Weekly Investor – February 1, 2016
U.S equity continued to rally last week and the S&P 500® Index ended the week up 1.8%. In an unexpected move by the Bank of Japan, Governor Haruhiko Kuroda implemented negative interest rates for certain bank reserves in an effort to stimulate the world’s third largest economy. Upon the news, sovereign yields around the world fell and the likelihood of any Fed rate hike in 2016 fell to 55.9%, according to the futures market. The potential of interest rates staying lower longer sent the S&P 500 to its best daily gain in four months. In economic news, consumer spending remained a bright spot, growing 2.2%. Additionally, earnings season remains in full swing and continues with mixed results. Looking ahead, investors prepare to digest reports from companies such as Pfizer and Google. They hope the rally continues!
The S&P 500® was up 1.7% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (4.3%) and Energy (4.2%), while bottom-performing sectors included Basic Materials (0.7%) and Health Care (-1.9%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Strong Growth Potential
Danaher Corp. (DHR), headquartered in Washington, D.C., is a designer, manufacturer and marketer of medical, industrial, professional and consumer products. DHR was founded in 1969 and was previously known as DMG, Inc., but later took the Danaher name in 1984. The company produces a broad range of products including electronic calibration equipment, retail/commercial petroleum products such as underground storage tank leak detection systems, high-precision optical systems for the analysis of microstructures and aerospace defense articles, among others. DHR’s primary product lines are sold in North America, Europe and Asia.
DHR has a long history of delivering consistent earnings growth through continual development of its own businesses and by acquiring businesses that are fast growing and have high returns. Over the years, the company’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. A more recent purchase included an expansion in the water treatment industry. This industry has strong growth potential and now DHR is a key beneficiary of this trend. Economic uncertainties have depressed DHR’s multiples, and as a result we have been presented with this buying opportunity. In the long-term, we expect DHR to outperform its peers and the market.
Top 10 Equity Holdings
|Alphabet, Inc. (Google, Inc.)||7.5%|
|Post Holdings, Inc.||5.2%|
|ConAgra Foods, Inc.||4.1%|
|Red Hat, Inc.||3.5%|
|Skyworks Solutions, Inc.||3.4%|
|Lowe’s Companies, Inc.||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.