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News & Our Thinking

Weekly Investor

Weekly Investor – April 13, 2015

20 April 2015

 

Low Expectations

U.S. equity markets ended the week in positive territory.  On Wednesday, the Federal Reserve released minutes from their March meeting.  The minutes showed officials were split on when to raise rates and some officials were advocating for June while others believe correct timing is later in the year or even into 2016.  Additionally, earnings season officially began and thus far, only a handful of companies have reported. Overall expectations for first quarter earnings season are muted and according to FactSet, profits could fall by 5% versus last year.  The strong dollar, weather and drop in oil prices have caused analysts to slash estimates.  With the bar set low, investors hope for upside surprises as earnings season kicks into high gear this week.

The S&P 500® was up 1.7% for the week.  The top-performing sectors in the S&P 500® Index included Industrials (3.3%) and Energy (3.1%), while bottom-performing sectors included Financials (0.1%) and Telecommunications (-0.6%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.0%.

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


Positioned to Benefit

Google, Inc. (GOOG) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), a checkout service for merchants (Google Checkout), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video, Google Docs, Google Toolbar, Google Desktop, Google Reader, and of course Gmail. This Mountain View, California based company was founded in 1998, and prides itself on maintaining a corporate culture that encourages creativity and community.

We believe the current trend of allocating additional advertising dollars to internet search ads will continue, and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG is able to proficiently match buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it accordingly. Recently, near-term economic conditions have placed pressure on GOOG’s stock, which has opened the door for long-term investors such as our clients. We believe the company will outperform its peers over the next three to five years.

Top 10 Equity Holdings


.
Skyworks Solutions 5.4%
Electronic Arts, Inc. 5.3%
Google, Inc. 5.0%
Teva Pharmaceutical 4.7%
CBS Corporation 4.0%
Post Holdings, Inc. 3.9%
Danaher Corp. 3.7%
Broadcom Corporation 3.6%
Lincoln National 3.5%
Mallinckrodt plc 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.