Weekly Investor – November 4, 2013
Catching Our Breath?
Market Summary:
As the sprint through third quarter earnings season continues, last week brought subdued but mixed equity market movement. On the economic front, payroll and homebuilding data arrived a bit softer than expected, and inflation readings continued to point to little near term concern. Along with softer payroll data, we have seen slight declines in company surveys, which is generally a measure of business confidence. Time will tell whether that is simply a remnant of the government shutdown or signs of future caution. All in all, the U.S. economy is in a “not bad but not accelerating” frame of mind. On the international front, it was a solid week as manufacturing data in China and Japan as well as consumer confidence in Europe exceeded expectations. As investors catch their breath, we enter the home stretch for third quarter earnings season.
The S&P 500® was up 0.1% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (1.2%) and Consumer Staples (1.1%), while bottom-performing sectors included Financials (-1.2%) and Basic Materials (-1.3%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Accelerating Earnings Growth
Quanta Services, Inc. provides specialty contracting services primarily in North America. Founded in 1997 and headquartered in Houston, Texas, PWR designs, installs and maintains electric power transmission and distribution networks for the electric power industry; designs, installs and maintains natural gas and oil transmission and distribution systems for the natural gas industry; and designs, installs and maintains fiber optic, copper, coaxial cable and wireless communications networks for communications carriers.
As the largest utility contractor in the United States, PWR is benefiting from government incentives to rebuild the electricity grid after years of under-investment. In addition, PWR’s pipeline construction business is benefiting from the need to move recently discovered shale gas and oil around the country. With the combination of accelerating earnings growth and the stock trading below its historical valuation, we believe that PWR offers favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.0% |
| Gilead Sciences | 5.2% |
| CBS Corp. | 5.0% |
| Lowes Cos. | 5.0% |
| Danaher Corp. | 4.1% |
| MasterCard, Inc. | 4.0% |
| Amgen Inc. | 3.9% |
| Forest Laboratories | 3.8% |
| SunTrust Banks | 3.8% |
| Schlumberger LTD | 3.5% |
U.S. Equity Indices
| Index | 11/01/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,615.6 | 0.3% | 19.2% |
| NASDAQ | 3,922.0 | -0.5% | 29.9% |
| S&P 500 | 1,761.6 | 0.1% | 23.5% |
| Russell 1000 G | 821.4 | 0.0% | 24.8% |
U.S. Credit Rates
| Index | 11/01/13 | 10/25/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.3% | 0.8% |
| 10 Year T-Note | 2.6% | 2.5% | 1.8% |
| 30 Year T-Bond | 3.7% | 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.
