Weekly Investor – December 27, 2011
A Present for Investors
Market Summary:
The U.S. equity averages ended this past week higher, pushing the major indices into the black for the year. While investors focus remained on headlines coming out of Europe, the prospects of an improving economy here in the U.S helped spur a much hoped for “Santa Claus” rally as we push towards year-end. Better-than-expected manufacturing and employment data added to the positive sentiment as 2012 approaches. As the new year approaches, a tale of two stories continues to unfold. The first story illustrates building momentum for our domestic economy, while the second story tells a tale of building pressures forEuropeand many emerging markets. These opposing forces will continue to provide both opportunities and risks for investors with the hope for a happy ending. Stay tuned.
The S&P 500® closed up 3.7% for the week. The top-performing sectors in the S&P 500® Index included Energy (+5.4%) and Financials (+4.9%), while bottom-performing sectors included Technology (+2.0%) and Consumer Staples (+3.2%). In the fixed-income market, the 10-year Treasury closed down for the week at 2.0%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
A Secular Winner
MasterCard, Inc. (MA), founded in 1966, operates with its subsidiaries to provide transaction processing and additional services for its credit, deposit, and ATM programs, which reach over 24,000 financial institutions worldwide. MA facilitates the authorization, clearing, and settlement of transactions, as well as markets and develops other payment-related services. MA’s brands include MasterCard, Maestro and Cirrus.
The payment transition from cash to checks to plastic is well underway in theU.S., but is in its infancy in areas abroad. We expect MA to be a prime beneficiary of this secular change, as the company enjoys high barriers to entry, basically dividing the market with Visa, Inc. (V). The positive competitive landscape will, in our belief, protect MA’s profits in the years to come, as the company increases its saturation in developing economies. Like many companies, MA has been impacted by the slowing economy; however, it has at its disposal cost cutting options to mitigate the cyclical pressures that may weigh on its earnings. Given the company’s bright long-term growth prospects and near-term ability to protect profits, we believe MA represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 5.0% |
| Biogen Idec Inc. | 4.4% |
| 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. | 3.5% |
| Energizer Holdings | 3.5% |
U.S. Equity Indices
| Index | 12/23/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,294.0 | 3.6% | 6.2% |
| NASDAQ | 2,618.6 | 2.5% | -1.3% |
| S&P 500 | 1,265.3 | 3.7% | 0.6% |
| Russell 1000 G | 584.0 | 3.1% | 1.6% |
U.S. Credit Rates
| Index | 12/23/11 | 12/16/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.0% | 0.8% | 2.0% |
| 10 Year T-Note | 2.0% | 1.9% | 3.3% |
| 30 Year T-Bond | 3.0% | 2.9% | 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.
