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News & Our Thinking

Weekly Investor

Weekly Investor – February 17, 2015

18 February 2015

 

All Time-Highs

U.S. equity markets continued to reach all-times highs last week and the S&P 500® Index closed on Friday with a value of nearly 2,097.  Positive news overseas boosted investor confidence and markets rallied upon hearing the news that Greece would soften its stand on potential changes in austerity measures.  Additionally, Germany announced quarterly GDP growth which exceeded expectations.  Finally, a cease fire in the Russian-Ukraine conflict was reached.   At home, earnings season continued with mixed results and oil prices rose for the third consecutive week, easing profitability concerns for energy related companies.   Looking ahead to this week, earnings season continues and investors hope for positive news from Corporate America.

The S&P 500® was up 2.0% for the week.  The top-performing sectors in the S&P 500® Index included Technology (4.3%) and Basic Materials (3.0%), while bottom-performing sectors included Telecommunications (0.1%) and Utilities (-3.3%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.0%.

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. DHR was founded in 1969 and was previously known as DMG, Inc., but later took the Danaher name in 1984. 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


.
Electronic Arts, Inc. 5.2%
Google, Inc. 5.2%
Skyworks Solutions 4.6%
Teva Pharmaceutical 4.1%
Post Holdings, Inc. 4.0%
CBS Corporation 4.0%
Danaher Corp. 3.9%
Broadcom Corporation 3.8%
Lincoln National 3.6%
F5 Networks, Inc. 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.