Weekly Investor – June 8, 2015
Positive U.S. Economic Data
U.S. equity markets began the month of June in negative territory. Despite increasing 1.29% in May, the S&P 500® Index slid to return -0.7% for the first week of June. U.S. economic news was mostly positive. April construction spending and personal income along with May ISM manufacturing numbers all beat expectations. Additionally, US initial jobless claims came in at 276k, lower than the previous week’s 282k and slightly better than consensus estimates of 278k. However, on Thursday, the IMF cut their US GDP growth forecast and markets sank. Friday, the change in nonfarm payrolls came in much higher than anticipated and many investors took this as an indication the Federal Reserve may raise rates at the June meeting. Overseas, Greek debt concerns continued and European stocks fell sharply, worrying investors globally. Finally, crude oil closed the week just under $59 a barrel, decreasing 3.82% from the 2015 closing high price of $61.26 set on June 2. Looking ahead, investors will pay close attention to retail sales and consumer sentiment reports which are both expected this week.
The S&P 500® was down 0.7% for the week. The top-performing sectors in the S&P 500® Index included Financials (0.8%) and Consumer Discretionary (0.2%), while bottom-performing sectors included Consumer Staples (-2.6%) and Utilities (-4.1%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.4%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Restructuring
Procter & Gamble (PG) engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. PG was founded in 1837 and is based in Cincinnati, Ohio.
For the past couple of years, PG has underperformed its peer group, losing share and posting anemic growth across its portfolio. In an effort to turn things around, management announced a major restructuring at the company with an emphasis on improving returns and restoring growth in their key brands. While we remain in the early days of progress, early signs have been particularly encouraging. We believe that an improving company outlook combined with both an attractive dividend yield and valuation offer favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Electronic Arts, Inc. | 5.6% |
| Google, Inc. | 4.9% |
| Skyworks Solutions | 4.7% |
| Teva Pharmaceutical | 4.3% |
| CBS Corporation | 3.9% |
| Danaher Corp. | 3.7% |
| ON Semiconductor | 3.7% |
| Lincoln National | 3.6% |
| Post Holdings, Inc. | 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.
