wall street

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. 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. Last week, an Inner Circle member, pleased with his investment in one U.S. stock, wanted to know if it would continue to pay off. This company uses personal sales representatives to sell its skin care and nutritional products and gets most of its sales in foreign markets like China....

INTERNATIONAL BUSINESS MACHINES CORP., $199.60, New York symbol IBM, reported higher-than-expected earnings for the latest quarter. However, revenue fell short of the consensus estimate. That caused the stock to fall 2% this week. In the three months ended March 31, 2012, the company earned $3.1 billion. That’s up 7.1% from $2.9 billion a year earlier. IBM spent $3.0 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 13.0%, to $2.61 from $2.31. Without unusual items, mainly costs to integrate acquisitions, IBM’s earnings per share would have risen 15.4%, to $2.78 from $2.41. On this basis, the latest earnings beat the consensus estimate of $2.65 a share....

A couple of weeks ago in this space, I said that if you want to add value to your investing, one of the least productive things to do is to try to “time” the market. By that, I meant attempting to sell good stocks at what looks to you like a price peak, in hopes of buying them back at lower prices. Rather than improving your results, market timing is likely to cost you money, in the long run if not in the short. You can find lots of promoters and ads that argue otherwise. They will assure you that their chart services, computer programs and training courses are able to produce extraordinarily profitable buy and sell signals. Of course, if you issue enough random buy and sell signals, some are bound to turn out right. But profits on the “good” calls are likely to fall short of losses on the “bad” calls, and brokerage commissions will simply expand your losses. I’ve met many, many investors who told me with a gleam in their eyes all about the vast profits they expected to make through market timing, with or without help from a chart service, trading software, training course, or a broker who could handle the details of one or more of these various profit shortcuts. I’ve never met anybody who succeeded with this kind of plan. All they ever got for their efforts was a costly lesson....

This week, an Inner Circle member wanted Pat’s opinion on the one of the world’s largest drug stocks. The leading maker of generic drugs,

GOOGLE INC., $624.60, Nasdaq symbol GOOG, currently has two share classes: the class A shares, which have one vote each, and the class B shares, which have 10 votes each. Only the class A shares are listed and traded. This week, the company announced that it would create a new share class: the non-voting class C shares, which will trade on Nasdaq. Existing class A and B shareholders will receive one class C share for each share they currently hold, for an effective 2-for-1 stock split. The proposal requires the approval of shareholders voting as a single group at the company’s annual meeting on June 21, 2012. Insiders control about 92% of the class B shares, which gives them 66% of the total votes, so the plan should pass easily....

This is the latest in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. Today, he deals with a question we hear quite often from our readers: How can I tell if my stock broker is really on my side? Pat begins by suggesting a version of the old encyclopedia buyer’s trick. Below is the transcription of Pat’s comments. ...

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. 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. Last week, an Inner Circle member had a particularly intriguing question about commodity stocks. Specifically, he wanted Pat’s opinion on a company that is using a revolutionary technology in an area in which traditional methods don’t work....

PLEASE NOTE: Our next Hotline will go out on Friday, April 13, 2012. VISA INC., $121.01, New York symbol V, operates the world’s largest retail electronic payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands. The company often uses third-party payment processors, provided they comply with Visa’s security standards and other requirements....

Merck & Co., $38.81, symbol MRK on New York (Shares outstanding: 3.0 billion; Market cap: $116.4 billion; www.merck.com), is a global health care company providing prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. Merck’s top-selling drugs include Singulair (for treating respiratory illnesses), Remicade (arthritis), Zetia and Vytorin (high cholesterol), and Januvia (diabetes). In the three months ended December 31, 2011, Merck’s revenue rose 1.7%, to $12.3 billion from $12.1 billion a year earlier. Excluding one-time items, earnings rose 8.1%, to $3.0 billion from $2.8 billion. Earnings per share rose 10.2%, to $0.97 from $0.88, on fewer shares outstanding. Merck holds cash of $15.0 billion, or $5.00 a share. Its long-term debt of $15.5 billion is a low 13.3% of its market cap....

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 specific investment advice, including how to use financial ratios and other information in your stock research. 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: “Use the price-to-sales ratio correctly and you can uncover stocks with strong growth potential.”...