Weekly Investor – December 19, 2011
Recent Trading Patterns Continue
Market Summary:
The major U.S. equity averages all posted losses following what was generally a downward trend all week. Investors continue to focus on the Eurozone and the potential for long-term fixes to the debt issues plaguing the area. Standard & Poor’s put 15 Eurozone countries on negative credit watch and Fitch cut the ratings of several European banks as well as Bank of America and Goldman Sachs. However, investors seemed to shrug off this news as the market had already priced in a negative view of sovereign debt and the banks which own it for several weeks. Although European headlines are driving the market in the short term, the U.S. posted positive economic news last week by way of increased employment and higher industrial production numbers. The good economic news, strong corporate profits and reasonable equity valuations may signal better days ahead for U.S. equity markets.
The S&P 500® closed up -2.8% for the week. The top-performing sectors in the S&P 500® Index included Utilities (-0.2%) and Telecommunications (-0.3%), while bottom-performing sectors included Energy (-4.9%) and Technology (-4.1%). In the fixed-income market, the 10-year Treasury closed up for the week at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Building Growth
Jacobs Engineering Group Inc. (JEC) provides professional, technical, and construction services. Founded in 1947 and headquartered in Pasadena, CA, JEC is one of the largest and most diverse engineering and construction companies in theU.S. Its principal services comprise various aspects of engineering and construction, operations, and maintenance, as well as scientific and specialty consulting services. JEC’s end customers range from oil and gas companies to mining and healthcare companies.
Over the past 18 months, the operating environment of JEC’s customers has steadily improved and JEC is beginning to experience a pick up in orders and overall business. JEC has a strong balance sheet, proven track record and an attractive valuation. As business conditions continue to improve, we at Argent expect JEC to benefit materially from the trickle down effect of the recovering economy. In other words, JEC represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.9% |
| Biogen Idec Inc. | 4.3% |
| Google Inc. | 4.3% |
| Qualcomm Inc. | 4.0% |
| Danaher Corp. | 3.9% |
| Hansen Natural Corp. | 3.7% |
| Jabil Circuit Inc. | 3.6% |
| Allergan Inc. | 3.6% |
| Gilead Sciences Inc. | 3.6% |
| Energizer Holdings | 3.4% |
U.S. Equity Indices
| Index | 12/16/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,866.4 | -2.6% | 2.5% |
| NASDAQ | 2,555.3 | -3.5% | -3.7% |
| S&P 500 | 1,219.7 | -2.8% | -3.0% |
| Russell 1000 G | 566.3 | -3.2% | -1.5% |
U.S. Credit Rates
| Index | 12/16/11 | 12/09/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.8% | 0.9% | 2.0% |
| 10 Year T-Note | 1.9% | 2.0% | 3.3% |
| 30 Year T-Bond | 2.9% | 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.
