Weekly Investor June 14, 2010
Relief
Market Summary:
The major equity averages closed out the week with solid gains. The battered Euro posted a weekly gain against the U.S. Dollar, a potential sign that investors’ confidence in European countries is returning. In the U.S., weekly initial jobless claims were in line with expectations, although May retail sales were weaker than expected. However, excluding non-core items such as auto sales, building materials and gasoline sales, core retail sales were slightly positive. In addition, positive June Consumer Confidence Survey results and supportive comments from Fed Chairman Bernanke regarding economic recovery all contributed to support the market.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (5.3%) and Energy (5.1%), while bottom-performing sectors included Technology (0.9%) and Consumer Staples (1.4%). In the fixed-income market the 10-year Treasury remained at the same level with yield ending the week at 3.2%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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RAH
Ralcorp Holdings, Inc. (RAH) manufactures, distributes and markets private store brands for sale primarily in the United States. Its line of products includes items such as cereal, cookies, crackers, salad dressings, snacks, frozen waffles, peanut butter and nuts. RAH has numerous food production facilities in the United States from which its products are distributed through independent truck lines.
Traditionally, management has had a disciplined “grow through acquisition” strategy that focused on the very fragmented private label foods industry. RAH’s disciplined strategy led to a series of acquisitions that increased its product offerings and subsequently improved returns. Most recently RAH completed the acquisition of the Post cereal franchise from Kraft Foods (KFT). This acquisition has increased revenues and earnings materially. The acquisition has given RAH exposure to the significantly more profitable branded cereal business, providing an additional avenue for growth. This transformational deal, in combination with RAH’s demonstrated acquisition expertise, makes it an attractive stock for our clients.
Top 10 Equity Holdings
| Cisco Systems Inc. | 4.4% |
| Newell Rubbermaid Inc. | 4.1% |
| Google Inc. | 4.0% |
| Danaher Corp. | 3.8% |
| Starwood Hotels | 3.7% |
| Carnival Corp. | 3.6% |
| Intel Corp. | 3.3% |
| MasterCard Inc. | 3.2% |
| EMC Corp. | 3.1% |
| Energizer Holdings | 3.1% |
U.S. Equity Indices
| Index | 06/11/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,211.1 | 2.8% | -2.1%% |
| NASDAQ | 2,243.6 | 1.1% | -1.1% |
| S&P 500 | 1,091.6 | 2.5% | -2.1% |
| Russell 1000 G | 486.7 | 2.0% | -2.7%% |
U.S. Credit Rates
| Index | 06/11/10 | 06/04/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 2.0% | 2.0% | 2.6% |
| 10 Year T-Note | 3.2% | 3.2% | 3.8% |
| 30 Year T-Bond | 4.2% | 4.1% | 4.6% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
