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News & Our Thinking

Weekly Investor

Weekly Investor – April 11, 2011

03 May 2011

Clouds on the Horizon?

Market Summary:  

The major U.S. equity averages gave back ground this past week, taking a breather from the recent rally.  Much of the economic data remained on the bullish side, including better than expected chain-store sales, as well as new highs in the economic leading indicators.  Oil continued its impressive march higher and remains a key focus for investors as other commodity prices follow suit.  Inflation worries continued to pick up steam as market participants shift focus to the impact or rising rates.  As risks to the economy have increased over recent weeks, the tone of management teams will be closely monitored as the upcoming earnings season kicks into gear.

Over the past week, top-performing sectors in the S&P 500® Index included Consumer Staples (+0.5%) and Health Care (+0.2%), while bottom-performing sectors included Industrials (-1.4%) and Consumer Discretion (-0.6%).  In the fixed-income market, the 10-year Treasury lost ground during the week with the yield ending at 3.6%.

We continue to seek those companies possessing identifiablecatalysts, and focusing on those stocks with favorable odds.

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 New Strategy Paying Off

Jabil Circuit, Inc. (JBL) provides electronic manufacturing services and solutions in the Americas, Europe and Asia.  Founded in 1966 and headquartered in St. Petersburg, Florida, JBL offers electronics and mechanical design, production, product management, and after-market services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.

In the aftermath of the financial crisis, JBL refocused its business plan to accelerate the growth of its higher margins diversified manufacturing services segment while maintaining industry growth rates on its traditional businesses.  We believe JBL’s new approach will deliver longer-term sustainable margin improvement as well as earnings growth.  Since the implementation of its new strategy, JBL has improved its operating margins to pre-crisis levels.  However, JBL’s current valuation reflects skepticism of JBL’s ability to sustain its recent success.  At Argent, we see significant upside potential in JBL with reasonable downside; thus we are getting paid to take the risk.

 

 

 

Top 10 Equity Holdings


.
Danaher Corp. 4.1%
Google Inc. 3.8%
Qualcomm Inc. 3.8%
Biogen Idec Inc. 3.7%
EMC Corp. 3.6%
FactSet Research 3.5%
MasterCard Inc. 3.4%
Jabil Circuit 3.3%
Oracle Corp. 3.3%
Maxim Integrated 3.2%

U.S. Equity Indices


Index 04/08/11 Week % Chg YTD % Chg
DJIA 12,380.1 0.0% 6.9%
NASDAQ 2,780.4 -0.3% 4.8%
S&P 500 1,328.2 -0.3% 5.6%
Russell 1000 G 607.7 -0.4% 5.8%

U.S. Credit Rates


Index 04/08/11 04/01/11 12/31/10
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 2.3% 2.3% 2.0%
10 Year T-Note 3.6% 3.5% 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.