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
GENERAL ELECTRIC CO. $27 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $272.7 billion; Priceto- sales ratio: 1.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) is selling most office buildings and real estate loans belonging to GE Capital, its financing subsidiary, to a group of investors for $26.5 billion.

The company will also hand out its remaining 85% stake in Synchrony Financial (New York symbol SYF), which provides credit card loans through retailers. GE will give its shareholders the chance to swap their stock for Synchrony shares.

It will take two years for GE to complete these transactions. After that, the financing business will supply just 10% of its earnings, down from 42% in 2014. The company plans to use the funds from these sales to buy back $50 billion worth of its shares.

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NVIDIA CORP. $22 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 549.8 million; Market cap: $12.1 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.5%; TSINetwork Rating: Average; www.nvidia.com) is a leading designer of 3D-capable video chips, which make video games run more smoothly and appear more lifelike. The company outsources most of its production to Asian chipmakers.

In its 2015 fiscal year, which ended January 25, 2015, Nvidia’s revenue rose 13.3%, to a record $4.7 billion from $4.1 billion in 2014.

Earnings jumped 36.1%, to $801.0 million from $588.4 million. The company spent $813.6 million on share buybacks in the past year. As a result, its earnings per share rose 43.4%, to $1.42 from $0.99.

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ADOBE SYSTEMS INC. $76 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 500.3 million; Market cap: $38.0 billion; Price-to-sales ratio: 8.8; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) makes software for publishing companies and website developers.

The company’s main products include Adobe Acrobat, which lets users create and edit electronic documents in the widely used PDF format, and its Creative Suite package of desktop publishing and photo editing programs, including Photoshop.

In its fiscal 2015 first quarter, which ended February 27, 2015, Adobe earned $0.44 a share, up 46.7% from $0.30 a year earlier. Revenue rose 10.9%, to $1.11 billion from $1.00 billion. The company spends a high 20% of its revenue on research.

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APPLE INC. $129 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.8 billion; Market cap: $748.2 billion; Price-to-sales ratio: 3.7; Dividend yield: 1.5%; TSINetwork Rating: Average; www.apple.com) aims to cut its reliance on the iPhone smartphone, which supplies nearly 70% of its revenue, with several new products.

One example is its recently launched Apple Pay service, which lets users add their credit card information to their phones. They can then use them to make purchases at any tap-and-pay-enabled cash register and, in some cases, online. To prevent fraud, the phone will confirm the user’s identity by scanning their fingerprint.

So far, Apple Pay is only available in the U.S., but local banking rules could make it hard to bring the service to other countries. That could force the company to form alliances with foreign banks, payment processors and wireless carriers.

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GANNETT CO., INC. $35 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 227.8 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.3%; TSINetwork Rating: Average; www.gannett.com) publishes newspapers in the U.S. and U.K., including USAToday, its flagship paper. The company also owns 46 TV stations and websites that attract over 39 million unique visitors a month.

In the three months ended March 29, 2015, Gannett’s revenue rose 4.9%, to $1.5 billion from $1.4 billion a year earlier. Strong gains at the broadcasting and digital divisions (49% of the total) offset an 8.8% decline at the publishing businesses (51%) due to weak ad revenue. Earnings improved 4.3%, to $0.49 a share from $0.47.

The company still plans to spin off its publishing operations as a separate firm that will keep the Gannett name. The remaining company, called Tegna (New York symbol TGNA), will own the broadcast and Internet businesses.

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INTERNATIONAL BUSINESS MACHINES CORP. $165 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 985.0 million; Market cap: $162.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.ibm.com) traces its history back to 1911. Today, it’s one of the world’s largest computer companies, with operations in over 175 countries. In the past few years, IBM has moved away from making computers to designing entire systems and managing them for businesses and government agencies. It provides these services under long-term contracts, which gives it predictable revenue streams. In 2014, computer services supplied 59% of the company’s revenue.

Meanwhile, IBM continues to build up its software business, which supplied 28% of its 2014 revenue.

Last year, the company sold its low-end server business to China’s Lenovo Group for $2.1 billion in cash and Lenovo shares.

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Real Estate Investing
Pat McKeough responds to many requests from members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

Q: What is your opinion of the following investment: First Capital Realty? Thanks.

A: First Capital Realty Inc. (symbol FCR on Toronto; www.firstcapitalrealty.ca) owns, develops and operates shopping centres throughout Canada. It focuses on big cities, including Toronto, Montreal, Calgary, Vancouver, Ottawa and Edmonton.

First Capital owns interests in 157 properties. Supermarkets and drugstores account for 31% of its rental revenue, followed by national and discount retailers (15%), medical clinics, gyms and daycare facilities (14%), restaurants (13%) and banks and government offices (11%). Other retailers supply the remaining 16%.

The company’s largest tenants include Sobeys, Loblaw, Metro, Canadian Tire, Wal-Mart and Dollarama.

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Beware a few lucky wins with market timing, because all the random elements involved in timing the market inevitably lead to losses.
Meta Description: With its new 50% stake in the Ruby pipeline and an LNG plant in the works, Veresen can sustain big growth and its high dividend yield.