News & Our Thinking

Weekly Investor

Weekly Investor – August 15, 2016

18 August 2016


Hovering Near Record-Highs

U.S. equity markets hovered near record-highs last week and investors shifted focus to economic data as earnings season comes to a close. Consumer confidence remains strong and the University of Michigan’s index of consumer sentiment rose slightly to 90.4, but missed consensus expectations.  The Producer Price Index unexpectedly declined 0.4% in July, below the consensus expected gain of 0.4%. Oil rose significantly on Thursday and finished up 7% for the week.  Additionally, many retailers reported last week and earnings results beat expectations.  Looking ahead, the Federal Reserve will release minutes from the July meeting and investors will pay close attention to housing price data.

The S&P 500® Index was up 0.2% for the week. The top-performing sectors in the S&P 500® Index included Energy (1.2%) and Consumer Staples (0.7%), while bottom-performing sectors included Health Care (-0.6%) and Basic Materials (-0.9%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 1.5%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Favorable Odds

Alphabet, Inc. (GOOG / GOOGL) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video which merged with YouTube, Google Docs, Google Toolbar, Google Desktop, and of course Gmail. This Mountain View, California-based company was founded in 1998 and prides itself on maintaining a corporate culture that encourages creativity and community.

We believe the current trend of allocating additional advertising dollars to internet search ads will continue, and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG is able to proficiently match buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it accordingly. In addition, GOOG’s incubated services, like self-driving cars, could provide additional value to shareholders for the long-term.

The combination of GOOG’s current operations coupled with potential future products creates favorable odds for our clients.



Top 10 Equity Holdings

Alphabet, Inc. (Google, Inc.) 7.1%
Post Holdings, Inc. 6.5%
Masco Corporation 4.7%
Baxter International, Inc. 4.3%
ConAgra Foods, Inc. 4.1%
The Hain Celestial Group 3.7%
Danaher Corp. 3.5%
Lowe’s Companies Inc. 3.4%
CBS Corporation 3.3%
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.