Weekly Investor – Feb. 07, 2011
Strong Earnings Continue
Market Summary:
The major U.S. equity averages experienced significant gains during last week, as strong earnings results across a broad base of companies offset concerns over continued tensions in Egypt and neighboring countries. Solid results from Energy heavyweight Exxon Mobil lifted performance of the Energy and Materials sectors. During the week, major retailers also reported better-than-expected monthly same-store sales for January. On the economic front, positive news on personal income, consumer spending and ISM manufacturing and services readings were point to continued improvement, although winter weather disruptions made January employment data difficult to interpret. In the face of strong equity and economic momentum, the trend of increasing Treasury yields continued during the week.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+4.6%) and Energy (+4.2%), while bottom-performing sectors included Utilities (+0.3%) and Consumer Staples (+1.0%). In the fixed-income market, the 10-year Treasury loss ground during the week with the yield ending at 3.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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A Best-in-Breed Operator
Carnival Corp. (CCL), a subsidiary of Carnival Group, is a cruise and vacation company founded in 1974 with headquarters in Miami, Florida. CCL operates its cruise ships in North America, Europe, Australia and New Zealand. In addition to CCL’s cruise business, the company operates lodges in Alaska and the Yukon Territory of Canada, provides chartered coaches, and markets various sightseeing packages.
During the economic downturn, the discretionary nature of cruise travel spending has been reinforced, and as a result, companies instituted deep price cuts to lure vacationers. While the outlook remains challenging, CCL has lived up to its “best of breed” reputation by continuing to separate itself from the competition. The company’s strong balance sheet and industry position should allow CCL to capture market share from its weakened competitors. Going into an economic recovery with sustainable competitive advantages leads us to believe CCL offers favorable odds for our clients
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.1% |
| Qualcomm Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Carnival Corp. | 3.7% |
| EMC Corp. | 3.5% |
| FactSet Research | 3.5% |
| Cisco Systems Inc. | 3.5% |
| Maxim Integrated | 3.3% |
| Oracle Corp. | 3.2% |
| MasterCard Inc. | 3.2% |
U.S. Equity Indices
| Index | 02/04/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,092.1 | 2.3% | 4.4% |
| NASDAQ | 2,769.3 | 3.1% | 4.4% |
| S&P 500 | 1,310.9 | 2.7% | 4.2% |
| Russell 1000 G | 601.8 | 3.0% | 4.7% |
U.S. Credit Rates
| Index | 02/04/11 | 01/28/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.1% | 0.1% |
| 5 Year T-Note | 2.3% | 1.9% | 2.0% |
| 10 Year T-Note | 3.6% | 3.3% | 3.3% |
| 30 Year T-Bond | 4.7% | 4.6% | 4.3% |
| 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.
