Weekly Investor – November 28, 2016
Thankful for Record Highs
U.S. equity markets ended Thanksgiving week in positive territory and the S&P 500® Index closed at record highs on Friday. Stocks rose for the third consecutive week amid expectations for less regulation, reduced corporate taxation and increased infrastructure spending. Additionally, small cap stocks continued to soar and turned in the largest gains of the week with the Russell 2000® Index closing higher for the 15th consecutive trading day. Economic news was mostly positive and existing home sales hit their highest level in since February 2007 as higher incomes, steady hiring and strong consumer balance sheets drove demand for homes. However, new homes sales slightly missed expectations in October. Looking ahead, investors will turn attention to the November employment report and the Fed meeting which is scheduled for December 14th. as the chance of an interest rate hike now stands at 100%.
The S&P 500® Index was up 1.4% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (4.6%) and Basic Materials (2.7%), while bottom-performing sectors included Technology (1.0%) and Health Care (-0.3%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.4%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
Mattel, Inc. (MAT) designs, manufactures, and markets a range of toy products worldwide. MAT was founded in 1945 and is headquartered in El Segundo, CA.
Over the past few years, MAT has underperformed and experienced share loss to competitors. However, MAT recently hired a new CEO and has embarked on a restructuring program designed to restore growth for the company. In our view, this new strategy represents a catalyst for positive change within MAT. Furthermore, since the implementation of this change, MAT has reported positive progress. MAT also possesses an attractive valuation and dividend yield. For these reasons, we believe MAT offers favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 6.7% |
| Post Holdings, Inc. | 4.2% |
| Masco Corporation | 4.1% |
| Baxter International Inc. | 4.0% |
| Marvell Technology Group | 3.9% |
| CBS Corporation | 3.8% |
| Lincoln National | 3.7% |
| JP Morgan Chase & Co. | 3.7% |
| ON Semiconductor Corp. | 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.
