Weekly Investor – March 28, 2011
Two Steps Forward
Market Summary:
The major U.S. equity averages all rebounded this past week to post solid gains across the board. Despite a mountain of negative headlines surrounding the clean-up efforts in Japan, geopolitical uncertainties, and surging commodity prices, investors managed to push the averages higher. The fuel for this momentum continued to be stronger than expected economic data. This data includes declining unemployment claims, improving bank loan activity, and positive manufacturing data. With earnings season just around the corner, investors will be paying close attention to the messages coming from Corporate America.
Over the past week, top-performing sectors in the S&P 500® Index included Energy (+4.1%) and Technology (+4.0%), while bottom-performing sectors included Financials (+0.5%) and Utilities (+1.7%). 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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A New Model for Success
Herbalife Ltd. (HLF) is a global network marketing company that sells weight management, nutritional supplement, fitness and personal care products. Based in Grand Cayman, Cayman Islands, HLF offers science-based products in four principal categories: weight management, targeted nutrition, skin nutrition, and energy, sports and fitness.
HLF has been experiencing strong growth fueled in part by its changing business model which focuses on “daily consumption” as opposed to the monthly consumption model of most fitness supplements. HLF’s distributors operate nutrition clubs where customers are able to purchase products on a daily basis, thus eliminating large cash outlays normally required to purchase a month’s supply of product. The daily consumption option has greatly expanded HLF’s addressable customer base. HLF’s combination of strong fundamental performance, enhanced growth profile, and valuation at a discount to its peers offers a favorable risk / reward profile for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Danaher Corp. | 4.2% |
| Google Inc. | 3.9% |
| Qualcomm Inc. | 3.8% |
| EMC Corp. | 3.6% |
| Jabil Circuit Inc. | 3.6% |
| FactSet Research | 3.5% |
| Biogen Idec Inc. | 3.5% |
| Oracle | 3.2% |
| MasterCard Inc. | 3.2% |
| Maxim Integrated | 3.2% |
U.S. Equity Indices
| Index | 03/25/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,220.6 | 3.1% | 5.6% |
| NASDAQ | 2,743.1 | 3.8% | 3.4% |
| S&P 500 | 1,313.8 | 2.7% | 4.5% |
| Russell 1000 G | 600.7 | 3.4% | 4.5% |
U.S. Credit Rates
| Index | 03/25/11 | 03/18/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 2.2% | 1.9% | 2.0% |
| 10 Year T-Note | 3.5% | 3.3% | 3.3% |
| 30 Year T-Bond | 4.5% | 4.4% | 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.
