Weekly Investor – July 18, 2016
Earnings Season Begins!
U.S. equity markets continued to rally last week and the S&P 500® Index hit all-time highs on Monday, Tuesday Wednesday and Thursday before falling slightly on Friday to return 1.5% for the week. Since the fallout from the Brexit vote, which sent the S&P 500 down -5.3% between June 24th and June 27th, the index has rallied 8.2%. U.S. economic data was mixed last week as initial jobless claims remained unchanged, U.S. PPI beat consensus expectations and industrial production weakened. Last week also marked the unofficial kick off to earnings seasons and a handful of companies reported second quarter results. Many banks announced positive earnings which buoyed the Financial sector to rank as the second best performing sector for the week. JP Morgan Chase (JPM) announced profits and sales ahead of estimates as credit card write-offs and delinquencies came in better than expected. Looking ahead to this week, investors will pay close attention to Corporate America as over 92 S&P 500 companies are slated to release earnings. Stay tuned…
The S&P 500® Index was up 1.5% for the week. The top-performing sectors in the S&P 500® Index included Basic Materials (3.9%) and Financials (2.6%), while bottom-performing sectors included Consumer Staples (0.1%) and Utilities (-1.0%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 1.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Proven Record of Success
ConAgra Foods, Inc. (CAG) operates as a food company in North America. CAG operates through three segments: Consumer Foods, Commercial Foods and Private Brands. CAG was founded in 1919 and is headquartered in Omaha, Nebraska.
In 2012, CAG purchased Ralcorp, a prior Argent holding. Since this time CAG has struggled with execution issues, specifically within its private brands segment. However, a new management team, led by CEO, Sean Connolly, is focused on implementing a turnaround effort at the company. With a proven track-record of success within branded foods, we believe CAG’s new management team has the potential to improve the return profile of the business, offering favorable odds for our portfolio.
Top 10 Equity Holdings
| . | |
|---|---|
| Post Holdings, Inc. | 7.1% |
| Alphabet, Inc. (Google, Inc.) | 6.6% |
| Masco Corporation | 4.5% |
| ConAgra Foods, Inc. | 4.3% |
| Baxter International, Inc. | 4.3% |
| CBS Corporation | 3.6% |
| Danaher Corp. | 3.5% |
| The Hain Celestial Group | 3.5% |
| Lowe’s Companies Inc. | 3.5% |
| Red Hat, Inc. | 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.
