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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Learn the metrics that define “safe” stocks, including cash flow, payout ratios, debt, and moats, plus TFSA/RRSP tips for Canadian dividend investors.
QUAKER CHEMICAL CORP. $72 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.2 million; Market cap: $950.4 million; Price-to-sales ratio: 1.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.

Quaker continues to benefit from recent acquisitions that have expanded its international operations: it now gets 60% of its sales from overseas. The company has also cut its costs and raised its prices, which has improved its profitability.

In the three months ended June 30, 2013, earnings jumped 43.5%, to $1.22 a share from $0.85 a year earlier. Without several unusual items, including a tax refund and charges related to a client’s bankruptcy, per-share earnings rose 11.1%, to $1.00 from $0.90.
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BRIGGS & STRATTON CORP. $21 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 47.9 million; Market cap: $1.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.briggsandstratton.com) is the world’s largest maker of lawn mower engines. The company also makes other home and garden equipment, such as portable generators, pressure washers and snow blowers.

In Briggs’s 2013 fiscal year, which ended June 30, 2013, its sales fell 9.9%, to $1.9 billion from $2.1 billion in fiscal 2012. That’s mainly because inventories remain high following last year’s droughts in North America and Australia, hurting demand for new lawn mowers and other equipment.

As well, Briggs recently stopped selling its products through mass retailers in the U.S. That’s because big chains demand lower prices from suppliers like Briggs, which hurts its profit margins.
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MTS SYSTEMS CORP. $64 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.6 million; Market cap: $998.4 million; Price-to-sales ratio: 1.9; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that manufacturers use to test the behaviour of materials, machines and structures. This helps its clients reduce errors and costs.

The uncertain economy is prompting manufacturers to hold off on buying the company’s gear. In its fiscal 2013 third quarter, which ended June 29, 2013, MTS’s revenue fell 4.7%, to $135.1 million from $141.7 million a year earlier.

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TENNANT CO. $62 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.4 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.2%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets.

The company continues to enjoy strong demand for floor cleaners that use its ec-H2O technology, which uses electricity to make tap water act like a detergent. That eliminates the need for soaps and lowers the machine’s operating costs.

However, municipal governments, particularly in Europe, are spending less on cleaning equipment. As a result, Tennant’s sales rose just 0.4% in the three months ended June 30, 2013, to $200.2 million from $199.5 million a year earlier. If you exclude the negative impact of foreign exchange rates and contributions from acquisitions, sales would have risen 0.9%.
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CONAGRA FOODS INC. $30 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 419.5 million; Market cap: $12.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.conagrafoods.com) reported that its sales rose 27.2% in its fiscal 2014 first quarter, which ended August 25, 2013, to $4.2 billion from $3.3 billion a year earlier.

That’s mainly due to private-label food maker Ralcorp, which it bought for $4.75 billion in January 2013. Ralcorp contributed $942.0 million to ConAgra’s sales in the latest quarter.

However, strong price competition is hurting sales of ConAgra’s branded foods. It also spent $26 million on developing new products.
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VERIZON COMMUNICATIONS INC. $47 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $136.3 billion; Priceto- sales ratio: 1.2; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) is the second-largest wireless service provider in the U.S., with 100.1 million subscribers. Market leader AT&T has 107.9 million wireless customers.

Wireless now supplies 67% of Verizon’s revenue and 80% of its earnings. The remaining 33% of revenue and 20% of earnings comes from its 21.8 million phone and Internet customers.

Verizon’s revenue rose 10.7%, from $97.4 billion in 2008 to $107.8 billion in 2009. Revenue dipped to $106.6 billion in 2010 but then rebounded to $115.8 billion in 2012.
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Stella-Jones builds on its niche markets with acquisitions Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks to buy 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....
Overseas sales, smartphone orders help Domino’s Pizza keep growing
DOMINO’S PIZZA (New York symbol DPZ; www.dominos.com) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,440 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores....
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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 specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away. Today’s tip: “You may learn quite a bit about investing in an investment club, but keep in mind that some of what you learn may be things you should avoid in future.”...