Weekly Investor – April 28, 2014
Earnings Provide a Bright Spot
Market Summary:
U.S. equity markets ended the week lower as positive news in the U.S. was offset by increased tension between Ukraine and Russia. Violence in Kiev on Tuesday and Russia’s Thursday announcement that it would begin military drills along the Ukraine border worried investors. Fears worsened Friday as a Ukrainian crackdown on pro-Russian separatists moved ahead with the blockade of the eastern Slovyansk and both sides accused each other of escalating force and bringing upon a war, causing equity markets to tumble. However, earnings provided a bright spot at home. Thus far, almost 50% of S&P 500® Index members have reported earnings and earnings across all ten sectors have been above expectations. Looking ahead to this week, investors will be wary of any further developments between Ukraine and Russia and hope for continued momentum from Corporate America.
The S&P 500® was down -0.1% for the week. The top-performing sectors in the S&P 500® Index included Utilities (1.8%) and Health Care (0.8%), while bottom-performing sectors included Basic Materials (-0.7%) and Telecommunications (-3.6%). 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.
Favorable Odds
Oracle Corp. (ORCL) is a leading provider of database software – programs that allow the storage of large amounts of information while also having the capacity to search, retrieve, sort, revise, analyze and order data, both quickly and efficiently. ORCL has completed a handful of acquisitions, which as a result has enhanced its market share and its ability to gain additional market share going forward.
With its dominate position in database management as an anchor, ORCL has successfully branched out into successive fast growing areas of technology services over the last decade. Most recently ORCL launched new products and services that enable its clients to migrate an internal IT environment into cloud computing. We believe the market currently underestimates ORCL’s growth potential over the next few years and therefore represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.6% |
| CBS Corp. | 4.5% |
| SunTrust Banks, Inc. | 4.0% |
| Danaher Corp. | 3.8% |
| Qualcomm, Inc. | 3.6% |
| The Dow Chemical Co. | 3.6% |
| Quanta Services, Inc. | 3.6% |
| Schlumberger LTD | 3.6% |
| Lincoln National | 3.4% |
| Oracle Corp. | 3.4% |
U.S. Equity Indices
| Index | 04/25/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,361.5 | -0.3% | -1.3% |
| NASDAQ | 4,075.6 | -0.5% | -2.4% |
| S&P 500 | 1,863.4 | -0.1% | 0.8% |
| Russell 1000 G | 859.1 | -0.3% | -0.5% |
U.S. Credit Rates
| Index | 04/25/14 | 04/17/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.7% | 1.7% | 1.8% |
| 10 Year T-Note | 2.7% | 2.7% | 3.0% |
| 30 Year T-Bond | 3.4% | 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.
