Weekly Investor – November 25, 2013
Record Highs!
Market Summary:
U.S. equity markets continued their recent winning streak. The Dow Jones Industrial Average and the S&P 500® Index both ended the week with record highs. The S&P 500 closed out its seventh straight week of gains and is up nearly 29% for the year, positioning itself for the largest annual increase since 1997. However, the week did not start off strong as Federal Reserve minutes revealed that the central bank may reduce bond purchases in the coming months and equities slid. Economic news was mixed and existing homes sales fell slightly below expectations. Investors look forward to the shortened Thanksgiving week and hope to gain some perspective on the strength of the consumer as the holiday shopping season officially begins.
The S&P 500® was up 0.4% for the week. The top-performing sectors in the S&P 500® Index included Financials (1.7%) and Health Care (1.6%), while bottom-performing sectors included Technology (-0.5%) and Utilities (-1.8%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.7%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
SunTrust Banks, Inc. (STI) was founded in 1891 and is headquartered in Atlanta, Georgia. STI provides various financial services within the United States. Historically, STI has been a solid, southeast regional bank. However, since 2008 the severe housing bubble in Florida combined with the global financial crisis has put significant earnings and capital pressure on STI.
STI’s newly promoted CEO, Bill Rogers, is committed to lowering cost and rebuilding STI’s business. In Argent’s view, the current depressed valuation of STI is due to the expectation of a relatively slow recovery and worries over the company’s exposure to older and troubled mortgages. Therefore, we believe STI’s upside potential is substantial as the company works to return to a solid, healthy regional bank within the next few years and offers favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.9% |
| CBS Corp. | 4.7% |
| Lowes Cos. | 4.7% |
| Endo Health Solutions | 4.1% |
| Danaher Corp. | 4.1% |
| Forest Laboratories | 4.0% |
| MasterCard, Inc. | 4.0% |
| SunTrust Banks | 3.9% |
| Amgen Inc. | 3.6% |
| Qualcomm Inc. | 3.6% |
U.S. Equity Indices
| Index | 11/22/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,064.8 | 0.6% | 22.6% |
| NASDAQ | 3,991.7 | 0.1% | 32.2% |
| S&P 500 | 1,804.8 | 0.4% | 26.5% |
| Russell 1000 G | 837.0 | 0.0% | 27.2% |
U.S. Credit Rates
| Index | 11/22/13 | 11/15/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.3% | 1.3% | 0.8% |
| 10 Year T-Note | 2.7% | 2.7% | 1.8% |
| 30 Year T-Bond | 3.8% | 3.8% | 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.
