Weekly Investor – Nov. 15, 2010
Temporary Setback
Market Summary:
After posting meaningful gains over the last month, the major U.S. equity averages corrected during the past week. Technology bellwether Cisco Systems (CSCO) provided a weaker than expected outlook due to a significant slowdown in government purchasing, which caused selling pressure in the Tech Sector. As a result, investors became more skeptical of the sustainability of the current economic recovery as well and priced in a potentially slower growth economy in 2011. Although we saw positive U.S. employment data during the week, speculation that China may raise interest rates to slow growth and control inflation added to the negative market sentiment.
Over the past week, top-performing sectors in the S&P 500® Index included Energy (+1.0%) and Consumer Staples (-1.3%), while bottom-performing sectors included Financials (-4.0%) and Technology (-3.2%). In the fixed-income market the 10-year Treasury lost ground, 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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More Room to Grow
Hansen Natural Corp. (HANS) engages in the development, marketing, sale, and distribution of beverages in the United States and internationally. Based in Corona, California, HANS offers natural sodas, fruit juices, fruit smoothies, sparkling beverages, multi-vitamin juice drinks as well as energy drinks under several brands including Hansen Naturals, Monster Energy, Rumba, Samba, Tango, Peace Tea, Blue Sky, Vidration and Java.
HANS is a dominant player in the energy drink category as its Monster Energy drink brand controls more than 30% market share and has consistently added to its strong position. The beverage industry has shown signs of stabilization and the energy drink segment is leading the way as the highest growth category in the industry, which we believe are signs that HANS’s fundamentals will continue to improve. In addition to stabilizing industry dynamics, HANS’s new distribution agreement with Coca-Cola Enterprises is off to an encouraging start and provides strong international growth opportunities. We have initiated a position in HANS as we believe the attractive valuation coupled with improving growth prospects offer an attractive return profile for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.3% |
| Starwood Hotels | 4.0% |
| Danaher Corp. | 3.8% |
| Carnival Corp. | 3.7% |
| Qualcomm Inc. | 3.6% |
| Energizer Holdings | 3.5% |
| Cisco Systems Inc. | 3.4% |
| MasterCard Inc. | 3.4% |
| Biogen Idec Inc. | 3.4% |
| FactSet Research | 3.2% |
U.S. Equity Indices
| Index | 11/12/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,192.6 | -2.2% | 7.3% |
| NASDAQ | 2,518.2 | -2.4% | 11.0% |
| S&P 500 | 1,199.2 | -2.2% | 7.5% |
| Russell 1000 G | 548.0 | -2.0% | 9.6% |
U.S. Credit Rates
| Index | 11/12/10 | 11/05/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.1% | 2.6% |
| 10 Year T-Note | 2.8% | 2.5% | 3.8% |
| 30 Year T-Bond | 4.3% | 4.1% | 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.
