Weekly Investor – April 16, 2012
April Showers
Market Summary:
The major U.S. equity markets declined last week as Eurozone financial strains intensified when Spanish yields rose to 6%. Another macroeconomic concern came fromChinawhich announced slowing GDP growth. At home, weaker than expected economic data including unemployment claims and consumer confidence added to investor confusion. All of this negative data proved too much for investors and worries of a double-dip resurfaced. However, positive differences from the last double-dip scare include the global easing cycle, the housing recovery, increased vehicle production, credit expansion, a significantly lower unemployment rate and real domestic GDP, which is clearly in expansion territory. Investors once again look to earnings season and any signal from Corporate America that these April showers will pass.
The S&P 500® closed down 1.1% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (-1.1%) and Materials (-1.1%), while bottom-performing sectors included Financials (-2.8%) and Energy (-2.7%). In the fixed-income market, the 10-year Treasury yield declined, closing out the week at 2.0%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Growth in the Right Places
Founded in 1879 and based in San Ramon, California, Chevron Corporation (CVX) engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream, which involves the exploration, development and production of crude oil and natural gas and Downstream, which engages in the refining of crude oil into petroleum products. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005.
Although CVX’s production growth forecast is muted over the next few years, we believe the anticipated addition of two natural gas fields inAustraliaduring 2015 will change CVX’s growth profile dramatically. The change in production from these fields, as well as other projects CVX is undertaking, should drive a re-rating of the company to peer levels. The combination of higher production and the potential for higher valuation give Argent confidence that CVX represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.8% |
| Qualcomm Inc. | 4.3% |
| Biogen Idec Inc. | 4.2% |
| Monster Beverage | 4.1% |
| Danaher Corp. | 4.0% |
| Jabil Circuit Inc. | 3.8% |
| Google Inc. | 3.8% |
| Gilead Sciences Inc. | 3.7% |
| EMC Corp. | 3.6% |
| CBS Corp. | 3.5% |
U.S. Equity Indices
| Index | 04/13/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,849.6 | -1.6% | 5.2% |
| NASDAQ | 3,011.3 | -2.2% | 15.6% |
| S&P 500 | 1,370.3 | -2.0% | 9.0% |
| Russell 1000 G | 650.4 | -1.8% | 12.0% |
U.S. Credit Rates
| Index | 04/13/12 | 04/05/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.9% | 0.9% | 2.0% |
| 10 Year T-Note | 2.0% | 2.0% | 3.3% |
| 30 Year T-Bond | 3.1% | 3.2% | 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.
