Weekly Investor – October 17, 2011
A Week of Relief
Market Summary:
The major U.S.equity markets rebounded this past week, inching back towards positive territory for the year. This market activity was fueled by a rise in optimism surrounding a potential resolution to Eurozone debt worries. This, along with encouraging economic data points and a “better than feared” start to earnings season helped keep the Wall Street bears on the sidelines. The two near-term keys to sustaining momentum for the markets will remain Europe and the domestic economy. As earnings season kicks into high gear, Corporate America will provide some answers for investors. Over the next few weeks we will find out if they are answers investors want to hear.
The S&P 500® closed up 6.0% for the week. The top-performing sectors in the S&P 500® Index included Energy (+8.7%) and Technology (+7.9%), while bottom-performing sectors included Utilities (+1.7%) and Consumer Staples (+2.8%). In the fixed-income market, the 10-year Treasury lost ground with the yield ending the week at 2.2%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Opportunities for a Positive Change
Forest Laboratories, Inc. (FRX) develops, manufactures, and sells branded and generic forms of ethical drug products. Founded in 1956 and based in New York, New York, its principal products include Lexapro for the treatment of depression and generalized anxiety disorder; Namenda for the treatment of Alzheimer’s disease; Bystolic for the treatment of hypertension; and Savella for the management of fibromyalgia. FRX sells its products through independent distributors to physicians, pharmacies, hospitals, managed care and other healthcare organizations.
FRX presents a unique opportunity as investors worry about the sustainability of its growth prospects beyond 2012, when its number one selling drug Lexapro goes off-patent. However, FRX has historically proven its ability to successfully navigate growth challenges and currently possesses a strong balance sheet and an extensive pipeline of late-stage products. FRX has numerous opportunities to deliver above average growth and surprise investors, which we believe represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.6% |
| Google Inc. | 4.1% |
| Qualcomm Inc. | 4.1% |
| Biogen Idec Inc. | 4.0% |
| Danaher Corp. | 3.8% |
| Allergan Inc. | 3.7% |
| Hansen Natural Corp. | 3.7% |
| Jabil Circuit | 3.6% |
| Gilead Sciences Inc. | 3.6% |
| Energizer Holdings Inc. | 3.5% |
U.S. Equity Indices
| Index | 10/14/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,644.5 | 4.9% | 0.6% |
| NASDAQ | 2,667.9 | 7.6% | 0.6% |
| S&P 500 | 1,224.6 | 6.0% | -2.6% |
| Russell 1000 G | 576.5 | 6.7% | 0.3% |
U.S. Credit Rates
| Index | 10/14/11 | 10/07/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.1% | 1.1% | 2.0% |
| 10 Year T-Note | 2.2% | 2.1% | 3.3% |
| 30 Year T-Bond | 3.2% | 3.0% | 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.
