Weekly Investor – Oct. 25, 2010
Reasons for Optimism?
Market Summary:
The major U.S. equity averages all closed in positive territory for the week as positive corporate earnings, on balance, outweighed a surprise rate hike in China and a spate of negative economic news. Cautionary headlines, which provided more support for Fed intervention, included soft retailer surveys, a decline in mortgage apps, as well as stagnant payroll numbers. Rays of sunshine were provided by an uptick in the Leading Economic Indicators, as well as an increase in manufacturing activity. According to Credit Suisse, of the S&P 500® companies that have reported earnings thus far this quarter, 83% beat expectations. With a general election only days away and corporate earnings rolling out on a daily basis, investors can expect market volatility to continue.
Over the past week, top-performing sectors in the S&P 500® Index included Financials (+1.9%) and Consumer Discretion (+0.8%), while bottom-performing sectors included Basic Materials (-0.6%) and Utilities (-0.04%). In the fixed-income market the 10-year Treasury gained ground, ending the week at 2.5%.
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 Growing Market
FactSet Research Systems, Inc. (FDS) provides financial data and analytical tools to the global investment community. Its data collection and consolidation efforts, when combined with the relationships the company has established with many third-party data providers, has allowed FDS to provide its users with a wide array of financial data. FDS also continues to develop and enhance the tools available for investment professionals, thereby resulting in more efficient workflows for portfolio managers, risk managers, equity analysts, investment bankers and fixed-income professionals.
FDS has a proven track record of winning market share and delivering growth at a significantly higher rate when compared to its peers. The company’s success has been primarily driven by the flexibility of its tools and its high level of customer satisfaction. FDS has achieved additional credibility in pursuing new clients as a result of purchasing the historic database from its rival, Thomson Reuters Corp. We believe FDS has plenty of room to stretch and grow, and with no debt on its balance sheet, FDS is well-positioned to invest in its businesses for the long-term. As such, we believe the company will outperform its peers and the market over the next three to five years.
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.4% |
| Starwood Hotels | 4.1% |
| Cisco Systems Inc. | 4.0% |
| Newell Rubbermaid | 4.0% |
| Energizer Holdings | 3.8% |
| Danaher Corp. | 3.7% |
| Carnival Corp. | 3.5% |
| MasterCard Inc. | 3.4% |
| FactSet Research Systems | 3.3% |
| EMC Corp. | 3.2% |
U.S. Equity Indices
| Index | 10/22/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,132.6 | 0.6% | 6.8% |
| NASDAQ | 2,479.4 | 0.4% | 9.3% |
| S&P 500 | 1,183.1 | 0.6% | 6.1% |
| Russell 1000 G | 538.3 | 0.5% | 7.6% |
U.S. Credit Rates
| Index | 10/22/10 | 10/15/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.1% | 1.2% | 2.6% |
| 10 Year T-Note | 2.6% | 2.6% | 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.
