News & Our Thinking

Weekly Investor

Weekly Investor – February 18, 2014

19 February 2014

A Positive Week

Market Summary: 

U.S. equity markets all posted positive returns last week and the S&P 500® ended the week up 2.39%, the best week of 2014 thus far.  Investors reacted positively to comments from Federal Reserve Chairwoman Janet Yellen and House Speaker John Boehner.  Yellen stressed the need for reductions in the central bank’s bond purchases while Boehner announced that he would hold a vote on raising the federal borrowing limit without provisions.  However, not all news was positive.  Retails sales unexpectedly fell in January and U.S. initial jobless claims came in higher than expected at 339K versus consensus estimates of 330K.  Looking ahead, earnings season is beginning to wind down and investors hope positive news from Corporate America will continue to push equity markets forward.

The S&P 500® was up 0.8% for the week.  The top-performing sectors in the S&P 500® Index included Utilities (3.3%) and Health Care (3.3%), while bottom-performing sectors included Consumer Discretionary (1.7%) and Financials (1.6%). 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.

Opportunity for Growth

Founded in 1986, Express Scripts Holding Company (ESRX) provides a range of pharmacy benefit management services in North America and is headquartered in St. Louis, Missouri.

ESRX has a solid track record of delivering earnings growth through steady profitability improvement and the successful integration of acquisitions.  On April 02, 2012 the FTC granted ESRX the official approval to acquire Medco and we believe this will help drive profitability and sales for the company.  Additionally, the anticipated release of various generic drugs and the management of fast growing biologic drugs should positively impact ESRX’s growth over the next several years.  We believe these recent developments present favorable odds for shares of ESRX to outperform its peers and the market.

Top 10 Equity Holdings

Google, Inc. 6.5%
Forest Laboratories 5.3%
CBS Corp. 5.0%
Endo Health Solutions 4.2%
Danaher Corp. 4.0%
MasterCard, Inc. 3.9%
SunTrust Banks, Inc. 3.9%
Amgen Inc. 3.7%
Qualcomm Inc. 3.5%
Post Holdings, Inc. 3.5%

U.S. Equity Indices

Index 02/14/14 Week % Chg YTD % Chg
DJIA 16,154.4 2.3% -2.5%
NASDAQ 4,244.0 2.9% 1.6%
S&P 500 1,838.6 2.3% -0.5%
Russell 1000 G 866.3 2.4% 0.3%

U.S. Credit Rates

Index 02/14/14 02/07/14 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% 3.7% 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.