News & Our Thinking

Weekly Investor

Weekly Investor – February 10, 2014

14 February 2014

Jobs and Earnings!

Market Summary: 

Despite a slow start to the week, equity markets rebounded and the S&P 500® posted its best two-day rally since October.  On Friday, the Labor Department reported that the economy added 113,000 jobs in January and that the unemployment rate dropped slightly to 6.6%.  This data fell short of expectations as analysts had projected more growth in the labor market.  Finally, earnings season continued and provided a bright spot for the week.   Of the two-thirds of companies that have reported earnings in the S&P 500, the majority have surpassed expectations and fundamentals remain strong.  Looking ahead to this week, Federal Reserve Chairwoman Janet Yellen’s first testimony to Congress and the retail sales report will be watched closely by investors.

The S&P 500® was up 0.8% for the week.  The top-performing sectors in the S&P 500® Index included Consumer Discretionary (1.9%) and Basic Materials (1.5%), while bottom-performing sectors included Utilities (-0.7%) and Telecommunications (-1.7%). 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.

Successful Track Record

Endo Health Solutions Inc. (ENDP) provides specialty healthcare solutions in the United States and internationally.  ENDP was formerly known as Endo Pharmaceuticals Holdings Inc. and changed its name to Endo Health Solutions Inc. in May 2012. ENDP was founded in 1997 and is headquartered in Malvern, Pennsylvania.

In recent years, ENDP has been struggling with the successful execution of its pipeline across its multiple business segments.  The company recently named Rajiv De Silva as CEO in an effort to help execution.  Prior to joining ENDP, De Silva was an executive at Valeant Pharmaceuticals and assisted in the significant growth of the company.  We expect Rajiv to exercise his successful track record of creating shareholder value through his operational focus and value-added M&A background to ENDP.  For these reasons, we believe ENDP offers favorable odds to our clients.

Top 10 Equity Holdings

Google, Inc. 6.5%
Forest Laboratories 5.2%
CBS Corp. 4.7%
Endo Health Solutions 4.2%
SunTrust Banks 4.0%
Danaher Corp. 4.0%
MasterCard, Inc. 3.9%
Amgen Inc. 3.7%
Post Holdings, Inc. 3.5%
Qualcomm Inc. 3.5%

U.S. Equity Indices

Index 02/07/14 Week % Chg YTD % Chg
DJIA 15,794.1 0.6% -4.7%
NASDAQ 4,125.9 0.5% -1.2%
S&P 500 1,797.0 0.8% -2.8%
Russell 1000 G 846.2 0.9% -2.0%

U.S. Credit Rates

Index 02/07/14 01/31/14 12/31/13
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.5% 1.5% 1.8%
10 Year T-Note 2.7% 2.7% 3.0%
30 Year T-Bond 3.7% 3.6% 4.0%
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.