Weekly Investor – December 28, 2015
A Present for Investors
U.S equity markets ended the holiday-shortened week up and the S&P 500® Index returned 2.8%. U.S. gasoline prices fell below $2 per gallon in the beginning of the week but quickly recovered as crude oil rallied to close above $38 for the week. The positive news in oil helped buoy the energy sector, which closed up 4.6%, making it the top performing sector in the S&P 500. In economic news, real GDP growth in Q3 was revised to a 2.0% annual rate, which exceeded expectations of 1.9%. Consumer spending was the largest positive contributor to real GDP growth. However, existing homes sales fell 10.5% in November as single-family home sales were less than expected. Analysts cite new federal rules for the unusually large decline and expect sales which would have closed in November to be finalized in December. Investors have four trading days left of 2015 and they hope for more presents from the market.
The S&P 500® was up 2.8% for the week. The top-performing sectors in the S&P 500® Index included Energy (4.6%) and Basic Materials (4.3%), while bottom-performing sectors included Utilities (2.3%) and Consumer Discretionary (1.4%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Turnaround Effort
Teva Pharmaceutical Industries Ltd. (TEVA) develops, manufactures, sells and distributes pharmaceutical products worldwide. Founded in 1901, TEVA offers generic pharmaceutical products as well as specialized product families and is headquartered in Petach Tikva, Israel. TEVA produces well known pharmaceuticals such as Copaxone for the treatment of multiple sclerosis, Azilect for the treatment of Parkinson’s and Treanda for the treatment of leukemia and non-Hodgkins lymphoma.
Over the past few years, shares of TEVA have been depressed due to several execution issues within the company. However, TEVA is now in the midst of a turnaround effort led by a new CEO who is focused on improving operations and rebuilding the company’s pipeline through a series of acquisitions and internal development. For these reasons, we have added TEVA to our portfolio as we believe it offers favorable odds.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 6.9% |
| Post Holdings, Inc. | 5.2% |
| Danaher Corp. | 4.1% |
| Electronic Arts, Inc. | 4.1% |
| ConAgra Foods, Inc. | 3.8% |
| Expedia, Inc. | 3.7% |
| Skyworks Solutions, Inc. | 3.5% |
| Teva Pharmaceutical | 3.4% |
| LinkedIn Corporation | 3.3% |
| JP Morgan Chase & Co. | 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.
