Weekly Investor – January 17, 2017
What Lies Ahead
U.S. equity markets fell slightly last week and the S&P 500 Index returned -0.1%. Markets appear to be normalizing after the first month of the “Trump Bump” and last week biotech stocks fell surrounding comments made by the President Elect. In his first press conference since the election, Trump stated that the drug industry needed “more competitive drug bidding”. Investors also paid close attention to Congress last week as both the Senate and House of Representatives passed a budget reconciliation bill which could pave the way for a quick repeal of Obamacare after the upcoming inauguration. Finally, many banks reported earnings last week and many heavy hitters such as Bank of America and JP Morgan Chase & Co. reported positive earnings as they continue to profit from higher interest rates. Looking ahead to next week, investors will pay close attention to the way Trump’s campaign promises begin to play out.
The S&P 500® Index was down 0.1% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (0.8%) and Technology (0.8%), while bottom-performing sectors included Consumer Staples (-1.1%) and Energy (-1.9%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.4%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Growth Potential
Skyworks Solutions, Inc. (SWKS) provides analog semiconductors worldwide. Founded in 1962 and headquartered in Woburn, MA, SWKS products support automotive, broadband, cellular infrastructure, energy management as well as smartphone and tablet applications.
We believe SWKS is currently positioned to benefit from the growth of the low-end smartphone market, specifically in emerging markets. Lower-end or cheaper smartphones require integrated chipset solutions, an area where SWKS specializes. Additionally, SWKS is expanding beyond their traditional smartphone market into connected home and automotive applications. For these reasons, we have added SWKS to our portfolio as we believe the company has the potential to grow sales and increase margins at a higher level than currently expected.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 6.9% |
| Post Holdings, Inc. | 4.5% |
| JP Morgan Chase & Co. | 4.0% |
| Baxter International Inc. | 3.9% |
| Masco Corporation | 3.9% |
| Lincoln National | 3.8% |
| Marvell Technology Group | 3.7% |
| CBS Corporation | 3.7% |
| ON Semiconductor Corp. | 3.6% |
| The Dow Chemical | 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.
