Weekly Investor – Dec. 20, 2010
A Gift for Investors
Market Summary:
The major U.S. equity averages closed out this past week with solid gains across the board. The week’s catalyst was provided by a policy shift from President Obama, moving more towards the center in an effort to win the business contingency back. The positive move, which was cheered by the market, included the signing of the $858 billion tax bill, extending tax breaks for all Americans. In addition, President Obama pledged more government backed lending to small business. Along with the political maneuvers, the equity averages were boosted by positive economic data, including a drop in unemployment claims as well as rising retail sales. As the year comes to a close, the equity averages remain poised to close out a prosperous year for equity investors.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+1.7%) and Health Care (+1.5%), while bottom-performing sectors included Financials (-1.4%) and Technology (-0.4%). In the fixed-income market, the 10-year Treasury remained steady, ending the week with yield at 3.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Positioning for Future Improvement
Ultra Petroleum Corporation (UPL) engages in the development, production, operation and acquisition of oil and gas properties. UPL has reserves located in the Pinedale Basin (Wyoming) and the Marcellus Shale Basin (Pennsylvania).
Despite the current scenario of relatively low natural gas prices, UPL retains a profitable production growth profile due to the high-quality Pinedale acreage and its low costs. Expanding upon its best-in-breed resource base, UPL recently purchased additional acreage in the Marcellus Shale Basin. The acquisition will enable UPL to reinvest its impressive cash flow and accelerate production growth. These factors combined with industry leading financial returns and a favorable valuation near the market average lead the Argent team to conclude UPL exhibits favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Starwood Hotels | 4.1% |
| Google Inc. | 4.1% |
| Danaher Corp. | 3.9% |
| Qualcomm Inc. | 3.7% |
| Carnival Corp. | 3.6% |
| Energizer Holdings | 3.5% |
| Biogen Idec Inc. | 3.4% |
| FactSet Research | 3.3% |
| EMC Corp. | 3.2% |
| Legg Mason Inc. | 3.2% |
U.S. Equity Indices
| Index | 12/17/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,491.9 | 0.7% | 10.2% |
| NASDAQ | 2,643.0 | 0.2% | 16.5% |
| S&P 500 | 1,243.9 | 0.3% | 11.6% |
| Russell 1000 G | 571.8 | 0.4% | 14.3% |
U.S. Credit Rates
| Index | 12/17/10 | 12/03/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.9% | 2.0% | 2.6% |
| 10 Year T-Note | 3.3% | 3.3% | 3.8% |
| 30 Year T-Bond | 4.4% | 4.4% | 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.
