Weekly Investor – December 10, 2012
Waiting on Washington
The U.S. equity markets were mixed and relatively quiet as evidence of economic decoupling continued to persist. Signs of strength in the U.S. economy appeared in the forms of improving employment, consumer confidence and reported growth in both the manufacturing and service economy. The rest of the world continued to be mixed, as China’s stock market rose in response to expectations of stimulative economic policy that will favor growth while Germany and Japan warned of potential recession. Back in the U.S., there continued to be a lack of progress in Washington regarding the fiscal cliff, and the equity market reaction was muted this past week as investors continue to play the waiting game.
The S&P 500® closed up 0.1% for the week. The top-performing sectors in the S&P 500® Index included Financials (1.7%) and Industrials (0.8%), while bottom-performing sectors included Technology (-1.4%) and Basic Materials (-1.9%). In the fixed-income market, the 10-year Treasury yield remained stable for the week at 1.62%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Growing through Acquisition
Founded in 1986, Express Scripts Holding Company (ESRX) provides a range of pharmacy benefit management services in North America and is headquartered in St. Louis, Missouri.
ESRX has a solid track record of delivering earnings growth through steady profitability improvement and the successful integration of acquisitions. In April 2012 the FTC granted ESRX the official approval to acquire Medco and we believe this will help drive profitability and sales for the company. Additionally, the anticipated release of various generic drugs and the management of fast growing biologic drugs should positively impact ESRX’s growth over the next several years. We believe these recent developments present favorable odds for shares of ESRX to outperform its peers and the market.
Top 10 Equity Holdings
|Gilead Sciences, Inc.||3.3%|
U.S. Equity Indices
|Index||12/07/12||Week % Chg||YTD % Chg|
|Russell 1000 G||655.5||-0.6%||12.9%|
U.S. Credit Rates
|3 Month T-Bill||0.1%||0.1%||0.1%|
|5 Year T-Note||0.6%||0.6%||2.0%|
|10 Year T-Note||1.6%||1.6%||3.3%|
|30 Year T-Bond||2.8%||2.7%||4.3%|
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.