Weekly Investor – June 04, 2012
Chill in the Air
Market Summary:
Despite a shortened holiday week which unofficially kicked off summer, economic activity was plentiful and left a slight chill in the air. The major U.S. equity averages all fell last week and ended in negative territory. As another week passed, the question remained the same, how will investors be impacted by the turmoil in Europe? Last week Eurozone bank stocks declined to a 25-year low as policymakers face a recession and financial crisis. Additionally, the market wasn’t helped by U.S. economic data. The U.S. economy added 69,000 jobs in May, significantly missing expectations and raising the unemployment rate to 8.2%. Finally, a downward revision in first quarter real GDP growth to 1.9% has investors wondering whether or not the market chill is only temporary.
The S&P 500® closed down 3.0% for the week. The top-performing sectors in the S&P 500® Index included Utilities (-0.2%) and Telecommunications (-0.5%), while bottom-performing sectors included Financials (-3.8%) and Energy (-4.6%). In the fixed-income market, the 10-year Treasury yield declined, closing out the week at 1.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Positioned for Growth
Gilead Sciences, Inc. (GILD), a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for the treatment of life-threatening infectious diseases. Notably, GILD is a leader in drug development for the treatment of human immunodeficiency virus (HIV) in adults.
After years of being a “growth darling” for investors, GILD’s stock has underperformed this past year as investors have focused on GILD’s patent expirations later this decade and questioned the company’s ability to drive growth beyond that horizon. Despite such concern, the core business continues to execute, delivering solid sales and earnings growth. As GILD’s drug development pipeline continues to progress, including next-generation HIV therapies, we believe investors will once again become comfortable with the company’s growth prospects, offering the potential for attractive upside from current levels.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 5.1% |
| Biogen Idec Inc. | 4.7% |
| Gilead Sciences Inc. | 4.2% |
| Danaher Corp. | 4.0% |
| Qualcomm Inc. | 4.0% |
| Google Inc. | 3.8% |
| CBS Corp. | 3.6% |
| Intel Corp. | 3.3% |
| Apple Computer | 3.3% |
| EMC Corp. | 3.2% |
U.S. Equity Indices
| Index | 06/01/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,118.6 | -2.7% | -0.8% |
| NASDAQ | 2,747.5 | -3.2% | 5.5% |
| S&P 500 | 1,278.0 | -3.0% | 1.6% |
| Russell 1000 G | 602.3 | -3.4% | 3.7% |
U.S. Credit Rates
| Index | 06/01/12 | 05/25/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.6% | 0.8% | 2.0% |
| 10 Year T-Note | 1.5% | 1.7% | 3.3% |
| 30 Year T-Bond | 2.5% | 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.
