Weekly Investor – March 07, 2011
Return of Volatility
Market Summary:
The major U.S. equity averages ended the week relatively unchanged. Increasing uncertainty in the Middle East and North Africa continues to increase oil and gold prices, creating downward pressure for the equity market. On the other hand, better than expected February employment data at week’s end helped reverse the downward trend in the equity market. Private employers added 222,000 jobs which lowered the unemployment rate by 0.1% to 8.9%. In addition, positive comments from Fed Chairman Bernanke regarding the US economy also helped calm investors nerves. As most investors focus attention on the events in the Middle East North Africa and their ramifications on the global economy, we expect equity markets to remain volatile.
Over the past week, top-performing sectors in the S&P 500® Index included Health Care (+2.4%) and Utilities (0.6%), while bottom-performing sectors included Financials (-1.6%) and Telecommunications (-0.3%). In the fixed-income market, the 10-year Treasury lost ground during the week with the yield ending at 3.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Benefiting from Positive Industry Trend
Google, Inc. (GOOG) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), a checkout service for merchants (Google Checkout), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video, Google Docs, Google Toolbar, Google Desktop, Google Reader, and of course Gmail. The Mountain View, California based company was founded in 1998, and prides itself on maintaining a corporate culture that encourages creativity and community.
We believe the current trend of allocating additional advertising dollars to internet search ads will continue, and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG proficiently matches buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it accordingly. Recently, near-term economic conditions have placed pressure on GOOG’s stock, which has opened the door for long-term investors such as our clients. We believe the company will outperform its peers over the next three to five years.
Top 10 Equity Holdings
| . | |
|---|---|
| Qualcomm Inc. | 4.1% |
| Danaher Corp. | 4.0% |
| Google Inc. | 3.9% |
| Jabil Circuit Inc. | 3.7% |
| EMC Corp. | 3.7% |
| FactSet Research | 3.5% |
| Maxim Integrated | 3.5% |
| Biogen Idec Inc. | 3.4% |
| Carnival Corp. | 3.2% |
| MasterCard Inc. | 3.2% |
U.S. Equity Indices
| Index | 03/04/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,169.9 | 0.3% | 5.1% |
| NASDAQ | 2,784.7 | 0.1% | 5.0% |
| S&P 500 | 1,321.2 | 0.1% | 5.1% |
| Russell 1000 G | 606.2 | 0.2% | 5.5% |
U.S. Credit Rates
| Index | 03/04/11 | 02/25/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 2.2% | 2.2% | 2.0% |
| 10 Year T-Note | 3.5% | 3.4% | 3.3% |
| 30 Year T-Bond | 4.6% | 4.5% | 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.
