Weekly Investor – June 27, 2011
Economic Firewords Ahead?
Market Summary:
The major U.S.equity averages finished this past week mixed as debate continued on the fate of the economy. The latest round of economic data provided ammo for both sides of the argument. For the “temporary slowdown” camp, durable goods orders provided encouragement and consumers continued to see relief at the gas pump. For those in the “double dip” camp, unemployment claims increased and the closely-watched ECRI index of leading indicators declined yet again. The next couple of months should go a long way in determining the outcome for investors as Corporate America gets set for another earnings season.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+2.4%) and Consumer Discretionary (+1.4%), while bottom-performing sectors included Consumer Staples (-1.7%) and Energy (-1.3%). In the fixed-income market, the 10-year Treasury gained ground with the yield ending the week at 2.9%.
We continue to seek those companies possessing identifiablecatalysts, and focusing on those stocks with favorable odds.
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Favorable Odds
Ultra Petroleum Corporation (UPL) engages in the development, production, operation and acquisition of oil and gas properties. UPL has reserves located in thePinedaleBasin(Wyoming) and theMarcellusShaleBasin(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 theMarcellusShaleBasin. 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. | 3.9% |
| Biogen Idec Inc. | 3.8% |
| UnitedHealth Group | 3.7% |
| EMC Corp. | 3.6% |
| MasterCard Inc. | 3.5% |
| Gilead Sciences Inc. | 3.5% |
| FactSet Research | 3.4% |
| Allergan Inc. | 3.3% |
| Energizer Holdings | 3.3% |
U.S. Equity Indices
| Index | 06/24/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,934.6 | -0.6% | 3.1% |
| NASDAQ | 2,652.9 | 1.4% | 0.0% |
| S&P 500 | 1,268.5 | -0.2% | 0.9% |
| Russell 1000 G | 583.3 | 0.3% | 1.5% |
U.S. Credit Rates
| Index | 06/24/11 | 06/17/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.5% | 2.0% |
| 10 Year T-Note | 2.9% | 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.
