Weekly Investor – April 1, 2013
Good News All Around
Market Summary:
The U.S. equity markets all ended in positive territory last week. The S&P 500® Index closed at a record high, surpassing the previous closing high set in October 2007. Additionally, Thursday’s 4Q12 GDP growth report came in at 0.4%, exceeding original expectations of 0.1%. More good news came from the housing sector as the S&P Case Schiller Index reported the largest gain in housing prices since 2006. Overseas, the reopening of banks in Cyprus without panic moved markets higher and increased investor confidence. Looking forward, investors will pay close attention to this week’s release of the March employment report and hope for continued positive performance.
The S&P 500® closed up 0.8% for the week. The top-performing sectors in the S&P 500® Index included Health Care (2.4%) and Utilities (2.4%), while bottom-performing sectors included Industrials (0.3%) and Financials (0.1%). In the fixed-income market, the 10-year Treasury yield closed even for the week at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Earnings Power
Schlumberger LTD (SLB) is a global oilfield services company that employs more than 105,000 people in more than 80 countries. Operating through four “GeoMarket” regions, the company’s technologies and services help the world’s largest exploration and production (E&P) companies discover and produce the energy required to fuel the global economy. Founded in 1927 and based in Houston, Texas, SLB’s service portfolio includes some of the most sophisticated drilling, testing and production equipment in the industry.
Many E&P companies curtailed spending during the recession, dampening SLB’s earnings outlook. However, several quarters of higher energy prices and the discovery of large oil resources in Brazil created rising capital expenditure budgets as well as higher demand for energy services. In addition, oil and natural gas are becoming more difficult to find, leading to more complex and expensive exploratory programs and therefore an increased demand for SLB’s services. Argent anticipates that energy companies are beginning a multi-year investment cycle that will highlight the value of SLB’s industry leading services and accelerate the company’s earnings power.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.2% |
| CBS Corp. | 4.4% |
| Lowes Cos. | 4.2% |
| Allstate | 4.2% |
| Gilead Sciences | 4.0% |
| Danaher Corp. | 3.9% |
| Qualcomm Inc. | 3.8% |
| SunTrust Banks | 3.6% |
| Procter & Gamble | 3.5% |
| Forest Laboratories | 3.4% |
U.S. Equity Indices
| Index | 03/28/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 14,578.5 | 0.5% | 11.3% |
| NASDAQ | 3,267.5 | 0.7% | 8.2% |
| S&P 500 | 1,569.2 | 0.8% | 10.0% |
| Russell 1000 G | 718.0 | 1.0% | 9.1% |
U.S. Credit Rates
| Index | 03/28/13 | 03/22/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.8% | 0.8% | 0.8% |
| 10 Year T-Note | 1.9% | 1.9% | 1.8% |
| 30 Year T-Bond | 3.1% | 3.2% | 3.0% |
| 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.
