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
AT&T INC. $34 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.2 billion; Market cap: $176.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) is the largest wireless provider in the U.S., with 120.6 million subscribers. Wireless accounts for 55% of AT&T’s revenue and 75% of its earnings.

The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 34.4 million customers.

Shift to wireless fuelled sales

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MOTOROLA SOLUTIONS INC. $68 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 219.8 million; Market cap: $14.9 billion; Priceto- sales ratio: 2.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.motorolasolutions.com) recently sold its enterprise division for $3.45 billion. This business makes a variety of electronics, such as bar-code scanners and kiosks, for corporate clients.

The company now focuses on specialized communications equipment, such as radios for police and fire vehicles. Its sales fell 5.6%, to $5.9 billion in 2014 from $6.2 billion in 2013, due to weaker demand in North America and Asia. Earnings per share dropped 33.2%, to $2.58 from $3.86.

The stock has risen recently on speculation that Motorola Solutions is considering selling itself. However, it could drop suddenly if a suitable offer fails to materialize.

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NORDSTROM INC. $81 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 190.1 million; Market cap: $15.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.8%; TSINetwork Rating: Average; www.nordstrom.com) has raised its quarterly dividend by 12.1%, to $0.37 a share from $0.33. The new annual rate of $1.48 yields 1.8%.

The company sells upscale clothing and shoes, so it’s less vulnerable to changes in the overall economy. Still, it should benefit as low gasoline prices give consumers more cash for other goods. Meanwhile, the high U.S. dollar cuts the cost of goods it imports from overseas.

Nordstrom is a buy.

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DIEBOLD INC. $36 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $2.3 billion; Priceto- sales ratio: 0.8; Dividend yield: 3.2%; TSINetwork Rating: Average; www.diebold.com) is a leading maker of automated teller machines. It also makes safes, vaults and building-security systems.

Thanks to a major cost-cutting plan, Diebold’s earnings rose 27.2%, to $1.73 a share in 2014 from $1.36 in 2013. Revenue rose 6.8%, to $3.05 billion from $2.86 billion.

Diebold gets 55% of its revenue from outside of North America, so the high U.S. dollar will probably cause its revenue to fall about 5% in 2015.

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PFIZER INC. $35 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 6.3 billion; Market cap: $220.5 billion; Price-to-sales ratio: 4.4; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.pfizer.com) has received approval from the U.S. Food and Drug Administration for new breast cancer drug palbociclib. Pfizer will market this treatment under the Ibrance brand.

Ibrance will probably contribute $4 billion to the company’s annual revenue by 2020; last year, Pfizer’s revenue was $49.6 billion.

The company spends a high 17% of its revenue on research. This hurts its short-term earnings but lets it develop innovative drugs like Ibrance. New treatments like these help Pfizer offset sales of other drugs that have lost their patent protection, like Lipitor (cholesterol) and Celebrex (arthritis).

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CEDAR FAIR L.P. $56 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.9 million; Market cap: $3.1 billion; Price-to-sales ratio: 2.8; Dividend yield: 5.4%; TSINetwork Rating: Average; www.cedarfair.com) owns 11 amusement parks, three outdoor water parks, one indoor water park and five hotels.

Cedar Fair reported record revenue of $1.16 billion in 2014, up 2.2% from $1.13 billion in 2013. If you exclude the sale of a water park in 2013, attendance was flat. However, spending per guest rose 3%, while out-of-park spending (hotels adjacent to its parks) gained 2%. Higher labour costs and spending on new attractions cut its earnings by 4.1%, to $1.86 a unit from $1.94.

The partnership recently raised its quarterly distribution by 7.1%, to $0.75 from $0.70. The new annual rate of $3.00 yields 5.4%.

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BUCKEYE PARTNERS L.P. $77 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 127.0 million; Market cap: $9.8 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.9%; TSINetwork Rating: Average; www.buckeye.com) operates over 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. The partnership also owns oil and gas storage terminals.

Buckeye continues to expand by acquisition. In December 2013, it paid Hess Corp. (New York symbol HES) $850 million for 19 oil-storage terminals on the U.S. east coast and one on the Caribbean island of St. Lucia. It now has over 120 terminals.

In September 2014, it paid $860 million for 80% of a new firm that operates several oil-processing plants on the U.S. Gulf Coast. The deal included a deepwater oil-transfer terminal in Corpus Christi, Texas, as well as storage tanks and pipelines.

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MOLSON COORS BREWING CO. $76 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 193.0 million; Market cap: $14.7 billion; Price-to-sales ratio: 3.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.molsoncoors.com) reported that its worldwide beer volumes fell 1.3% in 2014. Its revenue also declined 1.4%, to $4.1 billion from $4.2 billion in 2013. If you disregard unfavourable currency exchange rates, revenue gained 0.3%.

The company continues to improve its efficiency. As a result, its earnings rose 5.7%, to $768.5 million from $727.1 million. Per-share earnings gained 4.6%, to $4.13 from $3.95, on more shares outstanding.

Molson Coors’ improving earnings let it cut its long-term debt to $2.3 billion (or 15% of its market cap) from $3.2 billion at the end of 2013. The company has also raised its dividend by 10.8%. The new annual rate of $1.64 yields 2.2%.

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DIAGEO PLC ADRs $118 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.8 million; Market cap: $74.1 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.diageo.com) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker whisky and Captain Morgan rum.

The company recently agreed to acquire the 50% of Don Julio tequila that it doesn’t already own from Casa Cuervo in exchange for its Bushmills Irish whisky business. Diageo will also get $408 million when it completes the deal later this year.

Gaining full control over Don Julio is part of Diageo’s plan to use premium brands to expand in emerging markets. It will use the cash to pay down its debt, which totalled 8.5 billion British pounds (1 pound = $1.93 Canadian) on December 31, 2014.

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