Weekly Investor – November 18, 2013
Tape(r) Delay!
Market Summary:
U.S. equity markets continued their positive performance trend and the S&P 500® posted its sixth straight week of positive returns. The S&P 500 is up more than 28% year-to-date on a total return basis and is on par to post its best year since 2003. Markets were relatively quiet on Monday as the government and bond markets were closed in honor of Veteran’s Day. Tuesday the President of the Federal Reserve Bank of Dallas speculated that stimulus measures could not go on forever and markets pulled back. However, on Thursday, new Fed Chairman Janet Yellen indicated that she would continue stimulus measures in order to strengthen the economy and markets rebounded. In economic news, U.S. initial jobless claims were higher than expected at 339K and also higher than consensus estimates of 330K, providing further comfort that Fed tapering was not imminent. All ten economic sectors were positive with consumer discretionary stocks leading the way. This week, investors hope for continued positive returns as earnings season slowly winds down.
The S&P 500® was up 1.6% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (2.5%) and Health Care (2.1%), while bottom-performing sectors included Utilities (0.8%) and Telecommunications (0.8%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.7%.
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. | 5.9% |
| Lowes Cos. | 5.0% |
| CBS Corp. | 4.9% |
| Danaher Corp. | 4.1% |
| Forest Laboratories | 4.0% |
| Endo Health Solutions | 4.0% |
| MasterCard, Inc. | 4.0% |
| SunTrust Banks | 3.9% |
| Amgen Inc. | 3.6% |
| Qualcomm Inc. | 3.5% |
U.S. Equity Indices
| Index | 11/15/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,961.7 | 1.9% | 21.8% |
| NASDAQ | 3,986.0 | 1.7% | 32.0% |
| S&P 500 | 1,798.2 | 1.6% | 26.1% |
| Russell 1000 G | 836.7 | 1.9% | 27.1% |
U.S. Credit Rates
| Index | 11/15/13 | 11/08/13 | 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 | 2.7% | 2.8% | 1.8% |
| 30 Year T-Bond | 3.8% | 3.9% | 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.
