Weekly Investor – May 29, 2012
Waiting Game
Market Summary:
The major U.S. equity averages all ended the week in positive territory and the S&P 500 rallied +1.7%. U.S. economic data was slightly better and the most significant positive data difference was housing, highlighted by a +8.6% surge in homebuilder shares. Additionally, bank loans continued to increase and positive readings for unemployment and consumer sentiment added to a generally positive week for the U.S. economy. In contrast, Eurozone data were once again weaker and the health of Spanish banks and Greek exit concerns continue to trouble investors. Finally, anticipation of the looming Fiscal Cliff and Fed Chairman Ben Bernanke’s statement that “The size of the Fiscal Cliff is such that there’s no chance that the Fed could have any ability whatsoever to offset,” once again has investors playing the waiting game.
The S&P 500® closed up 1.7% for the week. The top-performing sectors in the S&P 500® Index included Materials (3.9%) and Consumer Discretionary (2.9%), while bottom-performing sectors included Health Care (0.5%) and Telecommunications (0.5%). In the fixed-income market, the 10-year Treasury yield remained unchanged, closing out the week at 1.8%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Positioned for Growth
Forest Laboratories, Inc. (FRX) develops, manufactures, and sells branded and generic forms of ethical drug products. Founded in 1956 and based in New York, New York, its principal products include Lexapro for the treatment of depression and generalized anxiety disorder; Namenda for the treatment of Alzheimer’s disease; Bystolic for the treatment of hypertension; and Savella for the management of fibromyalgia. FRX sells its products through independent distributors to physicians, pharmacies, hospitals, managed care and other healthcare organizations.
FRX presents a unique opportunity as investors worry about the sustainability of its growth prospects beyond 2012, when its number one selling drug Lexapro goes off-patent. However, FRX has historically proven its ability to successfully navigate growth challenges and currently possesses a strong balance sheet and an extensive pipeline of late-stage products. FRX has numerous opportunities to deliver above average growth and surprise investors, which we believe represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 5.2% |
| Biogen Idec Inc. | 4.7% |
| Gilead Sciences Inc. | 4.2% |
| Danaher Corp. | 4.1% |
| Qualcomm Inc. | 4.0% |
| Google Inc. | 3.8% |
| CBS Corp. | 3.6% |
| Intel Corp. | 3.2% |
| EMC Corp. | 3.2% |
| Jabil Circuit Inc. | 3.2% |
U.S. Equity Indices
| Index | 05/25/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,454.8 | 0.7% | 1.9% |
| NASDAQ | 2,837.5 | 2.1% | 8.9% |
| S&P 500 | 1,317.8 | 1.7% | 4.8% |
| Russell 1000 G | 623.3 | 2.2% | 7.3% |
U.S. Credit Rates
| Index | 05/25/12 | 05/18/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.8% | 0.8% | 2.0% |
| 10 Year T-Note | 1.7% | 1.8% | 3.3% |
| 30 Year T-Bond | 2.9% | 2.8% | 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.
