 million. That’s equal to 1.1 times the $362 million, or $0.56 a share, that Telus earned in the three months ended March 31, 2013. The company expects to finish construction in the fall of 2017.

Telus is a buy....
CAE INC. $11 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 259.7 million; Market cap: $2.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.8%; TSINetwork Rating: Average; www.cae.com) has won several new contracts with 15 countries’ defence forces. Under these deals, CAE will build helicopter flight simulators and train pilots and aircraftsupport personnel.

In all, these deals are worth $100 million, or 5% of CAE’s annual revenue of $2.1 billion.

CAE is a buy....
CANADIAN TIRE CORP. $83 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.9 million; Market cap: $6.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.canadiantire.ca) has a new four-year deal to sell Olympic-branded shoes and other sports equipment made by Adidas Group. The company will feature this merchandise in its main Canadian Tire stores and its SportChek and Sports Experts sporting good chains.

Offering exclusive products is a good way for retailers to draw customers to their stores. This new deal also builds on Canadian Tire’s current eightyear sponsorship agreement with the Canadian Olympic Committee.

Canadian Tire is a buy....
HOME CAPITAL GROUP INC. $57 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.6 million; Market cap; $2.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.8%; TSINetwork Rating: Average; www.homecapital.com) caters to borrowers who don’t meet the stricter standards of larger banks.

Even so, the company continues to do a good job of identifying problem loans before borrowers fall behind on their payments. In the latest quarter, loan-loss provisions rose just 3.8% from a year earlier. Home Capital also limits its risk by keeping its mortgage loans below 80% of a property’s market value.

Home Capital Group is a buy....
IGM FINANCIAL INC. $46 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 255.1 million; Market cap: $11.7 billion; Price-to-sales ratio: 3.7; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.7% of IGM.

As of June 30, 2013, the company had $124.8 billion of assets under management, including mutual funds. That’s down 1.8% from $127.1 billion on May 31, 2013. Recent volatility in world stock markets is the main reason for the decline. However, IGM’s assets under administration are still up 5.8% from a year earlier.

IGM’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the value of these assets rises.
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GREAT-WEST LIFECO INC. $31 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 951.4 million; Market cap: $29.5 billion; Price-to-sales ratio: 1.0; Dividend Yield: 4.0%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company after Manulife, with $581.9 billion of assets under administration. It also sells mutual funds and retirement planning and wealth management services. Power Financial (Toronto symbol PFC) owns 68.2% of Great-West.

The company expects to complete its $1.75- billion purchase of Irish Life Group in the next few weeks. This business is Ireland’s largest pension manager and life insurance provider.

Meanwhile, Great-West continues to benefit from rising equity markets, which have raised the value of the assets it manages. Mutual fund sales at U.S. subsidiary Putnam Investments are also improving.
...
CGI GROUP INC. $31 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 309.3 million; Market cap: $9.6 billion; Price-to-sales ratio: 1.5; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses.

CGI continues to profit from its August 2012 acquisition of Logica plc, a U.K.-based firm that provides computer-outsourcing services in 36 countries.

Thanks to this $2.7-billion purchase, CGI’s earnings rose 66.3% in its 2013 second quarter, which ended March 31, 2013, to $175.9 million from $105.7 million a year earlier. Due to more shares outstanding, earnings per share rose at a slower rate of 40.0%, to $0.56 from $0.40. These figures exclude unusual items, such as costs to integrate Logica.
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BCE INC. $43 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 775.9 million; Market cap: $33.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.bce.ca) has completed its $3.2-billion purchase of Astral Media, which 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.

BCE is a buy.

...
CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.6 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.cenovus.com) plans to ship more of the heavy bitumen from its Alberta oil sands projects by rail, in response to a lack of pipeline capacity and uncertainty over the Keystone XL project (see page 71).

By the end of 2013, the company expects to ship 10,000 barrels a day by rail, mostly lighter oil from its properties in Saskatchewan. It aims to boost that total to 30,000 barrels a day by the end of 2014. That’s equal to 17% of Cenovus’s current daily output of 180,000 barrels. The company has leased 800 railcars to support this expansion.

Cenovus is a buy....