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News & Our Thinking

Weekly Investor

Weekly Investor – December 15, 2014

30 December 2014

 

Bad News for Oil

U.S. equity markets tumbled last week, ending seven straight weeks of positive performance.  In fact, the S&P 500® Index posted its worst one week performance of 2014 with a -3.47% return.  The energy sector contributed to volatility throughout the week and crude oil closed at the week at $56.34 per barrel, its lowest price since May 2009.  Despite the bad news on oil, U.S. economic data provided a boost mid-week.  November U.S. retail sales advanced 0.7% and initial jobless claims came in at 249K, beating consensus estimates.  Additionally, the Michigan Consumer Confidence released a preliminary December reading of 93.8 which was substantially more than the expected 89.5.  Looking ahead, investors will pay close attention to the price of oil and hope for positive returns.

The S&P 500® was down 3.5% for the week.  The top-performing sectors in the S&P 500® Index included Utilities (0.0%) and Consumer Staples (-2.0%), while bottom-performing sectors included Basic Materials (-6.2%) and Energy (-8.1%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.1%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.


Growth Potential

Skyworks Solutions, Inc. (SWKS) provides analog semiconductors worldwide. Founded in 1962 and headquartered in Woburn, MA, SWKS products support automotive, broadband, cellular infrastructure, energy management as well as smartphone and tablet applications.

We believe SWKS is currently positioned to benefit from the growth of the low-end smartphone market, specifically in emerging markets.  Lower-end or cheaper smartphones require integrated chipset solutions, an area where SWKS specializes.  Additionally, SWKS is expanding beyond their traditional smartphone market into connected home and automotive applications.   For these reasons, we have added SWKS to our portfolio as we believe the company has the potential to grow sales and increase margins at a higher level than currently expected.

Top 10 Equity Holdings


.
Google, Inc. 5.3%
Electronic Arts, Inc. 4.5%
Skyworks Solutions 4.2%
Danaher Corp. 4.1%
F5 Networks, Inc. 3.9%
CBS Corp. 3.8%
Broadcom Corporation 3.7%
Lincoln National 3.7%
Teva Pharmaceutical 3.3%
JP Morgan Chase & Co. 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.