Weekly Investor – January 23, 2012
Riding the Wave of Positive News
Market Summary:
The major U.S. equity averages ended this past week higher thanks again to better-than-expected economic data here in the U.S. as well as encouraging signs regarding the Eurozone crisis. This past week’s positive news included stronger readings from the latest unemployment claims number along with encouraging data regarding the housing market. Add lower inflation readings to the mix along with better bond auctions inEuropeand we see the recipe for the equity markets strong start to the year. Additionally, earnings season remains in full swing and should give investors plenty to chew on over the upcoming days and weeks. The positive economic backdrop should help balance any worries over corporate earnings.
The S&P 500® closed up +2.0% for the week. The top-performing sectors in the S&P 500® Index included Technology (+3.2%) and Energy (+2.8%), while bottom-performing sectors included Utilities (-0.6%) and Consumer Staples (+0.9%). 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.
Well Positioned for an Improving Market
Principal Financial Group, Inc. (PFG) is a provider of retirement savings, investment and insurance products and services. The company’s United States and International operations are engaged in asset accumulation and asset management. In addition, PFG provides a range of insurance solutions, including individual and group life insurance, group health insurance, individual and group disability insurance and group dental and vision insurance.
As credit markets have normalized, PFG’s book value has risen substantially, thus increasing the company’s liquidity and providing PFG the kind of stability that investors have come to expect from the company. While PFG’s life insurance segment should grow in-line with the market, we expect PFG’s higher growth 401(k) franchise to differentiate the company from its peers. Trading at a discount to its historic average with a stabilized balance sheet and improving business prospects, PFG represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.3% |
| Biogen Idec Inc. | 4.3% |
| Qualcomm Inc. | 4.1% |
| Danaher Corp. | 4.0% |
| Gilead Sciences Inc. | 4.0% |
| Jabil Circuit Inc. | 3.9% |
| Google Inc. | 3.8% |
| Monster Beverage | 3.8% |
| Allergan Inc. | 3.5% |
| Energizer Holdings | 3.5% |
U.S. Equity Indices
| Index | 01/20/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,720.5 | 2.4% | 4.1% |
| NASDAQ | 2,786.7 | 2.8% | 7.0% |
| S&P 500 | 1,315.4 | 2.0% | 4.6% |
| Russell 1000 G | 609.1 | 2.3% | 4.9% |
U.S. Credit Rates
| Index | 01/20/12 | 01/13/12 | 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 | 3.1% | 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.
