Weekly Investor – May 19, 2014
A Mixed Week
Market Summary:
U.S. equities ended the week mixed on the heels of weaker than expected economic data and monetary policy signals. The anticipated retail sales report fell below expectations and the European Central Bank and Bank of England both signaled that they would continue to use monetary policies to bolster equity markets. Additionally, the week saw no shortage of deals at home. AT&T announced that it would acquire DirectTV for $48.5 billion and Allergan, maker of Botox, rejected a bid by Valeant Pharmaceuticals, to name a few. Looking ahead to this week, earnings season is slowly coming to a close and investors will pay close attention to the jobless claims report and home sales data for April.
The S&P 500® was down 0.03% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (1.2%) and Technology (0.8%), while bottom-performing sectors included Energy (-0.6%) and Financials (-0.9%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Growth Potential
Qualcomm Incorporated (QCOM) is a leading provider of digital wireless communications technologies, products and services. QCOM’s extensive intellectual property portfolio, which includes industry-leading code division multiple access (CDMA) technologies, is sold through licensing agreements with wireless network infrastructure and wireless device manufacturers, and through the sale of CDMA-based chipsets and system software. In addition, QCOM provides a broad range of technology solutions and services to enterprise, government and transportation companies. QCOM was founded in 1985 and is based in San Diego, California.
QCOM is well positioned to benefit from the proliferation of smartphones and wireless devices, such as the iPad and other netbooks, as QCOM supplies chips that power many such devices. More importantly, QCOM receives royalty payments from the sale of devices that utilize QCOM’s patented technologies. We believe the current valuation does not fully reflect QCOM’s potential earning power, assuming that double–digit growth rates in sales and earnings are achievable over the next few years. For these reasons, we believe purchasing QCOM positions us ahead of the curve as QCOM presents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.6% |
| CBS Corp. | 4.4% |
|
Danaher Corp. |
3.9% |
| Suntrust Banks, Inc. | 3.8% |
| Electronic Arts Inc | 3.7% |
| Qualcomm Inc. | 3.7% |
| The Dow Chemical Co. | 3.6% |
| Oracle Corp. | 3.6% |
| Schlumberger LTD | 3.5% |
| Forest Laboratories | 3.5% |
U.S. Equity Indices
| Index | 05/16/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,491.3 | -0.6% | -0.5% |
| NASDAQ | 4,090.6 |
0.5% |
-2.1% |
| S&P 500 | 1,877.9 | -0.3% | 1.6% |
| Russell 1000 G | 870.3 |
0.2% |
0.7% |
U.S. Credit Rates
| Index | 05/16/14 | 05/09/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.6% | 1.6% | 1.8% |
| 10 Year T-Note | 2.5% | 2.6% | 3.0% |
| 30 Year T-Bond | 3.3% | 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.
