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News & Our Thinking

Weekly Investor

Weekly Investor – May 31, 2011

01 June 2011

Eurozone Debt

Market Summary:  

Two weeks ago, the market ended the week worried about the Eurozone debt crisis, and last week, we picked up right where we left off.  Monday, U.S. equity markets fell sharply after Standard & Poor’s cut its debt ratings outlook on Italy from stable to negative and weaker-than-expected manufacturing data came from both Europe and China. However, U.S. markets rebounded Tuesday through Friday and ended the week nearly unchanged. This week, investors will look to the Eurozone once again as several parties work to move closer to yet another Greek bailout. In the U.S. we have a full plate of economic data including manufacturing PMI and the monthly jobs report on Friday.

Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+2.1%) and Energy (+2.0%), while bottom-performing sectors included Utilities (-1.7%) and Health Care (-1.2%).  In the fixed-income market, the 10-year Treasury gained ground ending the week with the yield ending at 3.1%.

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

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 Oracle’s Long-Term Appeal Enhanced by Integrated Solutions

Oracle Corp. (ORCL) is a leading provider of database software – programs that allow the storage of large amounts of information while also having the capacity to search, retrieve, sort, revise, analyze and order data, both quickly and efficiently.  Within the past several years, ORCL has completed a number of acquisitions, which as a result has enhanced its market share and its ability to gain additional market share going forward.

Oracle has created a unique “one-stop shop” by integrating hardware and software into its Exadata and Exalogic platforms competing against multi-vendor solutions assembled from different hardware and software vendors. Chief Information Officers like the simplicity of using only one vendor rather than several and ORCL’s solution has demonstrated superior performance and ROI’s than competing multi-vendor solutions. ORCL’s integrated solution cannot easily be replicated by competing vendors and provides the company with a technology “moat.” Company management has a demonstrated ability to execute and has maintained above-average cash flow returns on invested capital for greater than 15 years.  Furthermore, we believe ORCL’s current valuation does not fully reflect how disruptive a force ORCL’s integrated appliance strategy really is, creating upside potential and favorable odds for our clients.

 

 

 

Top 10 Equity Holdings


.
Danaher Corp. 4.2%
Qualcomm Inc. 3.9%
EMC Corp. 3.6%
FactSet Research 3.5%
MasterCard Inc. 3.4%
Jabil Circuit Inc. 3.4%
Gilead Sciences Inc. 3.4%
Maxim Inegrated 3.3%
UnitedHealth Inc. 3.3%
Energizer Inc. 3.3%

U.S. Equity Indices


Index 05/27/11 Week % Chg YTD % Chg
DJIA 12,512.0 -0.7% 8.1%
NASDAQ 2,803.3 -0.9% 5.7%
S&P 500 1,333.3 -0.3% 6.0%
Russell 1000 G 613.2 -0.6% 6.7%

U.S. Credit Rates


Index 05/27/11 05/20/11 12/31/10
3 Month T-Bill 0.1% 0.0% 0.1%
5 Year T-Note 1.7% 1.8% 2.0%
10 Year T-Note 3.1% 3.1% 3.3%
30 Year T-Bond 4.3% 4.3% 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.