Weekly Investor – Feb. 14, 2011
Momentum Continuing
Market Summary:
The major U.S. equity averages added to their gains this past week as positive economic data and resolution in Egypt helped fuel the indices higher. In addition, better-than-expected news on the earnings front remained a consistent theme for Corporate America. Of all the companies that have reported thus far, nearly 70% have beaten expectations. This positive trend of fundamental improvement along with signs of further economic improvement has given the Wall Street Bulls more than enough momentum to take hold of the markets. Against this favorable fundamental backdrop, money flows are beginning to gradually reverse, finding a home in equities from fixed income investments. This momentum has benefited equity investors in the form of solid gains to start to the year.
Over the past week, top-performing sectors in the S&P 500® Index included Consumer Discretionary (+3.5%) and Financials (+2.9%), while bottom-performing sectors included Energy (-0.3%) and Health Care (+0.0%). In the fixed-income market, the 10-year Treasury remained steady 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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Getting Paid to Wait
Cisco Systems, Inc. (CSCO) designs, develops, manufactures and sells networking, communication and information technology products. These products enable the transportation of data, including voice and video, virtually anywhere in the world. CSCO’s advanced technologies can be found in use in private residences, businesses, enterprises and governmental institutions.
CSCO has solid long-term growth potential given its market opportunities such as 10-Gigabit Ethernet and Voice-Over Internet Protocol (VOIP). These markets, combined with CSCO’s dominance in its traditional networking business, give us confidence in the company’s future. CSCO has the right strategy, and more importantly, has the ability to execute on this strategy. The current valuation looks positive relative to the longer-term growth potential. While we are acutely aware of the risks associated with this stock, the potential reward justifies maintaining a stake in the company.
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.1% |
| Qualcomm Inc. | 4.0% |
| Danaher Corp. | 4.0% |
| Carnival Corp. | 3.7% |
| EMC Corp. | 3.7% |
| FactSet Research | 3.5% |
| Maxim Integrated | 3.5% |
| MasterCard Inc. | 3.2% |
| Oracle Corp. | 3.2% |
| Energizer Holdings | 3.1% |
U.S. Equity Indices
| Index | 02/11/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,273.3 | 1.5% | 6.0% |
| NASDAQ | 2,809.4 | 1.4% | 5.9% |
| S&P 500 | 1,329.2 | 1.4% | 5.7% |
| Russell 1000 G | 610.7 | 1.5% | 6.3% |
U.S. Credit Rates
| Index | 02/11/11 | 02/04/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.2% | 0.1% |
| 5 Year T-Note | 2.4% | 2.3% | 2.0% |
| 10 Year T-Note | 3.6% | 3.6% | 3.3% |
| 30 Year T-Bond | 4.7% | 4.7% | 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.
