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.

Posts by the author
A conservative, step-by-step Canadian guide: account choice, W-8BEN, FX cost cuts, first trade, and DRIP, built for steady dividend income.
ALLIANT ENERGY CORP. $69 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $7.7 billion; Price-to-sales ratio: 2.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www.alliantenergy.com) sells electricity and natural gas to 1.4 million customers in Wisconsin, Iowa and Minnesota.

The company has earmarked $5.2 billion for plant upgrades and replacing older transmission lines and pipelines between 2014 and 2018. These funds include $750 million for a gas-fired plant that should replace some of its older coal facilities (coal accounts for about half of Alliant’s electricity production).

Partly due to these extra costs, Alliant’s earnings fell 2.3%, to $155.2 million, or $1.40 a share, in the third quarter of 2014. A year earlier, it earned $158.9 million, or $1.43. Cooler-than-normal weather also cut its earnings by $0.06 a share in the latest quarter. Revenue fell 2.7%, to $843.1 million from $866.6 million.

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AMEREN CORP. $46 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $11.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.6%; TSINetwork Rating: Average; www.ameren.com) provides power and natural gas to 3.3 million customers in Illinois and Missouri.

A cool summer meant customers used less power for air conditioning in the quarter ended September 30, 2014. That cut Ameren’s earnings by 3.6%, to $294 million, or $1.20 a share. A year earlier, it earned $305 million, or $1.25. However, higher power rates increased revenue by 2.0%, to $1.7 billion from $1.6 billion.

Ameren generates 70% of its power by burning coal, so it’s vulnerable to tougher environmental regulations. As a result, the company expects to spend a total of $8.3 billion to modernize its operations between 2014 and 2018.

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WAL-MART STORES INC. $87 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.2 billion; Market cap: $278.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.walmart .com) plans to open 11 new supercentres, which sell groceries as well as merchandise, in Canada. That will give the company 394 Canadian stores, including 280 supercentres.

Rival retailer Target recently announced that it would close all 133 of its Canadian outlets, and many people who shopped at these stores will likely switch to Wal-Mart. In addition, the company will probably pick up some of Target’s locations at a discount.

Wal-Mart is a buy.

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MICROSOFT CORP. $41 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.2 billion; Market cap: $336.2 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www. microsoft.com) plans to release Windows 10, the latest version of its popular operating system, later this year.

Unlike previous editions, Microsoft will let users of older versions update for free. Sales to computer makers provide most of the revenue Microsoft gets from Windows, so giving it away to existing users will have little impact on its earnings. This will also help prevent users from switching to competing operating systems.

Microsoft aims to make up the lost sales by selling related services, such as online versions of its Office business programs.

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TEXAS INSTRUMENTS INC. $54 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.05 billion; Market cap: $56.7 billion; Priceto- sales ratio: 4.7; Dividend yield: 2.5%; TSINetwork Rating: Average; www.ti.com) specializes in analog chips, which convert inputs like touch, sound and pressure into electronic signals computers can understand.

Manufacturers use these chips in a variety of products, including cars, cameras, medical devices and appliances.

The company’s earnings jumped 30.5% in 2014, to $2.8 billion from $2.2 billion in 2013. Texas Instruments spent $2.8 billion on share buybacks during the year. As a result, earnings per share gained 34.6%, to $2.57 from $1.91.

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CISCO SYSTEMS INC. $27 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.1 billion; Market cap: $137.7 billion; Price-to-sales ratio: 3.0; Dividend yield 2.8%; TSINetwork Rating: Average; www.cisco.com) is a leading maker of hardware and software that links and manages computer networks. Its hardware includes routers, local area network (LAN) and asynchronous transfer mode (ATM) switches, and dial-up access servers.

In its fiscal 2015 first quarter, which ended October 31, 2014, Cisco’s revenue rose 1.3%, to $12.2 billion from $12.1 billion a year earlier.

Without unusual items, it earned $2.8 billion, down 2.3% from $2.9 billion. Cisco spent $1.0 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 1.9%, to $0.54 from $0.53.

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INTEL CORP. $34 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.9 billion; Market cap: $166.6 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading computer chip maker. Its products power 80% of all personal computers.

The company continues to benefit as businesses upgrade their computers after Microsoft (see box) stopped supporting its old Windows XP operating system. Strong demand for Internet services has also spurred sales of server computers.

As a result, Intel’s 2014 sales rose 6.0%, to $55.9 billion from $52.7 billion in 2013. Earnings jumped 21.7%, to $11.7 billion, or $2.31 a share, from $9.6 billion, or $1.89.

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CONAGRA FOODS INC. $37 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 431.0 million; Market cap: $15.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.conagrafoods.com) bought Ralcorp Holdings, the largest private-label food maker in the U.S., for $4.75 billion in January 2013.

The company has had trouble integrating this business. Ralcorp also faces strong price competition that has hurt its sales and earnings. In response, ConAgra has adjusted the prices of its private-label products. That should help improve Ralcorp’s market share. Efforts to streamline Ralcorp should also help it adjust to rising ingredient costs and improve its profitability by 2016.

ConAgra is a buy.

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FEDEX CORP. $171 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 283.3 million; Market cap: $48.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) continues to profit from the rise of online shopping, which has boosted demand for its delivery services.

The company stands to gain from lower oil prices and new fuel-efficient planes. It has also undertaken an aggressive cost-cutting plan, the benefits of which should begin to appear in 2015.

In addition, FedEx’s largely non-unionized workforce helps keep its labour costs down, and the company should see higher revenue now that it’s basing its shipping fees on a parcel’s size rather than its weight.

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