Weekly Investor – October 5, 2015
Closing Out the Third Quarter
Treasury yields fell throughout the course of the week as weak September employment data fueled investors’ concerns over global economic growth. On Thursday, the number of Americans filing for unemployment benefits increased by more than expected. On Friday, the September employment report showed employers added only 142,000 jobs to nonfarm payrolls, falling well below consensus expectations. Looking to the week ahead, investors will get a small break from watching Chinese markets as they will remain closed until Wednesday. While earnings season will not start until next week, this week Pepsi, Yum Brands, Monsanto, RPM International and Domino’s Pizza will report earnings.
The S&P 500® was up 1.0% for the week. The top-performing sectors in the S&P 500® Index included Energy (2.8%) and Basic Materials (2.7%), while bottom-performing sectors included Financials (-0.6%) and Telecommunications (-1.1%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.0%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Upside Surprise
JP Morgan Chase & Co. (JPM) is a financial holding company that provides various financial services worldwide. Founded in 1823 and headquartered in New York, New York, JPM operates it business in several segments including investment banking, commercial banking, asset management services, retail finance services, as well as credit card and auto services.
JPM emerged from the financial crisis as one of the few financial institutions with a solid balance sheet. JPM recently demonstrated its superior financial position by passing the Federal Reserve stress tests and also obtaining approval to buyback shares and increase its dividend. Despite the headwinds of a low interest rate environment and a more onerous regulatory landscape, JPM is poised to gain market share as its weaker peers consolidate their businesses to improve their balance sheets. We believe JPM has the potential to significantly surprise on the upside as economic conditions continue to improve for the banking industry. For these reasons we have added JPM to our portfolio and believe it represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.1% |
| Post Holdings, Inc. | 5.1% |
| Teva Pharmaceutical | 4.5% |
| Electronic Arts, Inc. | 4.1% |
| Danaher Corp. | 4.0% |
| ConAgra Foods, Inc. | 4.0% |
| Skyworks Solutions | 3.9% |
| Expedia, Inc. | 3.7% |
| F5 Networks, Inc. | 3.4% |
| C.H. Robinson | 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.
