Weekly Investor – June 06, 2011
Chill in the Air
Market Summary:
Despite a shortened holiday week that ushers in the warm summer months, there was a great deal of economic activity, most of which had a chilling effect on theU.S.equity markets. The jobs reports provided the most disappointing news, and continued concerns over government debt inGreeceand at home continued to grab headlines. On the other hand, better than expected reading of ISM service activity provided a positive note, although not enough to outweigh the concerns that led to negative equity returns for the month of May. As economic readings in the coming months for the manufacturing sector will be affected by disruptions inJapan, the debate over whether the economy has hit a temporary soft patch or a more worrisome trend will continue.
Over the past week, top-performing sectors in the S&P 500® Index included Health Care (-1.3%) and Energy (-1.4%), while bottom-performing sectors included Materials (-3.2%) and Consumer Discretionary (-3.2%). In the fixed-income market, the 10-year Treasury gained ground ending the week with the yield ending at 3.0%.
We continue to seek those companies possessing identifiablecatalysts, and focusing on those stocks with favorable odds.
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Adding Value through Growth
Principal Financial Group, Inc. (PFG) is a provider of retirement savings, investment and insurance products and services. The company’sUnited Statesand International operations are engaged in asset accumulation and asset management. In addition, PFG provides a range of insurance solutions, including individual and group life insurance, group health insurance, individual and group disability insurance and group dental and vision insurance.
As credit markets have normalized, PFG’s book value has risen substantially, thus increasing the company’s liquidity and providing PFG the kind of stability that investors have come to expect from the company. While PFG’s life insurance segment should grow in-line with the market, we expect PFG’s higher growth 401(k) franchise to differentiate the company from its peers. Trading at a discount to its historic average with a stabilized balance sheet and improving business prospects, PFG represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Danaher Corp. | 4.0% |
| Qualcomm Inc. | 4.0% |
| EMC Corp. | 3.7% |
| FactSet Research | 3.6% |
| MasterCard Inc. | 3.5% |
| Gilead Sciences Inc. | 3.4% |
| UnitedHealth Group | 3.4% |
| Biogen Idec Inc. | 3.4% |
| Google Inc. | 3.4% |
| Jabil Circuit Inc. | 3.3% |
U.S. Equity Indices
| Index | 06/03/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,151.3 | -2.3% | 5.0% |
| NASDAQ | 2,732.8 | -2.3% | 3.0% |
| S&P 500 | 1,300.2 | -2.3% | 3.4% |
| Russell 1000 G | 598.6 | -2.3% | 4.2% |
U.S. Credit Rates
| Index | 06/03/11 | 05/27/11 | 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% | 4.3% | 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.
