Weekly Investor – June 20, 2011
The Debate Continues
Market Summary:
The major averages ended the week mixed as the debate of a double-dip recession versus a mid-cycle slowdown raged on for investors. Data continued to be mixed as both the Empire and Philly Fed manufacturing data both declined significantly. Helping add balance to the discussion remained tame inflation data, declining oil and gasoline prices, along with evidence thatJapan’s economy is beginning to bounce back. In addition, the focus on the economic data, theGreecedebt situation and the potential of a budget deal here in theU.S.complicated an already murky picture for investors. With the official start of summer upon us, many investors are opting for a vacation on the sidelines. The start of another earnings season is just around the corner and investors will be looking to Corporate America to help bring some clarity.
Over the past week, top-performing sectors in the S&P 500® Index included Consumer Staples (+1.2%) and Industrials (+1.1%), while bottom-performing sectors included Basic Materials (-2.0%) and Energy (-1.6%). In the fixed-income market, the 10-year Treasury ended the week flat with the yield 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
Schlumberger LTD (SLB) is a global oilfield services company that employs more than 105,000 people in more than 80 countries. Operating through four “GeoMarket” regions, the company’s technologies and services help the world’s largest exploration and production (E&P) companies discover and produce the energy required to fuel the global economy. Founded in 1927 and based inHouston,Texas, SLB’s service portfolio includes some of the most sophisticated drilling, testing and production equipment in the industry.
Many E&P companies curtailed spending during the recession, dampening SLB’s earnings outlook. However, several quarters of higher energy prices and the discovery of large oil resources inBrazilcreated rising capital expenditure budgets as well as higher demand for energy services. In addition, oil and natural gas are becoming more difficult to find, leading to more complex and expensive exploratory programs and therefore an increased demand for SLB’s services. Argent anticipates that energy companies are beginning a multi-year investment cycle that will highlight the value of SLB’s industry leading services and accelerate the company’s earnings power.
Top 10 Equity Holdings
| . | |
|---|---|
| Danaher Corp. | 4.2% |
| Qualcomm Inc. | 3.8% |
| Biogen Idec Inc. | 3.7% |
| UnitedHealth Group | 3.7% |
| EMC Corp. | 3.6% |
| MasterCard Inc. | 3.5% |
| Gilead Sciences Inc. | 3.5% |
| FactSet Research | 3.4% |
| Allergan Inc. | 3.4% |
| Energizer Holdings | 3.2% |
U.S. Equity Indices
| Index | 06/17/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,004.4 | 0.% | 3.7% |
| NASDAQ | 2,616.5 | -1.0% | -1.4% |
| S&P 500 | 1,271.5 | 0.0% | 1.1% |
| Russell 1000 G | 581.4 | -0.3% | 1.2% |
U.S. Credit Rates
| Index | 06/17/11 | 06/10/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.5% | 1.6% | 2.0% |
| 10 Year T-Note | 3.0% | 3.0% | 3.3% |
| 30 Year T-Bond | 4.2% | 4.2% | 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.
