Weekly Investor – Aug. 16, 2010
A Familiar Tune
Market Summary:
The major U.S. equity averages ended the week sharply in the red, pushing indices into negative territory for the year. News flow about the economy continues to move the markets, and a softer outlook from Cisco Systems did not help matters last week.
With each passing day, another economic number is reported and the numbers continue to paint a very confusing picture. While strength is certainly noticeable in pockets of the economy, the employment picture, housing market, and lack of clarity coming out of Washington remain overhangs for investors. Earnings season rolls on and thus far Corporate America has delivered a consistent message of strong operations with a cautious outlook. Market momentum will return only when investors gain confidence in that outlook. Stay Tuned!
Over the past week, top-performing sectors in the S&P 500® Index included Telecomm (+0.6%) and Consumer Staples (-1.2%), while bottom-performing sectors included Technology (-5.6%) and Industrials (-5.0%). In the fixed-income market the 10-year Treasury gained ground during the week with yield ending the week at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Gaining Share in a Challenging Environment
Minnesota based Best Buy Co., Inc. (BBY) operates consumer electronics stores in the United States, Canada, Mexico, China and Europe. The company’s retail stores carry a broad range of products including navigation systems, mobile electronics, notebook and desktop computers, mobile phones and related subscription services, home theater systems, entertainment software, digital downloads and kitchen appliances. BBY also offers service contracts, extended warranties, product repair, and installs home theater systems through its Geek Squad division.
The operating environment for BBY has improved given the reduced competitive landscape following the bankruptcy of Circuit City. In addition, the recovering health of the company’s end customer, the consumer, gives optimism for revenue growth and increased capture of market share going forward. As a “best in breed” company with an attractive valuation, we believe BBY represents favorable odds for our clients.
Top 10 Equity Holdings
| Cisco Systems Inc. | 4.3% |
| Google Inc. | 4.1% |
| Newell Rubbermaid Inc. | 4.1% |
| Starwood Hotels | 3.8% |
| Danaher Corp. | 3.7% |
| Energizer Holdings | 3.6% |
| MasterCard Inc. | 3.4% |
| Biogen Idec Inc. | 3.4% |
| Carnival Corp. | 3.3% |
| Allergan Inc. | 3.2% |
U.S. Equity Indices
| Index | 08/13/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,303.2 | -3.3% | -1.2% |
| NASDAQ | 2,173.5 | -5.0% | -4.2% |
| S&P 500 | 1,079.3 | -3.8% | -3.2% |
| Russell 1000 G | 479.7 | -4.1% | -4.1% |
U.S. Credit Rates
| Index | 08/13/10 | 08/06/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.2% | 0.1% |
| 5 Year T-Note | 1.4% | 1.5% | 2.6% |
| 10 Year T-Note | 2.6% | 2.8% | 3.8% |
| 30 Year T-Bond | 3.7% | 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.
