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Weekly Investor

Weekly Investor – July 26, 2010

04 August 2010

Back to Square One

Market Summary:  

The major U.S. equity averages posted significant gains last week, recovering to levels at or near beginning-of-the-year.  Generally positive earnings reports across a wide range of industries coupled with positive results from stress-tests on European banks supported the upward momentum in the market.  The optimism, however, was tempered somewhat by continued weak housing and employment data.  With many more companies set to report this week, investors will be looking for more good news to support further upward momentum.

Over the past week, top-performing sectors in the S&P 500® Index included Industrials (+7.2%) and Basic Materials (+7.1%), while bottom-performing sectors included Health Care (-0.7%) and Consumer Staples (+2.4%).  In the fixed-income market the 10-year Treasury declined during the week with yield ending the week at 3.0%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

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 VFC – A Well-Oiled Machine

 

V.F. Corp. (VFC), founded in 1899 and headquartered in North Carolina, designs, manufactures and markets apparel ranging from jeanswear to sportswear.  Its product range, which is available in the United States and abroad, also includes footwear, luggage, accessories and occupational apparel.  VFC’s lines are branded under numerous labels including Wrangler, Rustler, The North Face, Vans, Kipling, Harley-Davidson, Nautica and 7 For All Mankind.  The company’s distribution channels include specialty stores, department stores, licensees and company-operated retail stores.

VFC is investing the cash generated by its mature Jeanswear Coalition into higher growth outdoor and contemporary brands.  We anticipate revenues and profits will accelerate as the company makes this transition.  In addition, we believe that VFC’s increased momentum with international initiatives will lead to an increase in the company’s organic revenue growth rates.  VFC has a very efficient manufacturing and distribution network, making it a prime candidate to acquire other fragmented apparel companies with reasonable valuations.  This combination of catalysts and favorable odds makes VFC an ideal investment for our clients.

 

 

Top 10 Equity Holdings


Cisco Systems Inc. 4.5%
Google Inc. 4.0%
Newell Rubbermaid Inc. 3.9%
Starwood Hotels 3.8%
Danaher Corp. 3.7%
Intel Corp. 3.4%
EMC Corp. 3.4%
Carnival Corp. 3.4%
MasterCard Inc. 3.3%
Ultra Petroleum Corp. 3.2%

U.S. Equity Indices


Index 07/23/10 Week % Chg YTD % Chg
DJIA 10,424.6 3.2% 0.0%
NASDAQ 2,269.5 4.2% 0.0%
S&P 500  1,102.7  3.6%  1.1%
Russell 1000 G 493.5 4.1% -1.3%

U.S. Credit Rates


Index 07/23/10 07/16/10 12/31/09
3 Month T-Bill 0.2% 0.2% 0.1%
5 Year T-Note 1.7% 1.7% 2.6%
10 Year T-Note 3.0% 2.9% 3.8%
30 Year T-Bond 4.0% 4.0% 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.