Weekly Investor – Feb. 28, 2011
Uncertainty Building
Market Summary:
The major U.S. equity averages all gave back ground the past week as the continued threat from political unrest in the Middle East and North Africa gave investors plenty of reason to take some profits. With the latest revolutionary movement centered on Libya, investors are left to wonder just how far the protests will spread and which countries may be next. The immediate impact was a surge in the price of oil, which now hovers near $100 a barrel and consumers are feeling the pinch in the form of rising fuel prices. Rising energy prices have joined surging food-related commodity costs as headwinds for consumers that have the potential, if unchecked over long periods of time, to soften economic growth. As uncertainty builds, investors can expect equity market volatility to remain.
Over the past week, top-performing sectors in the S&P 500® Index included Energy (+1.1%) and Utilities (-0.4%), while bottom-performing sectors included Industrials (-3.3%) and Materials (-3.0%). In the fixed-income market, the 10-year Treasury gained ground during the week with the yield ending at 3.4%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Riding A New Product Cycle
Corning Inc. (GLW) was founded in 1851 and is based in Corning, New York. GLW manufactures and processes specialty glass and ceramics products worldwide. It operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences. The Display Technologies segment manufactures glass substrates for active matrix liquid crystal displays (LCDs) that are used primarily in notebook computers, flat panel desktop monitors, and LCD televisions.
About a year ago, GLW leveraged its engineering and manufacturing knowhow of its display technologies segment and introduced its next generation product, Gorilla Glass, which is exceptionally damage resistant and is currently used in numerous smartphones, tablet computing devices and personal computers. Thus far, demand for this new product has exceeded expectations set by the market as well as GLW. Given the unique properties of Gorilla Glass, we believe it will continue to enjoy strong demand and become a meaningful contributor to sales and profit growth for GLW over the next few years. Meanwhile, GLW is also experiencing the return of pricing and volume stability in its traditional glass business. We believe shares of GLW are poised to benefit from improving earnings and sentiment which will make it more likely to outperform the market and its peers.
Top 10 Equity Holdings
| . | |
|---|---|
| Qualcomm Inc. | 4.1% |
| Google Inc. | 4.0% |
| Danaher Corp. | 4.0% |
| EMC Corp. | 3.6% |
| FactSet Research | 3.5% |
| Maxim Integrated | 3.5% |
| Carnival Corp. | 3.4% |
| Biogen Idec Inc. | 3.2% |
| Oracle Corp. | 3.2% |
| MasterCard Inc. | 3.1% |
U.S. Equity Indices
| Index | 02/25/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,130.5 | -2.1% | 4.8% |
| NASDAQ | 2,781.1 | -1.9% | 4.8% |
| S&P 500 | 1,319.9 | -1.7% | 4.9% |
| Russell 1000 G | 605.2 | -1.9% | 5.3% |
U.S. Credit Rates
| Index | 02/25/11 | 02/18/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 2.2% | 2.3% | 2.0% |
| 10 Year T-Note | 3.4% | 3.6% | 3.3% |
| 30 Year T-Bond | 4.5% | 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.
