News & Our Thinking

Weekly Investor

Weekly Investor – April 23, 2012

30 April 2012

Mixed Signals

Market Summary:  

The major U.S. equity markets remained relatively unchanged last week and once again investors are left processing mixed signals.  On a positive front, of the 123 companies that have reported first quarter earnings, 81% have beat expectations, the highest on record for any quarter.  Additionally, gasoline futures plunged -20 cents last week, layoff announcements declined to a near-record low, and housing continues to show marked improvement.  On the other hand, another round of weakerU.S.economic data which included unemployment claims, consumer confidence and manufacturing dampened the positive earnings news. Problems in the Eurozone persist and the combination of these mixed signals at home and abroad leave investors contemplating the direction of the markets.  As earnings season continues, investors look for clarity on the horizon.

The S&P 500® closed down 1.1% for the week.  The top-performing sectors in the S&P 500® Index included Utilities (2.1%) and Consumer Staples (2.0%), while bottom-performing sectors included Consumer Discretionary (0.2%) and Technology (-1.5%).  In the fixed-income market, the 10-year Treasury yield remained flat, closing out the week at 2.0%.

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

A Premier Industrial Company

Danaher Corp. (DHR), headquartered inWashington,D.C., is a designer, manufacturer and marketer of medical, industrial, professional and consumer products. DHR was founded in 1969 and was previously known as DMG, Inc., but later took the Danaher name in 1984. The company produces a broad range of products including electronic calibration equipment, retail/commercial petroleum products such as underground storage tank leak detection systems, high-precision optical systems for the analysis of microstructures and aerospace defense articles, among others. DHR’s primary product lines are sold in North America, Europe and Asia.

DHR has a long history of delivering consistent earnings growth through continual development of its own businesses and by acquiring businesses that are fast growing and have high returns.  Over the years, the company’s management team has demonstrated skill and discipline in selecting and integrating its many purchases.  A more recent purchase included an expansion in the water treatment industry.  This industry has strong growth potential and now DHR is a key beneficiary of this trend. In the long-term, we expect DHR to outperform its peers and the market.

Top 10 Equity Holdings

MasterCard Inc. 5.2%
Biogen Idec Inc. 4.3%
Monster Beverage 4.3%
Qualcomm Inc. 4.0%
Gilead Sciences Inc. 4.0%
Danaher Corp. 3.8%
Google Inc. 3.6%
Jabil Circuit Inc. 3.5%
CBS Corp. 3.5%
EMC Corp. 3.5%

U.S. Equity Indices

Index 04/20/12 Week % Chg YTD % Chg
DJIA 13,029.3 1.4% 6.6%
NASDAQ 3,000.5 -0.4% 15.2%
S&P 500 1,378.5 0.6% 9.6%
Russell 1000 G 652.5 0.3% 12.3%

U.S. Credit Rates

Index 04/20/12 04/13/12 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% 3.1% 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.