Weekly Investor – July 23, 2012
Tug-of-War
Market Summary:
The major U.S .equity markets ended the week in positive territory as strong corporate earnings prompted a rally mid week. Additionally, June housing reports beat expectations and news that bank loans have increased over the past four months helped the markets. However, news from abroad dampened the positive sentiment at home. On Friday, concern that the $122 billion bank rescue plan for Spain may not be enough led Spanish officials to state their recession would likely last into next year. Coincidentally, the Euro fell to its lowest level against the U.S. Dollar since 2010. Furthermore, China announced it will not relax property control policies which only intensified concerns that it will continue to see slower economic growth. Once again, equity investors are caught in an ongoing game of tug-of war between positive news at home and trouble abroad.
The S&P 500® closed up 0.4% for the week. The top-performing sectors in the S&P 500® Index included Energy (2.6%) and Information Technology (1.9%), while bottom-performing sectors included Consumer Staples (-0.9%) and Financials (-2.3%). In the fixed-income market, the 10-year Treasury yield remained steady closing out the week at 1.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Opportunity for Growth
Monster Beverage Corp. (MNST) engages in the development, marketing, sale, and distribution of beverages in the United States and internationally. Based in Corona,California, MNST offers natural sodas, fruit juices, fruit smoothies, sparkling beverages, mutli-vitamin juice drinks as well as energy drinks under several brands including Hansen Naturals, Monster Energy, Rumba, Samba, Tango, Peace Tea, Blue Sky, Vidration and Java.
MNST is a dominant player in the energy drink category as its Monster Energy drink brand controls more than 30% market share and has consistently added to its strong position. The beverage industry has shown signs of stabilization and the energy drink segment is leading the way as the highest growth category in the industry, which we believe are signs that MNST fundamentals will continue to improve. In addition to stabilizing industry dynamics, MNST’S new distribution agreement with Coca-Cola Enterprises is off to an encouraging start and provides strong international growth opportunities. We have initiated a position in MNST as the attractive valuation coupled with improving growth prospects offer an attractive profile for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 5.2% |
| Biogen Idec Inc. | 5.0% |
| Gilead Sciences Inc. | 4.3% |
| Qualcomm Inc. | 3.9% |
| Danaher Corp. | 3.9% |
| Google Inc. | 3.8% |
| Express Scripts Holdings | 3.7% |
| CBS Corp. | 3.5% |
| Ebay, Inc. | 3.5% |
| Lowes Cos. | 3.5% |
U.S. Equity Indices
| Index | 07/20/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,822.6 | 0.4% | 5.0% |
| NASDAQ | 2,925.3 | 0.6% | 12.3% |
| S&P 500 | 1,362.7 | 0.4% | 8.4% |
| Russell 1000 G | 636.3 | 0.7% | 9.5% |
U.S. Credit Rates
| Index | 07/20/12 | 07/13/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.6% | 0.6% | 2.0% |
| 10 Year T-Note | 1.5% | 1.5% | 3.3% |
| 30 Year T-Bond | 2.6% | 2.6% | 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.
