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
T. ROWE PRICE GROUP INC. $84 (Nasdaq symbol TROW; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 260.7 million; Market cap: $21.9 billion; Price-to-sales ratio: 5.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.troweprice .com) sells mutual funds and wealth management services.

In 2014, the company earned $1.23 billion, or $4.55 a share. That’s up 17.4% from $1.05 billion, or $3.90 a share, in 2013. Revenue gained 14.3%, to $4.0 billion from $3.5 billion.

On December 31, 2014, the company had a record $746.8 billion of assets under management, up 7.9% from $692.4 billion at the end of 2013. About 93% of that increase came from higher stock prices. The company’s fee income varies with the value of the assets it manages, so it gains from rising stock markets. Higher mutual fund sales (net of redemptions) supplied the remaining 7%.

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VISA INC. $273 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 616.0 million; Market cap: $168.2 billion; Price-to-sales ratio: 13.2; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions.

In its fiscal 2015 first quarter, which ended December 31, 2014, Visa’s earnings rose 11.5%, to $1.6 billion from $1.4 billion a year earlier. Per-share earnings gained 15.0%, to $2.53 from $2.20, on fewer shares outstanding.

Revenue rose 7.2%, to $3.4 billion from $3.2 billion. The company gets half of its revenue from outside the U.S. Without the negative impact of currency exchange rates, revenue gained 9%. Visa processed 17.6 billion transactions in the quarter, up 10.1% from a year earlier.

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FAIR ISAAC CORP. $84 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 31.4 million; Market cap: $2.6 billion; Price-to-sales ratio: 3.3; Dividend yield: 0.1%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. FICO Scores dominates this niche market. Fair Isaac also sells software that helps credit card issuers cut fraud and analyze cardholders’ spending patterns.

In its fiscal 2015 first quarter, which ended December 31, 2014, Fair Isaac’s revenue rose 2.8%, to $189.6 million from $184.3 million a year earlier.

The company saw higher sales at its applications division (66% of revenue) on increased licensing revenue from software that detects bank fraud. Sales of credit-scoring software and programs for analyzing large amounts of a business’s data were lower, mostly due to a big order in the year-ago quarter.

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DUN & BRADSTREET CORP. $135 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 35.9 million; Market cap: $4.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 1.4%; TSINetwork Rating: Average; www.dnb.com) provides credit reports on over 240 million companies. Its clients use this information to make lending and buying decisions.

Credit reports supply 63% of Dun & Bradstreet’s revenue. The remaining 27% comes from other information products, such as software that helps businesses manage websites and customer data.

In 2014, revenue rose 1.7%, to $1.68 billion from $1.65 billion in 2013. All regions saw gains: North America (74% of revenue), up 1.2%; Europe (15%), up 4.1%; and Asia (11%), up 1.9%.

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BROADRIDGE FINANCIAL SERVICES INC. $54 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 120.9 million; Market cap: $6.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada.

Without one-time items, Broadridge earned $39.9 million, or $0.32 a share, in its fiscal 2015 second quarter, which ended December 31, 2014. That’s up 27.9% from $31.2 million, or $0.25 a share, a year earlier. The company continues to add new clients and is doing a good job of holding on to existing ones. Revenue gained 10.4%, to $574.6 million from $520.6 million.

Broadridge typically makes half of its profits in its fourth quarter, which ends June 30. This is the busiest time for processing proxies and annual reports.

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RESTAURANT BRANDS INTERNATIONAL INC. $43 (New York symbol QSR; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.1 million; Market cap: $20.1 billion; Price-to-sales ratio: 14.2; Dividend yield: 0.8%.; TSINetwork Rating: Average; www.rbi.com) took its current form on December 12, 2014, as a result of Burger King Worldwide’s (old symbol BKW) takeover of Tim Hortons Inc. (old symbol THI).

Restaurant Brands now has 14,372 Burger King restaurants and 4,671 Tim Hortons outlets in over 100 countries.

In the three months ended December 31, 2014, the company lost $514.2 million, or $2.52 a share, compared to a profit of $66.8 million, or $0.19, a year earlier. Without merger-related costs and other unusual items, gross earnings before depreciation, interest and taxes gained 23.1%.

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WAL-MART STORES INC. $84 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $268.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.walmart.com) gets about 60% of its sales from its 4,516 stores in the U.S., including 3,407 supercentres, which sell both groceries and general merchandise. Groceries now supply 56% of Wal-Mart’s U.S. sales.

In 1991, the company opened its first store outside of the U.S. through a joint venture with a Mexican retailer. Its international division (29% of total sales) now operates 6,290 stores in 26 countries.

The remaining 11% of Wal-Mart’s sales comes from its Sam’s Club warehouse stores. The company charges customers a $45 annual membership fee to shop at these stores, which sell a variety of goods at wholesale prices. There are currently 647 Sam’s Club stores in the U.S. and other countries.

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Tax Shelters
Nearly 50% of Canadians do not have a Tax Free Savings Account (TFSA). And many of those that do are not making regular contributions. This is a shame. It means that many are missing out on a savings plan that can contribute substantially to building wealth and accumulating a strong cash reserve that’s there when you need it.

Since their inception in 2009 tax free savings accounts have given Canadians an excellent opportunity to earn investment income, on interest, dividends and capital gains, tax free.

To ensure that you can take the greatest possible advantage of your TFSA, noted financial columnist Jonathan Chevreau and I have assembled a special report, Make the Most of Your Tax Free Savings Account.

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Income Investing
Telus continues to upgrade its wireless and Internet services, spending $2.2 billion on these improvements in 2014. That’s helping it attract more subscribers in a highly competitive market.

As well, last year the company bought $1.1 billion worth of wireless frequencies, or spectrum that should let it cover more of Canada, particularly smaller cities and rural areas.

TELUS (Toronto symbol T; www.telus.com) gets 55% of its revenue from its 8.0 million wireless subscribers across Canada. It also has 3.2 million phone customers, 1.5 million high-speed Internet users and 888,000 TV subscribers.

Telus also continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats.

In September 2014, the company paid an undisclosed sum for ZRx Prescriber, an app that lets doctors write prescriptions through their tablet computers and smartphones. The app can also access a patient’s drug-insurance information, which speeds up claims and cuts down on errors. Over 520 clinics in Ontario and Quebec use ZRx Prescriber to process 400,000 prescriptions a month.

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