News & Our Thinking

Weekly Investor

Weekly Investor – April 21, 2014

23 April 2014


Earning Reports Abound!

Market Summary: 

U.S. equity markets all posted gains last week which was welcome news after the previous week’s market drop.  Although the tension in Ukraine continued and China reported slower than expected economic growth, U.S. equity markets rebounded on positive news from Corporate America.  Many banks reported first quarter earnings and overall the health of America’s financial sector remains strong.  Additionally, U.S. retail sales rose 1.1% in March, posting the largest increase since September of 2012 and boosting investor confidence.  Looking ahead, investors wait and hope for additional good news from Corporate America as more earnings reports flood the airwaves.

The S&P 500® was up 2.7% for the week.  The top-performing sectors in the S&P 500® Index included Energy (4.7%) and Industrials (3.6%), while bottom-performing sectors included Telecommunications (1.9%) and Utilities (1.6%). In the fixed-income market, the 10-year Treasury yield was up 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

MAMasterCard, Inc. (MA), founded in 1966, operates with its subsidiaries to provide transaction processing and additional services for its credit, deposit, and ATM programs, which reach over 24,000 financial institutions worldwide. MA facilitates the authorization, clearing, and settlement of transactions, as well as markets and develops other payment-related services. MA’s brands include MasterCard, Maestro and Cirrus.

The payment transition from cash to checks to plastic is well underway in the U.S., but is in its infancy in areas abroad. We expect MA to be a prime beneficiary of this secular change, as the company enjoys high barriers to entry, basically dividing the market with Visa, Inc. (V). The positive competitive landscape will, in our belief, protect MA’s profits in the years to come, as the company increases its saturation in developing economies. Given the company’s bright long-term growth prospects and near-term ability to protect profits, we believe MA represents favorable odds for our clients.

Top 10 Equity Holdings

Google, Inc. 5.8%
CBS Corp. 4.6%
SunTrust Banks, Inc. 3.9%
Danaher Corp. 3.8%
Qualcomm, Inc. 3.8%
Quanta Services, Inc. 3.7%
The Dow Chemical Co. 3.6%
Amgen, Inc. 3.5%
Lincoln National 3.5%
Post Holdings, Inc. 3.5%

U.S. Equity Indices

Index 04/21/14 Week % Chg YTD % Chg
DJIA 16,408.5 2.4% -1.0%
NASDAQ 4,095.5 2.4% -1.9%
S&P 500 1,864.9 2.7% 0.9%
Russell 1000 G 861.3 2.7% -0.3%

U.S. Credit Rates

Index 04/11/14 04/11/14 12/31/13
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.7% 1.6% 1.8%
10 Year T-Note 2.7% 2.6% 3.0%
30 Year T-Bond 3.5% 3.5% 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.