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.

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If you want to find out how to hire a stock broker who meets your needs, you need to watch out above all for conflicts of interest
J.P. MORGAN CHASE & CO. $63 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.7 billion; Market cap: $233.1 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.8%; TSINetwork Rating: Average; www.jpmorganchase.com) earned $5.9 billion in the three months ended March 31, 2015, up 12.2% from $5.3 billion a year earlier. Earnings per share rose 13.2%, to $1.45 from $1.28, on fewer shares outstanding. Without unusual items, Morgan earned $1.58 a share in the latest quarter. Revenue rose 4.1%, to $24.8 billion from $23.9 billion.

Most of these gains came from the bank’s securities-trading division, where earnings jumped 19.4% on stronger volumes. It also saw higher fee income from advising firms on mergers.

These increases helped offset slower growth in retail banking. Low interest rates continue to spur loan demand, but Morgan is earning less interest on the money it lends. At the same time, it has to pay more to attract depositors.

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NEWMONT MINING CORP. $23 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 498.9 million; Market cap: $11.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 0.4%; TSINetwork Rating: Average; www.newmont.com) will soon begin work on the first phase of its Long Canyon gold mine in Nevada.

Long Canyon will produce 100,000 to 150,000 ounces a year when it opens in 2017. The midpoint of that range— 125,000 ounces— is equal to 2.6% of the 4.85 million ounces Newmont produced in 2014. The mine should last eight years.

The company will spend $250 million to $300 million on this project. Based on current gold prices, the mine should add $100 million a year to Newmont’s annual operating earnings.

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PEPSICO INC. $97 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $145.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www. pepsico.com) has replaced rival Coca-Cola (New York symbol KO) as the official soft drink sponsor of the National Basketball Association.

Coca-Cola still has marketing deals with some NBA teams and players, but this new multi-year agreement will let PepsiCo promote a wider range of products, such as Gatorade sports drinks and Frito-Lay snack foods, on NBA television broadcasts and other league events.

PepsiCo is a hold.

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HONDA MOTOR CO. LTD. ADRs $35 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $63.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.honda.com) is spending $61 million to increase capacity at its plant in Tapukara, India, by 50%, to 180,000 cars a year. The company expects to complete these upgrades in 2016. Honda’s other Indian facility makes 120,000 cars a year.

The extra capacity will help Honda take advantage of rising car demand in the country: in the 11 months ended February 28, 2015, it sold 166,366 cars in India, up 43.5% from the same period a year earlier.

At the same time, Honda plans to produce 39% more motorcycles in India by 2016. This expansion will cost the company $94.3 million.

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INTERNATIONAL FLAVORS & FRAGRANCES INC. $116 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.7 million; Market cap: $9.4 billion; Priceto- sales ratio: 3.1; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.iff.com) is buying Henry H. Ottens Manufacturing, a private Philadelphia-based firm that makes flavourings for major food makers.

IFF didn’t say how much it’s paying, but Ottens should add $60 million to its $3.1 billion of annual revenue. IFF expects to complete the purchase by June 30, 2015.

The company has a history of using acquisitions to expand, which adds risk. However, this purchase gives IFF access to Ottens’ high-quality clients, particularly in the U.K.

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APACHE CORP. $68 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 376.9 million; Market cap: $25.6 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.5%; TSINetwork Rating: Average; www.apachecorp.com) is selling its remaining Australian oil and natural gas properties to a group of private investors for $2.1 billion. It held on to its 49% stake in Australian fertilizer maker Yara Pilbara.

As well, the company has now sold its interests in two large liquefied natural gas developments: a 13% stake in Australia’s Wheatstone project and 50% of a proposed terminal in Kitimat, B.C. It received a total of $3.67 billion in return.

The sales are part of Apache’s plan to focus on its less risky onshore operations in North America.

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CHEVRON CORP. $110 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $209.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www. chevron.com) recently sold its 50% stake in Caltex Australia, which owns an oil refinery and 1,800 gas stations in Australia, for $3.6 billion.

The deal is part of Chevron’s plan to sell $15 billion worth of nonessential businesses by 2017. Even with these sales, the company’s oil output will probably average 3.1 million barrels a day in 2017, up 20.6% from 2.57 million in 2014.

That’s mainly because Chevron still plans to start up two big offshore gas projects: the Gorgon field, off Australia’s northwest coast (47.3% owned by Chevron) and the nearby Wheatstone field (64.14%-owned). Each will also have a plant to convert the gas into a liquid for shipment to clients in Asia.

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NCR CORP. $30 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.6 million; Market cap: $5.1 billion; Price-to-sales ratio: 0.8; No dividends paid; TSINetwork Rating: Average; www.ncr.com) gets 54% of its revenue from automated teller machines (ATMs). It also makes cash registers and self-serve checkouts (31% of revenue) and kiosks for theatres and arenas (10%). The remaining 5% comes from maintaining this equipment.

NCR is cutting its reliance on ATMs by purchasing other companies. In February 2013, it paid $788 million for Israel-based Retalix, whose software helps retailers manage their sales and track inventory. Companies with a combined 70,000 locations in over 50 countries use Retalix’s products.

In January 2014, NCR acquired Digital Insight, whose software helps over 1,000 banks and credit unions manage online and mobile transactions, for $1.65 billion.

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GOOGLE INC. (Nasdaq symbols GOOG $539 [class C non-voting] and GOOGL $549 [class A voting]); Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 680.6 million; Market cap: $366.8 billion; Price-to-sales ratio: 5.5; No dividends paid; TSINetwork Rating: Above Average; www.google.com) may launch a paid version of its popular YouTube video-streaming website later this year. By paying a monthly fee, viewers would be able to watch videos without advertising. That would help YouTube compete with other streaming services, including Netflix and Hulu, and cut its reliance on selling ads.

The company would have to share most of these subscription fees with content providers. Still, a subscription service could generate $2 billion of additional revenue a year for Google; the company’s total revenue was $66.0 billion in 2014.

Shareholders should continue to hold their class A shares, but we recommend the cheaper class C stock for new buying.

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