News & Our Thinking

Weekly Investor

Weekly Investor – October 31, 2011

25 January 2012

All Treats for Investors

Market Summary:  

The major U.S. equity indices all grinded higher this past week, continuing the recent winning streak and pushing this October closer to being one of best Octobers on record for the stock market.  This past week’s catalysts included more progress on the Eurozone crisis as well as stronger-than-expected data for theU.S.economy.  The stronger-than-expected data was led by positive consumer spending, an uptick in the leading economic indicators and a wave of positive earnings from Corporate America.  With 3rd Quarter earnings season well underway, S&P companies are on track to post year-over-year revenue gains of nearly 10% and profit gains of more than 15%.  Now that November is just around the corner, fundamentals will again carry the day for the equity markets.  Investors just hope October’s gains are a foreshadowing of what’s ahead.

The S&P 500® closed up 3.8% for the week.  The top-performing sectors in the S&P 500® Index included Basic Materials (+7.9%) and Financials (+7.0%), while bottom-performing sectors included Consumer Staples (+0.2%) and Utilities (+0.5%).  In the fixed-income market, the 10-year Treasury held steady 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.

Growth at a Reasonable Price

GILDGilead Sciences, Inc. (GILD), a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for the treatment of life-threatening infectious diseases.  Notably, GILD is a leader in drug development for the treatment of human immunodeficiency virus (HIV) in adults.

After years of being a “growth darling” for investors, investors have been focusing on GILD’s patent expirations later this decade and questioning the company’s ability to drive growth beyond that horizon.  Despite such concern, the core business continues to execute, delivering solid sales and earnings growth.  As GILD’s drug development pipeline continues to progress, including next-generation HIV therapies, we believe investors will once again become comfortable with the company’s growth prospects, offering the potential for attractive upside from current levels.

Top 10 Equity Holdings

MasterCard Inc. 4.6%
Biogen Idec Inc. 4.4%
Danaher Corp. 4.1%
Google Inc. 4.0%
Qualcomm Inc. 3.8%
Jabil Circuit Inc. 3.7%
Gilead Sciences Inc. 3.6%
Allergan Inc. 3.4%
Energizer Holdings 3.4%
EMC Corp. 3.4%

U.S. Equity Indices

Index 10/28/11 Week % Chg YTD % Chg
DJIA 12,231.1 3.6% 5.6%
NASDAQ 2,737.2 3.8% 3.2%
S&P 500 1,285.1 3.8% 2.2%
Russell 1000 G 598.1 3.7% 4.1%

U.S. Credit Rates

Index 10/28/11 10/21/11 12/31/10
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.0% 1.1% 2.0%
10 Year T-Note 2.2% 2.2% 3.3%
30 Year T-Bond 3.3% 3.2% 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.