Weekly Investor – July 12, 2011
Employment Numbers Take Center Stage
Market Summary:
Last week, the stock market managed to squeeze out a modest gain despite disappointing employment figures. On Friday, the Commerce Department released its monthly employment report and the numbers were disappointing on every front. Nonfarm payrolls barely budged during June with a +18,000 increase (consensus estimates were closer to +80,000) and the unemployment rate increased to 9.2% (from 9.1% the previous month). One bright spot in the otherwise dreary news was an unexpectedly strong retail sales report. Most retailers reported very good same-store sales last week which led to outperformance among retail shares. In oversees news, Moody’s downgraded Portugal’s debt to junk status and the People’s Bank of China again raised its one year lending rate.
Over the past week, top-performing sectors in the S&P 500® Index included Technology (+1.6%) and Basic Materials (+1.3%), while bottom-performing sectors included Telecommunications (-1.3%) and Financials (-1.1%). In the fixed-income market, the 10-year Treasury gained ground with the yield ending the week at 3.0%.
We continue to seek those companies possessing identifiablecatalysts, and focusing on those stocks with favorable odds.
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Best-In-Breed
Ultra Petroleum Corporation (UPL) engages in the development, production, operation and acquisition of oil and gas properties. UPL has reserves located in the Pinedale Basin (Wyoming) and theMarcellus Shale Basin (Pennsylvania).
Despite the current scenario of relatively low natural gas prices, UPL retains a profitable production growth profile due to the high-quality Pinedale acreage and its low costs. Expanding upon its best-in-breed resource base, UPL recently purchased additional acreage in theMarcellus Shale Basin. The acquisition will enable UPL to reinvest its impressive cash flow and accelerate production growth. These factors combined with industry leading financial returns and a favorable valuation near the market average led the Argent team to conclude UPL exhibits favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Danaher Corp. | 4.1% |
| Qualcomm Inc. | 4.0% |
| MasterCard Inc. | 3.9% |
| Biogen Idec Inc. | 3.8% |
| EMC Corp. | 3.6% |
| UnitedHealth Group | 3.5% |
| Jabil Circuit Inc. | 3.5% |
| Gilead Sciences Inc. | 3.5% |
| Google Inc. | 3.3% |
| Energizer Holdings | 3.3% |
U.S. Equity Indices
| Index | 07/08/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,657.2 | 0.6% | 9.3% |
| NASDAQ | 2,859.8 | 1.6% | 7.8% |
| S&P 500 | 1,343.8 | 0.3% | 6.9% |
| Russell 1000 G | 625.9 | 1.2% | 8.9% |
U.S. Credit Rates
| Index | 07/08/11 | 07/01/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.6% | 1.7% | 2.0% |
| 10 Year T-Note | 3.0% | 3.1% | 3.3% |
| 30 Year T-Bond | 4.3% | 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.
