Weekly Investor – May 12, 2014
Corporate Earnings Excel
Market Summary:
U.S. equities ended the week mixed and the Dow Jones Industrial Average closed the week at an all-time high of 16,583.34. Earnings season is slowly coming to an end and as of last week, of the 451 S&P 500® constituents that have announced earnings, 76% have exceeded earnings estimates. However, trouble overseas dampened the good news. China announced that manufacturing had contracted for the fourth month in a row. Additionally, ongoing tension between Russia and Ukraine continued early in the week. However, Thursday and Friday presented a potential turning-point when Russian President, Vladimir Putin urged pro-Russian factions to postpone political referendums and called for troops to pull back from the boarder. Looking forward, investors hope that enduring good news from Corporate America continues to overshadow issues abroad.
The S&P 500® was down -0.1% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (2.7%) and Consumer Staples (0.8%), while bottom-performing sectors included Utilities (-0.7%) and Technology (-0.7%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Restructuring
Procter & Gamble (PG) engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. PG was founded in 1837 and is based in Cincinnati, Ohio.
For the past couple of years, PG has underperformed its peer group, losing share and posting anemic growth across its portfolio. In an effort to turn things around, management announced a major restructuring at the company with an emphasis on improving returns and restoring growth in their key brands. While we remain in the early days of progress, early signs have been particularly encouraging. We believe that an improving company outlook combined with both an attractive dividend yield and valuation offer favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.6% |
| CBS Corp. | 4.3% |
| SunTrust Banks, Inc. | 3.9% |
| Danaher Corp. | 3.8% |
| Electronic Arts | 3.7% |
| Qualcomm Inc. | 3.7% |
| The Dow Chemical Co. | 3.6% |
| Lincoln National | 3.6% |
| Oracle Corp. | 3.5% |
| Schlumberger LTD | 3.5% |
U.S. Equity Indices
| Index | 05/09/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,583.3 | 0.4% | 0.0% |
| NASDAQ | 4,071.9 | -1.3% | -2.5% |
| S&P 500 | 1,878.5 | -0.1% | 1.6% |
| Russell 1000 G | 868.3 | -0.2% | 0.5% |
U.S. Credit Rates
| Index | 05/09/14 | 05/02/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.6% | 1.7% | 1.8% |
| 10 Year T-Note | 2.6% | 2.6% | 3.0% |
| 30 Year T-Bond | 3.5% | 3.4% | 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.
