Weekly Investor – February 06, 2012
A New Perspective for a New Year
Market Summary:
The major U.S. equity averages ended this past week sharply higher thanks to momentum from a steady flow of better-than-expected economic data. TheU.S.has now posted 18 weeks of strong economic data. Signs of hope for the Eurozone are added to the mix and have resulted in a strong start to the year for equity markets. Investors remain cautious as potential headwinds, includingMiddle East tensions and financial uncertainty associated with EuroZone debt issues, remain. A back drop of an improving economy coupled with attractive valuations and continued high levels of investor uncertainty, certainly seem to give legs to this latest Bull rally. As we begin the second month of 2012, the positive momentum witnessed to date is just what investors need to help forget about the challenges of 2011.
The S&P 500® closed up 2.2% for the week. The top-performing sectors in the S&P 500® Index included Financials (+4.2%) and Technology (+3.1%), while bottom-performing sectors included Utilities (+0.2%) and Consumer Staples (+0.9%). In the fixed-income market, the 10-year Treasury closed little changed for the week at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Positioning for Growth
Schlumberger LTD (SLB) is a global oilfield services company that employs more than 105,000 people in more than 80 countries. Operating through four “GeoMarket” regions, the company’s technologies and services help the world’s largest exploration and production (E&P) companies discover and produce the energy required to fuel the global economy. Founded in 1927 and based in Houston,Texas, SLB’s service portfolio includes some of the most sophisticated drilling, testing and production equipment in the industry.
Many E&P companies curtailed spending during the recession, dampening SLB’s earnings outlook. However, several quarters of higher energy prices and the discovery of large oil resources in Brazil created rising capital expenditure budgets as well as higher demand for energy services. In addition, oil and natural gas are becoming more difficult to find, leading to more complex and expensive exploratory programs and therefore an increased demand for SLB’s services. Argent anticipates that energy companies are beginning a multi-year investment cycle that will highlight the value of SLB’s industry leading services and accelerate the company’s earnings power.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.8% |
| Gilead Sciences Inc. | 4.5% |
| Biogen Idec Inc. | 4.3% |
| Qualcomm Inc. | 4.1% |
| Danaher Corp. | 4.0% |
| Jabil Circuit Inc. | 3.9% |
| Monster Beverage | 3.8% |
| Google Inc. | 3.7% |
| EMC Corp. | 3.4% |
| Energizer Holdings | 3.3% |
U.S. Equity Indices
| Index | 02/03/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,862.2 | 1.6% | 5.3% |
| NASDAQ | 2,905.7 | 3.2% | 11.5% |
| S&P 500 | 1,344.9 | 2.2% | 6.9% |
| Russell 1000 G | 630.5 | 2.4% | 8.5% |
U.S. Credit Rates
| Index | 02/03/12 | 01/27/12 | 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 | 1.9% | 1.9% | 3.3% |
| 30 Year T-Bond | 3.1% | 3.1% | 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.
