ARGENTCAPITALFUNDS.COM
MENU

News & Our Thinking

Weekly Investor

Weekly Investor – November 23, 2015

24 November 2015

 

Another Positive Week

Despite elevated geopolitical risks, U.S. equity markets moved higher last week. During the week, the S&P 500 gained 3.3% partly because of cautious comments regarding interest rates from the Federal Reserve as well as several positive corporate earnings announcement from some prominent consumer discretionary companies. Lowe’s Inc. (LOW) was up over 8% last week as the company reaffirmed 2016 guidance and noted strong same store sales, which translated in to earnings and revenues that exceeded analysts’ expectations.

On the ‘have not’ side of retail, there were some disappointing earnings last week, starting with Urban Outfitters Inc., which tumbled over 6% after the teen retailer announced poor revenue numbers and the purchase of a pizza chain to put in stores in an effort to increase foot traffic. Target Corp. was down over 4% on Wednesday, because the company announced earnings and revenue in line with expectations but was cautious about foot traffic growth going forward.

Industrial production fell below expectations, showing weakness in utilities and mining. Initial jobless claims remained relatively unchanged, indicating that the labor market should maintain solid momentum heading into the final jobs report ahead of the important Fed meeting in December.

The S&P 500® was up 3.3% for the week.  The top-performing sectors in the S&P 500® Index included Consumer Discretionary (4.5%) and Technology (4.3%), while bottom-performing sectors included Utilities (2.0%) and Energy (1.3%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.3%.

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


.
Alphabet, Inc. (Google, Inc.) 6.9%
Post Holdings, Inc. 5.0%
Danaher Corp. 4.2%
Electronic Arts, Inc. 4.2%
ConAgra Foods, Inc. 3.6%
LinkedIn Corporation 3.6%
Expedia, Inc. 3.6%
Skyworks Solutions, Inc. 3.5%
Lincoln National 3.3%
CBS Corporation 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.