Weekly Investor – Sept. 14, 2010
Tug of War
Market Summary:
The major U.S. equity averages ended the week with gains across the board. The positive momentum was the result of another round of economic data that came in ahead of pessimistic expectations. The latest data included better-than-expected retail sales, manufacturing data, unemployment claims, as well as home prices. For investors, the month of August was dominated by fear. Thus far, September seems to have changed the tone as a stream of positive fundamental data has lessened investors’ fears. The tug of war between prospects of “modest growth” versus “double-dip recession” will continue to dictate the near term direction for the markets. At least for now, the economic data appears to be tilting in favor of the Wall Street Bulls. Stay tuned!
Over the past week, top-performing sectors in the S&P 500® Index included Health Care (+2.0%) and Telecomm (+1.6%), while bottom-performing sectors included Utilities (-0.7%) and Technology (-0.3%). In the fixed-income market the 10-year Treasury lost ground with yield ending the week at 2.8%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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The Technology Leader
Cisco Systems, Inc. (CSCO) designs, develops, manufactures and sells networking, communication and information technology products. These products allow for the transportation of data, including voice and video, between virtually anywhere in the world. CSCO’s advanced technologies can be found in use in private residences, businesses, enterprises and additional institutions.
CSCO has solid long-term growth potential given numerous emerging market opportunities, such as 10-Gigabit Ethernet and Voice Over Internet Protocol (VoIP). These markets, combined with CSCO’s dominance in its traditional networking business, give us confidence in the company’s future. CSCO has the right strategy, and more importantly, has the ability to execute on this strategy. In addition, CSCO’s current valuation appears favorable relative to the longer-term growth potential.
Top 10 Equity Holdings
| Newell Rubbermaid | 4.2% |
| Starwood Hotels | 4.0% |
| Cisco Systems Inc. | 4.0% |
| Google Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Energizer Holdings | 3.7% |
| Carnival Corp. | 3.4% |
| FactSet Research Systems | 3.4% |
| Biogen Idec Inc. | 3.3% |
| EMC Corp. | 3.3% |
U.S. Equity Indices
| Index | 09/10/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,462.8 | 0.1% | 0.3% |
| NASDAQ | 2,242.5 | 0.4% | -1.2% |
| S&P 500 | 1,109.6 | 0.5% | -0.5% |
| Russell 1000 G | 493.5 | 0.3% | -1.3% |
U.S. Credit Rates
| Index | 09/10/10 | 09/03/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.6% | 1.4% | 2.6% |
| 10 Year T-Note | 2.8% | 2.6% | 3.8% |
| 30 Year T-Bond | 3.9% | 3.7% | 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.
