Weekly Investor – August 08, 2011
Searching for the Silver Lining
Market Summary:
The major U.S. equity averages all posted major declines this past week as issues surrounding the Eurozone debt situation continued to mount. In addition to the debt worries weighing on the markets from Europe, economic data both home and abroad came in weaker-than-expected, adding strength to the bears’ grip on the markets. This data, which included weaker manufacturing numbers along with a drop in consumer spending, has many investors running for the door as they hear the chants of a double-dip recession growing louder. In the end, the markets will bottom when fundamentals bottom and unfortunately for investors economic data has been deteriorating. Until more clarity is achieved, investors can expect the latest wave of volatility to remain.
Over the past week, top-performing sectors in the S&P 500® Index included Consumer Staples (-2.5%) and Telecommunications (-2.9%), while bottom-performing sectors included Energy (-10.0%) and Basic Materials (-9.5%). In the fixed-income market, the 10-year Treasury gained ground with the yield ending the week at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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New Product Cycle Fueling Growth
Allergan, Inc. (AGN) was founded in 1948 and is presently headquartered in Irvine, California. AGN discovers, develops and commercializes medical devices, pharmaceuticals and additional products for numerous specialty medical markets such as neurology, medical aesthetics, dermatology and urology. The company’s pharmaceutical segment is responsible for the ever-trendy Botox. Popular medical devices include the Lap-Band System as well as additional aesthetic products for augmentations and enhancements.
Due to an improving outlook for several of AGN’s key franchises, including Botox, the company’s growth profile remains a stand-out among its pharmaceutical peers. Coupled with FDA approval of an expanded indication for Botox as a treatment for migraine headaches, we have added confidence that AGN can maintain its better than average growth profile. In addition, encouraging feedback from our Main Street contacts concerning the company’s pipeline also leads us to believe that shares of AGN represent favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.6% |
| Google Inc. | 4.2% |
| Energizer Holdings | 3.9% |
| Qualcomm Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Biogen Idec Inc. | 3.8% |
| Gilead Sciences Inc. | 3.6% |
| EMC Corp. | 3.5% |
| Allergan Inc. | 3.4% |
| Herbalife Ltd. | 3.2% |
U.S. Equity Indices
| Index | 08/05/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,444.6 | -5.8% | -1.1% |
| NASDAQ | 2,532.4 | -8.1% | -4.5% |
| S&P 500 | 1,199.4 | -7.2% | -4.6% |
| Russell 1000 G | 558.2 | -7.5% | -2.9% |
U.S. Credit Rates
| Index | 08/05/11 | 07/22/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.3% | 1.4% | 2.0% |
| 10 Year T-Note | 2.6% | 2.8% | 3.3% |
| 30 Year T-Bond | 3.8% | 4.1% | 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.
