News & Our Thinking

Weekly Investor

Weekly Investor – September 19, 2011

22 September 2011

Seat Belts Required

Market Summary:  

The major U.S equity averages all posted strong gains this past week, rebounding across the board.  The relief rally was fueled by optimism that perhaps a deal could be worked out within the EU that would help add stability and ease pressures on European banks.  While all eyes certainly remain onEurope, news on the home front remained weak at best.  This news included disappointing data on the jobs front and continued evidence that the economy inches ever so close to recessionary levels.  With gridlock continuing in Washington D.C., financial uncertainty in Europe, and little faith in a jobs recovery plan or economic expansion, investors do not have to look to hard to find the source of the market’s volatility.  Until resolution to some of these key issues is apparent, one can expect the volatility to remain.

The S&P 500® closed up 5.4% for the week.  The top-performing sectors in the S&P 500® Index included Technology (+7.1%) and Consumer Discretionary (+6.9%), while bottom-performing sectors included Consumer Staples (+3.4%) and Health Care (+3.7%).  In the fixed-income market, the 10-year Treasury lost ground with the yield ending the week at 2.0%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Attractive Opportunity for a Rebound in Growth

Corning Inc. (GLW) was founded in 1851 and is based in Corning, New York.  GLW manufactures and processes specialty glass and ceramics products worldwide. It operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences.  The Display Technologies segment manufactures glass substrates for active matrix liquid crystal displays (LCDs) that are used primarily in notebook computers, flat panel desktop monitors, and LCD televisions.

About a year ago, GLW leveraged its engineering and manufacturing knowhow of its display technologies segment and introduced its next generation product, Gorilla Glass, which is exceptionally damage resistant and is currently used in numerous smartphones, tablet computing devices and personal computers. Thus far, demand for this new product has exceeded expectations set by the market as well as GLW.  Given the unique properties of Gorilla Glass, we believe it will continue to enjoy strong demand and become a meaningful contributor to sales and profit growth for GLW over the next few years.  Meanwhile, GLW is also experiencing the return of pricing and volume stability in its traditional glass business.  We believe shares of GLW are poised to benefit from improving earnings and sentiment which will make it more likely to outperform the market and its peers.

Top 10 Equity Holdings

MasterCard Inc. 4.7%
Qualcomm Inc. 4.1%
Biogen Idec Inc. 4.0%
Danaher Corp. 3.9%
Google Inc. 3.8%
Gilead Sciences Inc. 3.7%
Hansen Natural Corp. 3.6%
Allergan Inc. 3.6%
Energizer Holdings 3.5%
Maxim Integrated 3.5%

U.S. Equity Indices

Index 09/16/11 Week % Chg YTD % Chg
DJIA 10,992.1 -2.2% -5.1%
NASDAQ 2,468.0 -0.5% -7.0%
S&P 500 1,154.2 -1.7% -8.2%
Russell 1000 G 542.2 -1.5% -5.7%

U.S. Credit Rates

Index 09/16/11 09/09/11 12/31/10
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 0.8% 0.8% 2.0%
10 Year T-Note 2.0% 1.9% 3.3%
30 Year T-Bond 3.3% 3.3% 4.3%
Prime Rate 3.2% 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.