News & Our Thinking

Weekly Investor

Weekly Investor – March 05, 2012

08 March 2012

No News is Good News

Market Summary:  

The major U.S. equity markets remained relatively unchanged last week. Once again,U.S.economic data was strong.  Vehicle sales and production increased considerably in February lending credence to improved employment and consumer confidence readings. On the other hand, mixed data from the Eurozone region added to the lackluster week.  However, all eyes remain focused on the direction of oil prices. Increased oil prices through the summer months would be a significant headwind to consumer spending and economic activity around the world. Investors will take no news as good news and look for more positive signs next week.

The S&P 500® closed up 0.3% for the week.  The top-performing sectors in the S&P 500® Index included Consumer Discretionary (+1.4%) and Financials (+1.4%), while bottom-performing sectors included Energy (-1.7%) and Industrials (-1.0%).  In the fixed-income market, the 10-year Treasury closed with little change for the week at 2.0%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Favorable Oddsapple logo

Apple Inc. (AAPL) designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players; and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide.  After producing many popular and innovative products for consumer and domestic markets, AAPL is being gradually adopted by business, international and emerging markets.  AAPL has found increasing success in business markets partly due to its latest product, the iPad.  In addition, AAPL plans to open 40 new stores in 2012, 30 of which will be in international markets including the Asia-Pacific market.  AAPL’s latest in a long line of innovations, the Siri voice activation feature in the iPhone 4, was a huge success for the company, especially inChina.  AAPL intends to integrate Siri into other products, potentially an iTV, in the future.   We believe APPL’s new product pipeline and entrance into new markets can power sales and profit growth for many years to come.

Despite the fact that we have always been impressed by APPL’s products, we are cautious of a consumer product company that has a narrow product offering, as success attracts competition.  However, based on APPL’s accelerating leadership position we believe its competitive landscape has continued to improve.  While the stock has performed well over the years, it has grown sales and earnings at rates that justify strong performance and is expected to continue to do so.  For these reasons we have decided to initiate a position in APPL as we feel it possesses favorable odds to outperform in the future.

Top 10 Equity Holdings

MasterCard Inc. 4.9%
Jabil Circuit Inc. 4.1%
Qualcomm Inc. 4.1%
Biogen Idec Inc. 4.0%
Monster Beverage 4.0%
Danaher Corp. 3.9%
Google Inc. 3.8%
Gilead Sciences Inc. 3.7%
EMC Corp. 3.6%
CBS Corp. 3.2%

U.S. Equity Indices

Index 03/02/12 Week % Chg YTD % Chg
DJIA 12,977.6 0.0% 6.2%
NASDAQ 2,976.2 0.4% 14.2%
S&P 500 1,369.6 0.3% 8.9%
Russell 1000 G 645.3 0.3% 11.1%

U.S. Credit Rates

Index 03/02/12 02/24/12 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 2.0% 2.0% 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.