Weekly Investor – July 19, 2010
Unanswered Questions
Market Summary:
The major averages all posted declines for the week as a round of softer-than-expected economic data along with disappointing earnings from key financial names led to a somber mood on Wall Street. The latest round of data to disappoint included the Empire Manufacturing index, consumer sentiment, and mortgage applications for home purchases. On the earnings front, Alcoa and Intel delivered solid results while JP Morgan and other big banks caused investors to ponder the negative financial impact of government regulation. Although equity values look compelling, with many questions weighing on the markets and earnings season ramping into high gear, investors can expect volatility to remain high.
Over the past week, top-performing sectors in the S&P 500® Index included Consumer Staples (+0.1%) and Technology (+0.0%), while bottom-performing sectors included Financials (-2.9%) and Industrials (-1.9%). In the fixed-income market the 10-year Treasury gained during the week with yield ending the week at 2.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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VAR – Capitalizing on a Tough Environment
Varian Medical Systems, Inc. (VAR) is a leader in radiation therapy and oncology treatment. The company designs, manufactures, sells and services equipment and software products used to treat cancer with radiation, operating in two segments: Oncology Systems and X-ray Products.
Over the past 18 months, VAR’s stock has become more attractive from a valuation standpoint as large capital equipment purchases by hospitals have been negatively affected by a host of budgetary issues. Despite the challenging environment, VAR has continued to take market share from competitors along the way and strengthen its leading position. With hospital spending beginning to stabilize and VAR’s competitive position even stronger today, we feel an investment in VAR offers favorable odds for our clients.
Top 10 Equity Holdings
| Cisco Systems Inc. | 4.6% |
| Google Inc. | 4.0% |
| Newell Rubbermaid Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Starwood Hotels | 3.6% |
| EMC Corp. | 3.5% |
| Intel Corp. | 3.5% |
| Allergan Inc. | 3.3% |
| Biogen Indec Inc. | 3.2% |
| MasterCard Inc. | 3.2% |
U.S. Equity Indices
| Index | 07/16/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,097.9 | -1.0% | -3.2% |
| NASDAQ | 2,179.1 | -0.8% | -4.0% |
| S&P 500 | 1,064.9 | -1.2% | -4.5% |
| Russell 1000 G | 474.2 | -1.0% | -5.2% |
U.S. Credit Rates
| Index | 07/16/10 | 07/09/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.2% | 0.1% |
| 5 Year T-Note | 1.7% | 1.8% | 2.6% |
| 10 Year T-Note | 2.9% | 3.1% | 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.
