Weekly Investor – October 21, 2013
A Debt Deal and Positive Earnings!
Market Summary:
U.S. equity markets rose sharply last week as lawmakers avoided a potential Government debt default and corporate earnings reports were strong. However, the week was not without ups and downs as the debt ceiling debate worked itself out. While Monday brought news of a potential deal, equities fell nearly 1% on Tuesday when the deal fell through. However, late on Wednesday, Washington announced a short-term (through February) lift of the debt ceiling which was agreed upon by both the U.S. House of Representatives and the U.S. Senate. Google Inc. (GOOG) also made news last week. The company saw its shares rise nearly 14% – topping $1,000 per share for the first time in its history. Looking ahead to this week, investors hope for continued positive earnings from Corporate America.
The S&P 500® was up 2.4% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (3.2%) and Financials (3.0%), while bottom-performing sectors included Industrials (1.9%) and Utilities (0.9%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Restructuring
Procter & Gamble (PG) engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care and Baby Care and Family Care. PG was founded in 1837 and is based in Cincinnati, Ohio.
For the past couple of years, PG has underperformed its peer group, losing share and posting anemic growth across its portfolio. In an effort to turn things around, management announced a major restructuring at the company with an emphasis on improving returns and restoring growth in their key brands. While we remain in the early days of progress, early signs have been particularly encouraging. We believe that an improving company outlook combined with both an attractive dividend yield and valuation offer favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.3% |
| Lowes Cos | 4.6% |
| CBS Corp. | 4.5% |
| Gilead Sciences | 4.4% |
| SunTrust Banks | 4.1% |
| Danaher Corp. | 4.0% |
| Forest Laboratories | 3.6% |
| MasterCard, Inc. | 3.6% |
| Qualcomm Inc. | 3.5% |
| Citrix Systems, Inc. | 3.5% |
U.S. Equity Indices
| Index | 10/18/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,399.7 | 1.1% | 17.5% |
| NASDAQ | 3,914.3 | 3.2% | 19.6% |
| S&P 500 | 1,744.5 | 2.4% | 22.3% |
| Russell 1000 G | 812.2 | 2.7% | 23.4% |
U.S. Credit Rates
| Index | 10/18/13 | 10/14/13 | 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 | 2.6% | 2.7% | 1.8% |
| 30 Year T-Bond | 3.7% | 3.7% | 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.
