Weekly Investor – March 17, 2014
Domestic Strength Continues Despite Trouble Overseas
Market Summary:
U.S. equity markets fell last week as tension in Ukraine and weak economic data from China overshadowed a positive American economy. Although domestic markets have been relatively unfazed by the tension between Ukraine and Russia, increased pressure of sanctions by the U.S. on Russia inflated market uncertainty. Additionally, Chinese growth was weaker than anticipated as industrial output and retail sales missed expectations. U.S. economic data provided a bright spot in the week as retail sales showed an increase for the first time in three months and unemployment claims dropped beyond expectations. Looking ahead, investors will closely monitor the outcome of Crimea’s referendum vote on Sunday. Although the vote will likely affect the market in the short-term, we remain confident in continued strength of the U.S. economy.
The S&P 500® was down 2.0% for the week. The top-performing sectors in the S&P 500® Index included Utilities (2.3%) and Consumer Staples (-0.4%), while bottom-performing sectors included Financials (-2.5%) and Industrials (-3.2%). 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.
Opportunity to Outperform
Google, Inc. (GOOG) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), a checkout service for merchants (Google Checkout), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video, Google Docs, Google Toolbar, Google Desktop, Google Reader, and of course Gmail. This Mountain View, California based company was founded in 1998, and prides itself on maintaining a corporate culture that encourages creativity and community.
We believe the current trend of allocating additional advertising dollars to internet search ads will continue and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG is able to proficiently match buyers to providers. Advertisers recognize the effectiveness of this service and are willing to pay for it accordingly. With its’ market leading technologies, GOOG continue to dominate the search market. We believe GOOG can sustain its current impressive profit growth and thus outperformed the market.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.2% |
| CBS Corp. | 4.9% |
| SunTrust Banks, Inc. | 3.9% |
| Danaher Corp. | 3.7% |
| Post Holdings, Inc. | 3.6% |
| Amgen | 3.6% |
| Lincoln National | 3.5% |
| Quanta Services, Inc. | 3.5% |
| Forest Labratories | 3.5% |
| Qualcomm Inc. | 3.4% |
U.S. Equity Indices
| Index | 03/14/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,065.7 | -2.4% | -3.1% |
| NASDAQ | 4,245.4 | -2.1% | 1.6% |
| S&P 500 | 1,841.1 | -2.0% | -0.4% |
| Russell 1000 G | 867.2 | -2.1% | 0.4% |
U.S. Credit Rates
| Index | 03/14/14 | 03/07/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.5% | 1.6% | 1.8% |
| 10 Year T-Note | 2.7% | 2.8% | 3.0% |
| 30 Year T-Bond | 3.6% | 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.
