Weekly Investor – Nov. 29, 2010
Let the Shopping Begin!
Market Summary:
The major U.S. equity averages closed with mixed results over the Thanksgiving holiday. Lower than expected initial jobless claims and improving consumer sentiment measure gave positive support to the Market. However, concerns of the Ireland debt crisis spreading to the rest of Europe as well as the latest conflict between North and South Korea weighed on the Market. Investors are also cautiously awaiting sales figures from the traditional Thanksgiving weekend shopping as an indication of the expected level of good cheer from the Holidays.
Over the past week, top-performing sectors in the S&P 500® Index included Consumer Discretionary (+0.4%) and Technology (+0.4%), while bottom-performing sectors included Financials (-2.5%) and Energy (-1.7%). In the fixed-income market the 10-year Treasury lost ground, 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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Favorable Odds
Founded in 1969, Starwood Hotels & Resorts Worldwide, Inc. (HOT) is a hotel and leisure company operating luxury and upscale full service hotels, retreats, resorts, and residences around the globe. The company’s portfolio includes the following brands, among others: St. Regis, The Luxury Collection, W, Westin, Le Meridien, Sheraton, Four Points and Element.
Prior to the global economic pullback, HOT embarked upon a strategy change whereby the company began selling its hotel properties while maintaining the management contracts. After implementation of this plan, HOT will be left strictly in the hotel management business. The impact of this transition, once completed, will result in a company that offers investors much higher returns with less cyclicality when compared to the current ownership structure. Despite this positive shift, broad economic challenges have weighed heavily on the company and the hotel industry as a whole. HOT’s current valuation coupled with the change in strategy results in very attractive return potential as the economy begins to heal.
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.2% |
| Starwood Hotels | 4.0% |
| Danaher Corp. | 3.8% |
| Qualcomm Inc. | 3.6% |
| Carnival Corp. | 3.6% |
| Energizer Holdings | 3.4% |
| Biogen Idec Inc. | 3.4% |
| FactSet Research | 3.3% |
| Cisco Systems Inc. | 3.3% |
| MasterCard Inc. | 3.3% |
U.S. Equity Indices
| Index | 11/26/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,092.0 | -1.0% | 6.4% |
| NASDAQ | 2,534.6 | 0.7% | 11.7% |
| S&P 500 | 1,189.4 | -0.9% | 6.7% |
| Russell 1000 G | 550.2 | -0.0% | 10.0% |
U.S. Credit Rates
| Index | 11/26/10 | 11/19/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.1% | 0.1% |
| 5 Year T-Note | 1.5% | 1.5% | 2.6% |
| 10 Year T-Note | 2.9% | 2.8% | 3.8% |
| 30 Year T-Bond | 4.2% | 4.2% | 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.
