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
PENN WEST PETROLEUM $11.38 (Toronto symbol PWT; Shares outstanding: 485.0 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 5.1%) is moving to shore up its finances and boost its value after it appointed Rick George as chairman and Allan Markin as vice-chairman.

George played a key role in building Suncor Energy, while Markin was important to the growth of Canadian Natural Resources.

Penn West already plans to cut its staff by 10% and reduce its quarterly dividend by 48.1%, to $0.14 from $0.27. The new rate will give it a 4.9% yield, based on today’s share price.
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ENERPLUS CORP. $15.55 (Toronto symbol ERF; Shares outstanding: 199.7 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.0%) produces an average of 87,183 barrels of oil equivalent per day (52% gas and 48% oil).

The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

In the three months ended March 31, 2013 Enerplus’s cash flow per share rose 1.2%, to $0.87 from $0.86 a year earlier. Oil prices fell 8.6%, but that was offset by a 10.1% overall production increase and 36.5% higher gas prices.
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ARC RESOURCES $27.53 (Toronto symbol ARX; Shares outstanding: 311.1 million; Market cap: $8.8 billion; TSINetwork Rating: Speculative; Dividend yield: 4.4%; www.arcresources.com) produces oil and natural gas in western Canada. The company’s average daily output of 95,472 barrels of oil equivalent (including natural gas) is weighted 61% to gas and 39% to oil.

In the three months ended March 31, 2013, cash flow per share rose 4.8%, to $0.65 from $0.62. Production increased 2.1%, and a 22.2% rise in gas prices more than offset an 8.4% decline in oil prices.

ARC’s long-term debt is $762.0 million, or a low 8.7% of its market cap. It trades at 10.2 times its forecast 2012 cash flow of $2.70 a share.
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LOBLAW COMPANIES $47.66 (Toronto symbol L; Shares outstanding: 283.1 million; Market cap: $13.6 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.loblaw.ca) is testing a new store format in Calgary that is much smaller than its other supermarkets.

This store, called The Box by No Frills, is just 10,000 square feet, compared to 25,000 square feet for its regular stores.

Smaller stores like this would help Loblaw expand in urban areas. They would also help it compete with non-traditional food sellers, such as drug stores and convenience stores. To boost traffic, the new stores will highlight $1 items in most aisles.
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MARKET VECTORS VIETNAM ETF $18.89 (New York symbol VNM; buy or sell through brokers) holds shares of Vietnamese companies or foreign firms that get a significant amount of their revenue from Vietnam.

The ETF’s top 10 holdings are Pha Lai Thermal Power, 8.2%; Bank for Foreign Trade of Vietnam, 7.2%; Baoviet Holdings (finance and insurance), 7.1%; PetroVietnam Fertilizer and Chemical, 6.9%; Vincom Corp. (real estate), 6.8%; Saigon Thuong Tin Commercial Bank, 5.3%; Gamuda Bhd (a Malaysiabased construction group), 5.2%; Minor International (a Thailand-based firm with hotels and fast-food restaurants in Vietnam), 4.4%; Vietnam Construction and Import-Export, 4.3%; and Oil & Natural Gas Corp. (an India-based oil and gas company), 4.2%.

Market Vectors Vietnam ETF’s industry breakdown is as follows: Financials, 36.2%; Energy, 19.9%; Industrials, 14.5%; Materials, 10.0%; Utilities, 8.2%; Consumer Discretionary, 5.3%; and Consumer Staples, 3.7%. Its expense ratio is 0.76%.
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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $31.73 (New York symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange.

The fund’s top holdings are China Mobile, 10.5%; China Construction Bank, 8.7%; Industrial & Commercial Bank, 7.4%; Tencent Holdings, 6.8%, Bank of China, 5.9%; PetroChina, 4.0%, CNOOC, 4.0%; China Shenhua Energy, 3.9%; China Life Insurance, 3.9%, and Ping An Insurance, 3.9%.

The fund’s holdings give it the following industry breakdown: Financials, 52.1%; Telecommunications, 16.7%; Oil and Gas, 11.8%; Technology, 6.8%, Basic Materials, 5.0%; and Consumer Goods, 3.2%. Its expense ratio is 0.73%.
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H&R REIT $21.95 (Toronto symbol HR.UN; Units outstanding: 261.7 million; Market cap: $16.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.2%; www.hr-reit.com) has bought the Peter Pond Mall in Fort McMurray, Alberta for $168.5 million.

The Peter Pond Mall is Fort McMurray’s only enclosed shopping centre. It serves the thriving oil sands industry in that area.

The average household income in Fort Mc- Murray is over $190,000 a year, and that prosperity gives the mall average sales of over $870 a square foot. That average ranks Peter Pond among the top 10 shopping centres in Canada.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $31.73 (Toronto symbol AP.UN; Units outstanding: 68.0 million; Market cap: $2.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.alliedpropertiesreit.com) owns 126 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to office and retail space. They usually feature exposed beams, interior brick and hardwood floors.

The trust bought $400 million worth of properties in 2012. In the first quarter of 2013, it added a further $146 million of acquisitions. Allied has a 92.8% occupancy rate.
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RIOCAN REAL ESTATE INVESTMENT TRUST $25.37 (Toronto symbol REI.UN; Units outstanding: 300.0 million; Market cap: $7.8 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 344 shopping malls containing over 84 million square feet of leasable area. That total includes 50 U.S. malls containing over 13.7 million square feet.

RioCan recently ended its joint venture with Retail Properties of America (New York symbol RPAI). As a result, RioCan now holds 100% of eight highquality malls in Texas, including the dominant shopping centres in Austin and San Antonio.

In the quarter ended March 31, 2013, RioCan’s revenue rose 10.6%, to $281 million from $254 million a year earlier. Cash flow per unit rose 10.8%, to $0.41 from $0.37. The units yield 5.6%.
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