Weekly Investor – July 25, 2016
Positive Progress
U.S. equity markets ended last week in positive territory and the S&P 500® Index posted a 0.64% return. After declining 10.3% the first six weeks of the year and posting a low on February 11, the index has reversed course hitting new all-time highs and returning 7.7% on a year-to-date basis. Mostly positive earnings reports from Corporate America helped equities end the week up. Additionally, U.S. economic data was positive. Initial jobless claims of 253k were lower than consensus estimates of 265k and housing starts and existing homes sales were also positive. Crude oil closed the week at $44.19 a barrel, declining 3.8% for the week. Looking ahead to this week, investors will continue to pay close attention to Corporate America and the upcoming Federal Reserve meeting.
The S&P 500® Index was up 0.6% for the week. The top-performing sectors in the S&P 500® Index included Technology (2.0%) and Utilities (1.5%), while bottom-performing sectors included Industrials (-0.8%) and Energy (-1.3%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 1.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Positive Change
The Dow Chemical Company (DOW) manufactures and supplies chemical products for use as raw materials in the manufacture of customer products and services worldwide. DOW was founded in 1897 and is headquartered in Midland, Michigan.
We have added DOW to our portfolio as the company currently maintains the lowest margins among its peers with plans to increase the margins toward peer levels. Additionally, an activist investor has recently become involved in the company and is championing great change which we believe has the potential to unlock substantial shareholder value. Finally, the revolution in shale gas production provides North American-based chemical producers with a tremendous raw materials cost advantage over global competitors, giving DOW a conducive environment to enact positive changes. For these reasons, we have added DOW to our portfolio as we believe the company offers favorable odds.
Top 10 Equity Holdings
| . | |
|---|---|
| Post Holdings, Inc. | 7.0% |
| Alphabet, Inc. (Google, Inc.) | 6.8% |
| Masco Corporation | 4.4% |
| ConAgra Foods, Inc. | 4.2% |
| Baxter International, Inc. | 4.2% |
| CBS Corporation | 3.6% |
| Danaher Corp. | 3.5% |
| The Hain Celestial Group | 3.5% |
| Lowe’s Companies Inc. | 3.4% |
| Red Hat, 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.
