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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When we get questions about investing in stocks through split-share, our advice is, avoid the risk and invest in good stocks individually
AGILENT TECHNOLOGIES INC. $57 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 333.0 million; Market cap: $19.0 billion; Price-to-sales ratio: 2.8; Dividend yield: 0.9%; TSINetwork Rating: Average; www.agilent.com) was a unit of Hewlett- Packard until 1999, when Hewlett spun it off as a separate firm. Agilent now plans to break itself into two publicly traded companies in November 2014.

One firm will keep the Agilent name and focus on testing equipment for medical-research labs. This business supplies 60% of Agilent’s revenue and will pay a dividend comparable to the current 0.9% yield.

The second company, called Keysight Technologies, will make testing systems for improving electronics, such as cellphones and computer equipment. Keysight will not pay a dividend, at least initially.

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BAXTER INTERNATIONAL INC. $76 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 542.6 million; Market cap: $41.2 billion; Price-to-sales ratio: 2.7; Dividend yield: 2.7%; TSINetwork Rating: Average; www.baxter.com) recently announced that it will split into two separate companies.

One firm will focus on medical devices, such as intravenous pumps and kidney dialysis equipment. This business currently provides 60% of Baxter’s revenue. The other company will make biopharmaceuticals, including vaccines and hemophilia drugs.

In mid-2015, Baxter will hand out shares in the biopharmaceutical firm to its investors as a tax-deferred dividend.

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HILLSHIRE BRANDS CO. $63 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 123.4 million; Market cap: $7.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.1%; TSINetwork Rating: Average; www.hillshirebrands.com) took its current form on June 28, 2012, when the old Sara Lee Corp. split into two separate companies: Hillshire and European coffee maker D.E. Master Blenders.

D.E. Master accepted a $16.50-a-share takeover offer in June 2013, for a 55% gain since the Sara Lee breakup.

Hillshire makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Other foods include Sara Lee frozen desserts and Chef Pierre pies.

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KRAFT FOODS GROUP INC. $57 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 595.3 million; Market cap: $33.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Maxwell House coffee, Oscar Mayer meats, Philadelphia cream cheese, Jell-O desserts and Miracle Whip salad dressing.

Following the split from Mondelez, Kraft began consolidating plants and eliminating less-profitable products. The company expects to spend $625 million by the time it completes the plan in late 2014.

In the three months ended June 28, 2014, Kraft’s earnings fell 41.9%, to $482 million, or $0.80 a share. A year earlier, it earned $829 million, or $1.38 a share. If you disregard unusual items, earnings per share increased 7.9%, to $0.82 from $0.76.

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MONDELEZ INTERNATIONAL INC. $37 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $62.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.mondelezinternational.com) took its current form on October 1, 2012, when the old Kraft Foods Inc. broke itself into two publicly traded companies: Mondelez International and Kraft Foods Group.

Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets and Halls cough drops). It also makes coffee and other beverages, as well as grocery and cheese products for overseas markets.

The company has agreed to merge its packaged coffee business with European coffee maker D.E. Master Blenders. Under this deal, Mondelez will contribute its coffee brands, including Jacobs, Gevalia and Tassimo, to a new firm called Jacobs Douwe Egberts. In return, it will get $5 billion in cash and 49% of the new company when the deal closes later this year.

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WINDSTREAM HOLDINGS INC. $11 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 602.7 million; Market cap: $6.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 9.1%; TSINetwork Rating: Average; www.windstream.com) gets 73% of its revenue from high-speed Internet and business telecommunications. It also sells regular phone services, mainly in rural parts of the U.S.

The stock jumped 20% after the company announced that it would transfer its fibre-optic and copper networks, along with some land and buildings, to a new real estate investment trust (REIT). The company will then lease these assets from the REIT.

Windstream plans to hand out units in the new REIT to its own shareholders in the first quarter of 2015.

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INTERNATIONAL BUSINESS MACHINES CORP. $194 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $194.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.ibm.com) started up in 1911 making machines that processed U.S. census data, as well as other industrial equipment such as time clocks and scales.

The company now gets 55% of its revenue by designing computer systems and managing them for business and government clients. It typically does this under long-term contracts, which cuts its risk.

In the past few years, IBM has aggressively expanded its software business. It’s particularly interested in analytics software, which helps clients gather and analyze a wide variety of data. Software now supplies 27% of IBM’s revenue.

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socially responsible investing
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you advice on specific investment topics. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Ethical or socially responsible investing can be a misleading concept. Often it’s an oversimplified reaction to a complex situation, having little impact on the companies targeted while limiting perfectly good investment opportunities.” From time to time, we are asked about ethical investing (or “socially responsible investing”). I’d say it works as a marketing angle for a handful of small investment companies, and it may make you feel better about your investments. But it won’t do much to improve your investment results, or cut down on what you see as unethical corporate behaviour....
hot stocks
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you advice on specific investment topics. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Selling half of hot stocks that surge helps you guard your profits. But apply this rule only to more aggressive stocks, and not to the well-established stocks that may surprise you by going a lot higher in the long run.” As you probably know, our Successful Investor business model has two parts. We publish investment advice through The Successful Investor Inc., and we manage investor portfolios through Successful Investor Wealth Management Inc. (These two companies are affiliated by common ownership; I own both but set them up as separate companies for regulatory purposes.)...