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
SUN LIFE FINANCIAL $31.38 (Toronto symbol SLF; Shares outstanding: 603.0 million; Market cap: $18.9 billion; SI Rating: Above Average; Dividend yield: 4.6%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations.

The company mainly operates in Canada, the U.S. and the U.K., but has expanded into Asia, China and India. It has $570.7 billion of assets under management.

In the three months ended March 31, 2013, Sun Life’s earnings per share rose 1.4%, to $0.75 from $0.74. Revenue rose 3.1%, to $3.4 billion from $3.3 billion.
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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $22.87 (New York symbol ESR; buy or sell through brokers) is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 73.1%; Poland, 20.1%; Czech Republic, 3.0%; and Hungary, 2.9%.

The fund’s top holdings are Gazprom (Russia: gas utility), 14.6%; Sberbank (Russia: bank), 10.9%; Lukoil (Russia: oil), 10.5%; Magnit OJSC (Russia: retailing), 5.1%; Novatek (Russia: natural gas), 3.9%; PKO Bank Polski SA (Poland: banking), 3.5%; Mobile TeleSystems (Russia: wireless), 3.4%; Uralkali (Russia: potash), 3.3%; and Rosneft Oil Company (Russia: oil and gas), 3.1%.

iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.66%.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $21.98 (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 fund’s top holdings are ITC Ltd. (conglomerate), 9.7%; Reliance Industries Ltd. (conglomerate), 7.4%; Housing Development Finance, 7.1%; ICICI Bank, 6.7%; HDFC Bank, 6.5%; Infosys, 6.4%; Larsen & Toubro Ltd. (conglomerate), 4.2%; Tata Consultancy Services (information technology), 4.0%; Hindustan Unilever, 3.4%; and Oil & Natural Gas Corp., 3.1%.

The fund’s industry breakdown includes Banks, 21.4%; Computers, 11.4%; Cigarettes, 9.7%; Refineries, 7.9%; Finance, 7.1%; Pharmaceuticals, 5.9%; Engineering, 4.2%; Oil Exploration and Production, 4.0%; and Automobiles, 3.6%; The ETF has a 0.92% expense ratio.
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NEWMONT MINING $29.02 (New York symbol NEM; Shares outstanding: 492.3 million; Market cap: $14.5 billion; TSINetwork Rating: Average; Dividend yield: 4.8%; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru. Copper, zinc and other metals supply the remaining 10%.

Gold is down 33%, from $1,800 an ounce in September 2012 to $1,204 today. That’s partly because the U.S. Federal Reserve has indicated that it will soon scale back its bond-purchasing program, known as quantitative easing. Slowing growth in the money supply will reduce the likelihood of a sharp increase in inflation. Many investors buy gold as a hedge against inflation.

In response, Newmont is cutting jobs and postponing building new mines. The company also links its dividend to the price of gold, so it has lowered its quarterly payout by 17.6%, to $0.35 a share from $0.425, for a 4.8% yield. Further dividend cuts seem likely, particularly if gold prices continue to fall.
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BELL ALIANT INC. $27.96 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.5 billion; TSINetwork Rating: Average; Dividend yield: 6.8%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also sells wireless services through an alliance with BCE, which owns 44% of Bell Aliant.

The company continues to replace copper wires with fibre optic cable. That’s attracting more highspeed Internet and digital TV customers. Strong demand for these services is also helping offset lower revenue from traditional phone services.

Bell Aliant’s high-speed fibre optic systems now reach 679,000 homes, up from 516,000 a year ago. By the end of 2013, it plans to expand its network to 800,000 homes.
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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $29.20 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $7.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.0%; www.brpfund.com) owns 196 hydroelectric generating stations, 11 wind farms and two natural-gas-fired plants. In all, it has 5,900 megawatts of generating capacity.

Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 50% in the U.S. and 15% in Brazil.

In the three months ended March 31, 2013, Brookfield’s revenue rose 2.6%, to $437 million from $426 million a year earlier. Cash flow gained 4.3%, to $195 million, or $0.73 a share, from $187 million, or $0.71 a share.
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TELUS $31.68 (Toronto symbol T; Shs. o/s: 653.8 million; Market cap: $20.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.telus.com) has 7.7 million wireless subscribers across Canada, and gets much more of its revenue from wireless than BCE (54% compared to BCE’s 32%—see left).

Telus gets the remaining 46% of its revenue from its traditional phone business, which has 3.4 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.3 million Internet subscribers and 712,000 Telus TV subscribers.

In the three months ended March 31, 2013, Telus’s earnings per share rose 14.3%, to $0.56 from $0.49 a year earlier. Revenue rose 4.8%, to $2.76 billion from $2.63 billion.
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BCE INC. $42.68 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $33.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also sells satellite and Internet TV services across the country.

In the three months ended March 31, 2013, BCE’s earnings per share rose 11.6%, to $0.77 from $0.69 a year earlier. Revenue increased slightly, to $4.35 billion from $4.33 billion. Revenue fell 2.8% at the wireline (land line) division, which accounts for 58% of total revenue. This division faces rising competition. As well, many customers are cancelling land lines and switching to wireless devices.

Revenue from wireless services (32% of total revenue) rose 6.3%. The company’s network upgrades continue to attract new wireless subscribers, and it’s benefiting from rising use of smartphones, which generate higher monthly fees than regular cellphones. Bell’s Fibe high-speed Internet TV service also offers strong growth prospects.
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Israeli acquisition brings valuable new software to ATM and cash register specialist NCR
NCR CORP. (New York symbol NCR; www.ncr.com) is a leading maker of automated teller machines (ATMs), checkout scanners, cash registers and self-serve kiosks.

In February 2013, the company paid $791 million for Israel-based Retalix, whose software helps retailers manage their sales and track inventories. Retailers with a combined 70,000 locations in over 50 countries use Retalix’s products. NCR feels Retalix’s expertise will improve its point-of-sale terminals and self-serve kiosks.

In the three months ended March 31, 2013, Retalix contributed $50 million to NCR’s revenue. That helped push up the total by 13.3% in the latest quarter, to $1.4 billion from $1.2 billion a year earlier. The acquisition should add $255 million to the company’s full-year revenue.

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