News & Our Thinking

Weekly Investor

Weekly Investor – July 22, 2013

23 July 2013

Strength in Financials

Market Summary:  

The U.S. equity markets posted mostly positive returns last week.  The S&P 500® was the standout and closed at a record high of $1692.1 on Friday.  As earnings season continued investors were pleased by the continued strength of the financial sector.  Many banks reported earnings and overall they exceeded expectations.  Additionally, May advanced retail sales increased while June consumer confidence numbers fell slightly, sending mixed signals to investors.  As earnings season continues, investors hope for more positive news from Corporate America.

The S&P 500® was up 0.7% for the week.  The top-performing sectors in the S&P 500® Index included Industrials (2.2%) and Energy (2.1%), while bottom-performing sectors included Telecommunications (-0.4%) and Technology        (-1.8%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.5%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Favorable Odds

ESRXFounded 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.  On April 02, 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

Google, Inc. 5.4%
Lowes Cos 4.6%
CBS Corp. 4.5%
Gilead Sciences 4.5%
SunTrust Banks 4.0%
Danaher Corp. 4.0%
Forest Laboratories 3.7%
Post Holdings Inc. 3.5%
Procter & Gamble 3.4%
MasterCard, Inc. 3.4%

U.S. Equity Indices

Index 07/19/13 Week % Chg YTD % Chg
DJIA 15,543.4 0.5% 18.6%
NASDAQ 3,587.6 -0.3% 18.8%
S&P 500 1,692.1 0.7% 18.6%
Russell 1000 G 766.2 0.0% 16.4%

U.S. Credit Rates

Index 07/19/13 07/12/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.3% 1.4% 0.8%
10 Year T-Note 2.5% 2.6% 1.8%
30 Year T-Bond 3.6% 3.6% 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.