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
NEWMONT MINING CORP. $31 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 497.7 million; Market cap: $15.4 billion; Price-to-sales ratio: 1.8; Dividend yield: 3.2%; TSINetwork Rating: Average; www.newmont.com) has written down the value of its gold inventories, as well as two of its gold mines in Australia, by $1.8 billion. That’s because gold prices have dropped 21%, from around $1,800 an ounce in October 2012 to $1,420 today.

The company links its dividend to gold prices, so it has also cut the quarterly payout by 28.6%, to $0.25 a share from $0.35. The new annual rate of $1.00 yields 3.2%.

Newmont is still a hold.

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J.C. PENNEY CO. INC. $13 (New York symbol JCP; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 220.4 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.2; Dividend suspended in May 2012; TSINetwork Rating: Extra Risk; www. jcpenney.com) operates more than 1,100 department stores in the U.S. and Puerto Rico. It also sells goods online.

Over a year ago, the company switched to an everyday low prices strategy. It felt the move would entice shoppers to come into its stores more often and not wait for clearance sales.

However, the plan alienated Penney’s regular customers. In response to a sharp drop in its sales, the company switched back to its original marketing strategy.
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NORDSTROM INC. $57 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.5 million; Market cap: $11.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.nordstrom.com) mainly sells clothing, accessories and footwear. The company owns and operates 248 stores in 33 states.

In the second quarter of its 2014 fiscal year, which ended August 3, 2013, Nordstrom’s sales rose 6.3%, to $3.2 billion from $3.0 billion a year earlier. Samestore sales rose 4.2% on strong demand for men’s apparel, men’s shoes and children’s clothing. Online sales jumped 37%.

Earnings gained 17.9%, to $184 million from $156 million. Per-share earnings rose 24.0%, to $0.93 from $0.75, on fewer shares outstanding.
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MACY’S INC. $44 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 377.9 million; Market cap: $16.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.

The company continues to benefit from strong online sales. That’s largely because it is offering free shipping and letting customers pick up their orders at its stores. Macy’s recent move to tailor its merchandise to local tastes is also helping it compete.

Even so, Macy’s sales fell 0.8% in the second quarter of its 2014 fiscal year, which ended August 3, 2013, to $6.07 billion from $6.12 billion a year earlier. Same-store sales, which include online orders, also declined 0.8%.
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PEPSICO INC. $79 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $118.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.pepsico.com) earned $2.05 billion in the three months ended June 15, 2013, up 16.1% from $1.8 billion a year earlier. Earnings per share rose 17.0%, to $1.31 from $1.12, on fewer shares outstanding. The latest earnings included a $0.09-a-share gain on a deal to refranchise PepsiCo’s bottling operations in Vietnam. Revenue rose 2.1%, to $16.8 billion from $16.5 billion.

The company expects to save $900 million this year, mainly by closing plants and cutting jobs. PepsiCo will use some of these savings to develop and promote new products, particularly healthier snack foods. The savings will also help the company offset higher ingredient costs. However, soft drink sales continue to decline, particularly in North America.

PepsiCo is a hold....
MICROSOFT CORP. $33 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.3 billion; Market cap: $273.9 billion; Price-to-sales ratio: 3.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www. microsoft.com) jumped 8% after it announced that Steve Ballmer, its chief executive officer since 2000, will soon retire. Microsoft expects to name a replacement within the next 12 months.

The company continues to generate strong cash flows from its business products, such as server software, particularly as more companies move to a cloud computing model. However, weak sales of its new consumer devices, such as the Surface tablet computer, have held back its earnings. Investors feel a new CEO from outside the company may sell these struggling businesses.

Microsoft is still a buy....
FAIR ISAAC CORP. $51 .(New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. The company also produces software that helps credit card issuers control fraud and analyze cardholders’spending patterns.

In the company’s fiscal 2013 third quarter, which ended June 30, 2013, its earnings per share before one-time items rose 9.6% from a year ago, to $0.80 from $0.73.

Revenue gained 14.5%, to $183.8 million from $160.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through various channels, including voice, text messaging, mobile applications and email.
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BROADRIDGE FINANCIAL SERVICES INC. $30 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.1 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 85% of all proxy votes in the U.S.

In its 2013 fiscal year, which ended June 30, 2013, Broadridge’s earnings rose 10.6%, to $236.0 million from $213.4 million in fiscal 2012. Earnings per share rose 12.6%, to $1.88 from $1.67. These figures exclude unusual items, such as writedowns and costs to integrate recent acquisitions.

Revenue rose 5.5%, to $2.4 billion from $2.3 billion. Revenue from the company’s Investor Communications division (which supplies 73% of the total) rose 7.7%. Broadridge held on to 99% of its existing customers. It also continues to do a good job of signing clients to long-term deals that generate recurring revenue.
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DUN & BRADSTREET CORP. $100 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 38.8 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.dnb.com) is the world’s largest provider of credit reports on individual companies. Its customers use these reports to make buying and lending decisions.

Credit reports supply two-thirds of Dun & Bradstreet’s revenue. The remaining third comes from other information products, including software that helps businesses manage websites and customer data.

In the quarter ended June 30, 2013, Dun & Bradstreet’s revenue rose just 0.7%, to $386.4 million from $383.7 million a year earlier. Stronger demand for its credit reports and other products in Europe (which accounts for 15% of its revenue) and Asia (13%) offset weaker sales in North America (72%).
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