Weekly Investor – August 4, 2014
A Down Week
Market Summary:
U.S. equity markets ended the down. The S&P 500® Index posted its first monthly lost since January of this year. However, the S&P 500 has returned 5.36% year-to-date. Many investors attribute the drop in equities to better-than-expected economic data which may cause the Federal Reserve to tighten its accommodative stance. Additionally, second quarter earnings season continued and some companies did not have positive news to share. Exxon Mobile (XOM) and Chevron Corp. (CVX) both reported production declines in the most recent quarter which contributed to lower earnings. Looking ahead to this week, investors will pay close attention to any action by the Fed and hope Corporate America wraps up earnings season with positive news.
The S&P 500® was down 2.7% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (-1.2%) and Health Care (-1.6%), while bottom-performing sectors included Industrials (-3.6%) and Energy (-4.1%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
Danaher Corp. (DHR), headquartered in Washington, D.C., is a designer, manufacturer and marketer of medical, industrial, professional and consumer products. The company produces a broad range of products including electronic calibration equipment, retail/commercial petroleum products such as underground storage tank leak detection systems, high-precision optical systems for the analysis of microstructures and aerospace defense articles, among others. DHR’s primary product lines are sold in North America, Europe and Asia.
DHR has a long history of delivering consistent earnings growth through continual development of its own businesses and by acquiring businesses that are fast growing and have high returns. Over the years, the company’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. A more recent purchase included an expansion in the water treatment industry. This industry has strong growth potential and now DHR is a key beneficiary of this trend. Economic uncertainties have depressed DHR’s multiples, and as a result we have been presented with this buying opportunity. In the long-term, we expect DHR to outperform its peers and the market
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.9% |
| CBS Corp. | 4.2% |
| Suntrust Banks, Inc. | 3.7% |
| Danaher Corp. | 3.7% |
| Schlumberger LTD | 3.6% |
| The Dow Chemical Co. | 3.6% |
| Lincoln National | 3.6% |
| Electronic Arts, Inc. | 3.5% |
| F5 Networks, Inc. | 3.5% |
| EMC Corporation | 3.4% |
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.
