Weekly Investor – August 22, 2011
Looking for a Silver Lining
Market Summary:
The major equity averages all closed this past week deeply in the red. There was little to cheer about as economic data continued to weaken, raising the odds further of a “double-dip” recession. This past week’s disappointing readings included a plunge in the Philly Fed manufacturing index, along with the closely watched index of leading economic indicators falling to a 10-month low. Added to the mix of economic uncertainty for investors was the Fed’s increased scrutiny of European banks, and the broad displeasure and lack of confidence in the current political backdrop inWashingtonD.C. After the equity major averages posted one of the worst weeks in history for the stock market, one can only hope everyone gets on the same page quickly. Stay tuned for more volatility ahead.
The S&P 500 lost 4.7% for the week. Over the past week, top-performing sectors in the S&P 500® Index included Consumer Staples (-0.1%) and Telecomm (-0.2%), while bottom-performing sectors included Technology (-8.0%) and Industrials (-7.1%). In the fixed-income market, the 10-year Treasury gained ground with the yield ending the week at 2.1%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Strengthening its Position
Carnival Corp. (CCL), a subsidiary of Carnival Group, is a cruise and vacation company founded in 1974 with headquarters inMiami,Florida. CCL operates its cruise ships in North America, Europe,AustraliaandNew Zealand. In addition to CCL’s cruise business, the company operates lodges inAlaskaand the Yukon Territory of Canada, provides chartered coaches, and markets various sightseeing packages.
During an economic downturn, the discretionary nature of cruise travel spending is reinforced, and as a result, companies have maintained deep price cuts to lure vacationers. While the outlook remains challenging, CCL has lived up to its “best of breed” reputation by continuing to separate itself from the competition. The company’s strong balance sheet and industry position should allow CCL to capture market share from its weakened competitors. While worries over economic prospects have weighed on shares of CCL, we believe as confidence in the economy returns investors will appreciate CCL’s sustainable competitive advantages leading to favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.6% |
| Biogen Idec Inc. | 3.9% |
| Qualcomm Inc. | 3.9% |
| Google Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Gilead Sciences Inc. | 3.8% |
| Energizer Holdings | 3.8% |
| Allergan Inc. | 3.4% |
| Hansen Natural Corp. | 3.4% |
| EMC Corp. | 3.3% |
U.S. Equity Indices
| Index | 08/19/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,817.7 | -4.0% | -6.6% |
| NASDAQ | 2,341.8 | -6.6% | -11.7% |
| S&P 500 | 1,123.5 | -4.7% | -10.7% |
| Russell 1000 G | 520.8 | -5.9% | -9.4% |
U.S. Credit Rates
| Index | 08/12/11 | 08/12/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.9% | 1.0% | 2.0% |
| 10 Year T-Note | 2.1% | 2.3% | 3.3% |
| 30 Year T-Bond | 3.4% | 3.7% | 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.
