Weekly Investor – Jan. 31, 2011
All Eyes on Egypt
Market Summary:
The major U.S. equity averages ended in the red this past week as uncertainty over the demonstrations in Egypt sent averages lower. The political unrest in Egypt remains an evolving situation but its impact was immediately felt in the form of higher oil prices as investors worry about the fate of the Suez Canal, a key link in oil transportation. Adding balance to the markets was a steady wave of positive economic data. Included in this was the fact that the economy has officially shifted from “recovery” to “expansion” as 4Q nominal GDP came in at +3.4%. Earnings season remains underway and results continue to positively surprise. Thus far, of all the companies in the S&P 500 that have reported earnings, more than 70% have beaten estimates. With so many moving parts impacting the markets, investors can expect another volatile week.
Over the past week, top-performing sectors in the S&P 500® Index included Energy (+1.2%) and Basic Materials (+0.9%), while bottom-performing sectors included Health Care (-1.8%) and Consumer Discretionary (-1.7%). In the fixed-income market, the 10-year Treasury remained little changed during the week with the yield ending at 3.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Building Blocks for Sustained Growth
Allergan, Inc. (AGN) was founded in 1948 and is based in Irvine, California. AGN discovers, develops and commercializes medical devices, pharmaceuticals and additional products for numerous specialty medical markets such as neurology, medical aesthetics, dermatology and urology. The company’s pharmaceutical segment is responsible for the ever-trendy Botox. Popular medical devices include the Lap-Band System as well as additional aesthetic products for augmentations and enhancements.
Due to an improving outlook for several of AGN’s key franchises, including Botox, the company’s growth profile remains a standout among its pharmaceutical peers. With FDA approval of an expanded indication for Botox as a treatment for migraine headaches, we have added confidence that AGN can maintain its better than average growth profile. In addition, encouraging feedback from our Main Street contacts concerning the company’s pipeline leads us to believe that shares of AGN represent favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google Inc. | 4.1% |
| Starwood Hotels | 4.0% |
| Qualcomm Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Carnival Corp. | 3.7% |
| FactSet Research | 3.5% |
| Energizer Holdings | 3.5% |
| EMC Corp. | 3.4% |
| Maxim Integrated | 3.4% |
| Cisco Systems Inc. | 3.3% |
U.S. Equity Indices
| Index | 01/28/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,823.7 | -0.4% | 2.1% |
| NASDAQ | 2,686.9 | -0.1% | 1.3% |
| S&P 500 | 1,276.3 | -0.6% | 1.5% |
| Russell 1000 G | 584.3 | -0.2% | 1.7% |
U.S. Credit Rates
| Index | 01/28/11 | 01/21/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.2% | 0.1% |
| 5 Year T-Note | 1.9% | 2.0% | 2.0% |
| 10 Year T-Note | 3.3% | 3.4% | 3.3% |
| 30 Year T-Bond | 4.6% | 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.
