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.

AMERICAN EXPRESS CO. $55 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 969.0 million; Market cap: $53.3 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.americanexpress.com) is one of the world’s largest issuers of payment cards, with 117.8 million cards outstanding in over 130 countries. Amex issues two types of cards: charge cards, which have no preset spending limit and must be paid in full each month; and traditional credit cards, which let users carry a balance. The company is also a bank that accepts deposits and makes loans. It cuts its credit risk by mainly catering to clients with above-average incomes and good credit histories. Amex wrote off just 1.9% of its U.S. loans in 2015, up slightly from 1.8% in 2014. Its international write-off rate crept up to 2.2% from 2.1%....
On June 29, 2015, the old Gannet spun off its newspaper operation as a separate company that would keep the Gannett name (see box). Gannett’s broadcasting and Internet unit was then renamed Tegna. Under the deal, for every two shares investors held, they received one share of the spinoff company and two shares in Tegna. Both firms are now improving their prospects through acquisitions and new alliances. These deals will also help them maintain their current dividends....
GANNETT CO., INC. $14 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 115.4 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.6%; TSINetwork Rating: Average; www.gannett.com) publishes daily newspapers in 92 U.S. markets, including its flagship paper, USAToday, and 19 dailies in the U.K. The company recently agreed to buy Journal Media Group (New York symbol JMG), which publishes 15 dailies and 18 weeklies in nine states. The purchase price is $280 million, which includes Journal’s cash holdings. Gannett expects to close the deal in the first quarter of 2016. The purchase will add $0.10 to $0.15 a share to Gannett’s earnings in the first year; the company will likely earn $1.66 a share in 2016, and the stock trades at 8.4 times that estimate. Savings from combining printing plants and other operations should increase Gannett’s earnings by $0.20 to $0.25 a share in the second year. The $0.64 dividend seems secure and yields 4.6%....
FEDEX CORP. $128 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 275.6 million; Market cap: $35.3 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.8%; TSINetwork Rating: Average; www.fedex.com) has received approval from U.S. and European regulators for its $4.6-billion purchase of TNT Express NV, a Netherlands-based courier that operates throughout Europe. The deal makes FedEx the second-largest courier in Europe, with 22% of the market. That’s just behind leader United Parcel Services, which has 25%. Regulators in other countries, including China and Brazil, must approve the deal. However, FedEx expects to complete it by June 30, 2016....
CHEVRON CORP. $83 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $157.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.chevron.com) recently signed deals to sell 1.5 million metric tonnes of liquefied natural gas (LNG) per year to clients in China. These deals will add to the prospects of its Gorgon LNG project off northwestern Australia, which will start up in the next few months. Chevron owns 47.3% of Gorgon and operates the project. It cost $54 billion to build; Chevron’s share of the costs is $25.5 billion. The recent drop in gas prices will hurt Gorgon’s initial profitability. However, it should become a major supplier of gas to Japan, South Korea, India and China. Moreover, its reserves should last at least 40 years....
ALLIANT ENERGY CORP. $62 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 113.4 million; Market cap: $7.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Average; www.alliantenergy.com) sells power and natural gas to 1.4 million clients in Wisconsin, Iowa and Minnesota. The company has raised its quarterly dividend by 6.8% with the February 2016 payment, to $0.5875 from $0.55. The new annual rate of $2.35 yields 3.8%. Alliant has paid quarterly dividends since 1946 and has raised the annual rate each year since 2004. Alliant Energy is a buy.
WELLS FARGO & CO. $49 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.1 billion; Market cap: $249.9 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.1%; TSINetwork Rating: Average; www.wellsfargo .com) earned $21.6 billion in 2015, down 1.0% from $21.8 billion in 2014. However, earnings per share rose 1.2%, to $4.15 from $4.10, on fewer shares outstanding. Revenue gained 2.0%, to $86.1 billion from $84.3 billion. Low interest rates continue to spur demand for residential mortgages, business and car loans while encouraging consumers to make more credit card purchases. The bank also recently bought the commercial lending and leasing operations of General Electric (see page 18). Those businesses offer loans to help manufacturers boost their inventory, as well as other forms of financing. However, Wells Fargo is earning less interest income on its loans, which hurts its earnings. Higher salaries and federal deposit insurance premiums also slowed its profit growth....
GENERAL ELECTRIC CO. $28 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $282.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.ge.com) has agreed to sell $157 billion in assets of its GE Capital financing division. So far, it has completed transactions equalling $104 billion. These sales are part of GE’s plan to focus on its industrial businesses, including jet engines, power plant equipment, medical gear and locomotives.

Shrinking GE Capital cuts risk

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TENNANT CO. $52 (www.tennantco.com) continues to see strong demand for its floor-cleaning machines featuring its ec-H20 technology; that uses electricity to make tap water act like a detergent. Earnings per share in the third quarter of 2015 rose 7.9%, to $0.68 from $0.63 a year earlier....