News & Our Thinking

Weekly Investor

Weekly Investor – January 09, 2012

14 February 2012

Positive Start for the Year

Market Summary:  

The U.S. equity averages ended this past week higher, propelled largely by strong gains on Tuesday.  Manufacturing data from China,India and parts of Europe provided encouragement to buyers. Domestic manufacturing proved pleasing with the ISM manufacturing index increasing to 53.9 from 52.7 in November. Construction spending for November increased by 1.2%, which bested the 0.5% increase that had been generally expected after a downwardly revised 0.2% decline during October. 2012 will hold many twists and turns for the stock market, notably the Presidential election, but overall we feel the stock market offers a positive risk/reward for investors.

The S&P 500® closed up +1.6% for the week.  The top-performing sectors in the S&P 500® Index included Basic Materials (+3.8%) and Financials (+3.1%), while bottom-performing sectors included Utilities (-2.7%) and Telecommunications (-2.7%).  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.

Oracle’s Long-Term Appeal Enhanced by Integrated Solutions

ORCLOracle Corp. (ORCL) is a leading provider of database software – programs that allow the storage of large amounts of information while also having the capacity to search, retrieve, sort, revise, analyze and order data, both quickly and efficiently.  Within the past several years, ORCL has completed a number of acquisitions, which as a result has enhanced its market share and its ability to gain additional market share going forward.

Oracle has created a unique “one-stop shop” by integrating hardware and software into its Exadata and Exalogic platforms competing against multi-vendor solutions assembled from different hardware and software vendors. Chief Information Officers like the simplicity of using only one vendor rather than several and ORCL’s solution has demonstrated superior performance and ROI’s than competing multi-vendor solutions. ORCL’s integrated solution can not easily be replicated by competing vendors and provides the company with a technology “moat.” Company management has a demonstrated ability to execute and has maintained above-average cash flow returns on invested capital for greater than 15 years.  Furthermore, we believe ORCL’s current valuation does not fully reflect how dispruptive a force ORCL’s integrated appliance strategy really is, creating upside potential and favorable odds for our clients.

Top 10 Equity Holdings

MasterCard Inc. 5.0%
Google Inc. 4.4%
Biogen Idec Inc. 4.2%
Qualcomm Inc. 4.0%
Danaher Corp. 3.9%
Allergan Inc. 3.7%
Energizer Holdings 3.7%
Gilead Sciences Inc. 3.6%
Hansen Natural Corp. 3.6%
Jabil Circuit Inc. 3.5%

U.S. Equity Indices

Index 01/06/12 Week % Chg YTD % Chg
DJIA 12,359.9 1.2% 1.2%
NASDAQ 2,674.2 2.7% 2.7%
S&P 500 1,277.8 1.6% 1.6%
Russell 1000 G 590.5 1.7% 1.7%

U.S. Credit Rates

Index 01/06/12 12/30/11 12/31/10
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 0.9% 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.