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 ensure a higher (and safer) rate of return for your retirement portfolio, then it’s important to know what not to invest in after retirement
HILLSHIRE BRANDS CO. $36 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.4 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats.

In June 2012, the old Sara Lee Corp. spun off its international coffee and tea business, D.E. Master Blenders, as a separate company. The remaining operations became Hillshire Brands.

Hillshire gets 74% of its sales from supermarkets and other mass retailers; Wal-Mart is its largest single customer, accounting for 25% of its total sales. Restaurants supply the other 26%.

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KRAFT FOODS GROUP INC. $57 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 596.3 million; Market cap: $34.0 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, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.

Unlike Mondelez, Kraft prefers to focus on North America: Wal-Mart accounts for 26% of its sales. That hurts its growth prospects, but it also cuts its currency risk.

Kraft continues to reduce its costs following the breakup with Mondelez, mainly by consolidating facilities, laying off employees and eliminating less-profitable products. These moves are helping Kraft offset rising ingredient costs.

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MONDELEZ INTERNATIONAL INC. $35 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $59.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.6%; 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 beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for overseas markets. The company gets 40% of its sales from developing countries, 40% from Europe and 20% from North America.

Mondelez has now completed its plan to cut its annual costs by $800 million following its 2010 purchase of U.K.-based chocolate maker Cadbury.

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BAXTER INTERNATIONAL INC. $72 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 540.9 million; Market cap: $38.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.7%; TSINetwork Rating: Average; www.baxter.com) is the latest of our recommendations to announce a spinoff. (We analyze three other recent spinoffs in this issue.)

Baxter plans to split into two separate companies. One will focus on medical devices, such as intravenous pumps and kidney-dialysis equipment. This business provides 60% of Baxter’s total revenue. The other firm will make biopharmaceuticals, including vaccines and hemophilia drugs.

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

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CHEVRON CORP. $125 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $237.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.chevron.com) is the second-largest integrated oil company in the U.S. by revenue, after ExxonMobil (New York symbol XOM).

Chevron gets 90% of its earnings by producing oil (67% of total production) and natural gas (33%). The remaining 10% comes from its refineries, petrochemical operations and 8,050 gas stations in the U.S., which operate under the Chevron and Texaco banners. The company owns 400 of these locations and supplies fuel to an additional 8,600 stations outside the U.S.

At the end of 2013, Chevron’s proven reserves totaled 11.2 billion barrels of oil equivalent (57% oil and 43% natural gas). Based on its average 2013 production of 2.6 million barrels a day, that would last 11.8 years.

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potash stocks
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks as well as questions on investment strategy and the economy. 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. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week an Inner Circle member asked us about one of the Canadian commodity stocks operating in a risky part of the world (a week ago, Pat reported on a Canadian mining stock whose big property is in Eritrea: see the article here.) Allana Potash is developing a project in neighbouring Ethiopia. While the property holds mineable potash, a mine is still in the planning stages. Pat examines Allana’s progress toward building that mine, including a major strategic alliance it has formed, and assesses the company’s prospects for success. ...
2 Canadian energy stocks willing to spend big for big growth
BIRCHCLIFF ENERGY (Toronto symbol BIR; www.birchcliffenergy.com) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 81% of its output is gas. The remaining 19% is oil....
Real-Estate-Investing
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you advice on picking stocks and other investment topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “What makes investing in real estate different from your other investments is not just the nature of the risks you run, but the extra work you will have to do.”...
Enbridge, TransCanada push ahead with more pipeline projects
ENBRIDGE INC. (Toronto symbol ENB; www.enbridge.com) operates the world’s longest crude oil and liquids pipeline system. It also distributes natural gas to consumers in Ontario, Quebec, New Brunswick and New York State. As well, Enbridge has interests in 1,800 megawatts of renewable and alternative energy....