Weekly Investor – September 14, 2015
Volatility Remains
Equity markets advanced for the holiday-shortened week. Volatility remained high as investors continued to look to this week’s Fed decision, which could be the first rate hike in nearly ten years. In economic news, wholesale prices were flat in August led by a 3.3% decline in energy prices and a strong dollar. Fewer Americans filed for jobless benefits as claims fell by 6,000 to 275,000 for the week. Consumer confidence posted its biggest decline since December.
Looking ahead to rest of this week, investors will be focused on the Fed’s rate decision. For the market, the more important driver is earnings growth, which while challenged due to a strong dollar and weak energy prices, remains resilient. While S&P 500 earnings are only expected to grow 0.2% in 2015, pockets of strength still exist. For instance, the health care, information technology, consumer discretionary and telecom sectors are all expected to post double-digit bottom line growth in 2015.
The S&P 500® was up 2.1% for the week. The top-performing sectors in the S&P 500® Index included Technology (3.1%) and Health Care (2.8%), while bottom-performing sectors included Consumer Staples (1.0%) and Energy (-0.7%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.2%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
Expedia, Inc. (EXPE) operates as an online travel company in the United States and internationally. EXPE provides travel products and services to leisure and corporate travelers, retail travel agents and travel service providers through a portfolio of brands including, Expedia.com, Hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Egencia, Expedia CruiseShipCenters, eLong and Venere.com. EXPE’s travel offerings consist of airline tickets, hotel rooms, car rentals, destination services and cruises as package travel as well as on a stand-alone basis. EXPE was founded in 1996 and is headquartered in Bellevue, Washington.
Online travel continues to gain market share as travelers’ transition from using traditional travel agents to online services. EXPE is coming off a multi-year investment period and is beginning to reap the benefits of its efforts, as shown by its accelerating growth rate. With an attractive valuation and the opportunity to gain increased market share, we believe EXPE offers favorable odds to our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.0% |
| Post Holdings, Inc. | 5.5% |
| Teva Pharmaceutical | 4.7% |
| Electronic Arts, Inc. | 4.1% |
| Skyworks Solutions | 4.0% |
| Danaher Corp. | 3.9% |
| ConAgra Foods, Inc. | 3.9% |
| Expedia, Inc. | 3.5% |
| F5 Networks, Inc. | 3.3% |
| JP Morgan Chase & Co. | 3.2% |
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.
