Weekly Investor – October 7, 2013
Shutdown Continues
Market Summary:
U.S. equity markets ended the week mixed and the government shutdown continued. While many government agencies remained closed, most investors likely missed the weekly jobs report which is released by the Bureau of Labor Statistics. In addition to the shutdown, last week ushered in the beginning of health insurance exchanges, a part of the Patient Protection and Affordable Care Act. Looking ahead to this week, investors remain focused on any potential impacts from the shutdown and begin digesting the first round of third quarter earnings reports.
The S&P 500® was down 0.1% for the week. The top-performing sectors in the S&P 500® Index included Health Care (0.9%) and Basic Materials (0.8%), while bottom-performing sectors included Industrials (-0.9%) and Consumer Staples (-1.0%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
MasterCard, Inc. (MA), founded in 1966, operates with its subsidiaries to provide transaction processing and additional services for its credit, deposit, and ATM programs, which reach over 24,000 financial institutions worldwide. MA facilitates the authorization, clearing, and settlement of transactions, as well as markets and develops other payment-related services. MA’s brands include MasterCard, Maestro and Cirrus.
The payment transition from cash to checks to plastic is well underway in the U.S., but is in its infancy in areas abroad. We expect MA to be a prime beneficiary of this secular change, as the company enjoys high barriers to entry, basically dividing the market with Visa, Inc. (V). The positive competitive landscape will, in our belief, protect MA’s profits in the years to come, as the company increases its saturation in developing economies. Given the company’s bright long-term growth prospects and near-term ability to protect profits, we believe MA represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.3% |
| Lowes Cos | 5.0% |
| CBS Corp. | 4.9% |
| Gilead Sciences | 4.7% |
| Danaher Corp | 4.0% |
| Amgen Inc. | 3.8% |
| MasterCard, Inc. | 3.8% |
| SunTrust Banks | 3.8% |
| Forest Laboratories | 3.6% |
| Qualcomm Inc. | 3.5% |
U.S. Equity Indices
| Index | 10/04/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,072.6 | -1.2% | 15.0% |
| NASDAQ | 3,807.8 | 0.7% | 26.1% |
| S&P 500 | 1,690.5 | -0.1% | 18.5% |
| Russell 1000 G | 790.4 | 0.1% | 20.1% |
U.S. Credit Rates
| Index | 10/04/13 | 09/27/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.4% | 0.8% |
| 10 Year T-Note | 2.6% | 2.6% | 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.
