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
Small cap stock rises with crop yields in Western Canada
Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice 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....
CAE prospers when the global economy rises
CAE INC. (Toronto symbol CAE; www.cae.com) is the world’s leading maker of flight simulators for commercial airlines, with 70% of the market. It also makes simulators for military clients. The company began training pilots for its customers in 2001 and now has over 100 flight schools in 30 countries....
As pipeline capacity lags, CN ships more oil
CANADIAN NATIONAL RAILWAY CO. (Toronto symbol CNR; www.cn.ca) operates Canada’s largest railway. Its 32,350-kilometre network stretches across the country and through the U.S. Midwest to the Gulf of Mexico....
GENUINE PARTS CO. $82 (www.genpt.com) is buying Edmontonbased Commercial Solutions Inc. This firm distributes industrial products, such as bearings and transmission parts, across Canada. Genuine Parts didn’t say how much it would pay when it completes this purchase in the first quarter of 2014, but the deal will add $100 million to its annual revenue of $13.7 billion....
GENERAL ELECTRIC CO. $27 (www.ge.com) has raised its quarterly dividend by 15.8%, to $0.22 a share from $0.19. The new annual rate of $0.88 yields 3.3%. Buy.
BOEING CO. $135 (www.boeing.com) is seeing stronger demand for its passenger planes as airlines upgrade their aging fleets with more efficient models. As a result, it has increased its dividend by 50.5%. The new annual rate of $2.92 a share yields 2.2%. Boeing also plans to buy back $10 billion worth of its shares, or about 10% of the total outstanding, over the next three years....
AMERICAN EXPRESS CO. $86 (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $94.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.1%; TSINetwork Rating: Average; www. americanexpress.com) gets most of its revenue from the fees it charges merchants who accept its charge cards (which have no pre-set spending limit and must be paid in full each month) and credit cards (which can carry a balance).

Unlike other credit card companies, such as Visa and MasterCard, Amex is also a lender. That lets it collect interest payments on its cardholders’outstanding balances.


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ADOBE SYSTEMS INC. $59 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 501.8 million; Market cap: $29.6 billion; Price-to-sales ratio: 7.0; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $164.6 million, or $0.32 a share, in its fiscal 2013 fourth quarter, which ended November 29, 2013. That’s down 46.5% from $307.9 million, or $0.61 a share, a year earlier. Revenue fell 9.7%, to $1.04 billion from $1.15 billion.

Last year, the company starting selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. Adobe added 402,000 Creative Cloud subscribers during the quarter, to bring its total to 1.44 million. That beat its goal of 1.25 million users.

The stock is up 57% in the past year and now trades at 53.6 times the $1.10 a share that Adobe will likely earn in fiscal 2014. That’s a high p/e ratio for a company that mainly serves customers in cyclical businesses like publishing. However, its switch to sale-by-subscription could generate a lot of long-term growth.
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STATE STREET CORP. $71 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 439.0 million; Market cap: $31.2 billion; Price-to-sales ratio: 3.3; Dividend yield: 1.5%; TSINetwork Rating: Extra Risk; www. statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans.

The company’s fee income rises and falls with the value of the mutual funds and other securities it manages. Thanks to improving stock markets and new contracts, State Street’s earnings rose 13.5% in the three months ended September 30, 2013, to $537 million from $473 million a year earlier.

The company spent $560 million buying back its shares in the quarter. As a result, earnings per share gained 20.2%, to $1.19 from $0.99. Revenue increased 3.4%, to $2.5 billion from $2.4 billion.
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