News & Our Thinking

Weekly Investor

Weekly Investor – February 21, 2017

22 February 2017


Earnings Surprise!

U.S. equity markets ended last week up and the S&P 500® Index returned 1.5%, marking the fourth consecutive weekly gain. Strong economic data, positive commentary from Federal Reserve Chairwoman, Janet Yellen, and robust corporate profits drove equity market performance.   Chairwoman Yellen signaled that the central bank may raise rates again in March, citing rising inflation and a strong job market.  In economic news, wholesale prices increased by 0.6% in January, the largest monthly increase since September 2012 and were led by an increase in gasoline prices.  Retail sales were also positive and advanced 0.4% versus the expectation of 0.1%.  Finally, earnings season is near completion and thus far, the S&P 500 is on pace to grow by 5% for fourth quarter 2016.  Although the energy sector remained a detractor to overall performance, energy earnings are expected to recover and be incremental to S&P 500 profits in 2017.  Looking ahead to this week, investors will digest earnings from a number of retailers and hope for continued improvement.

The S&P 500® Index was up 1.5 % for the week. The top-performing sectors in the S&P 500® Index included Financials (3.0%) and Health Care (2.5%), while bottom-performing sectors included Telecommunications (0.2%) and Energy (-2.1%). 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.

Favorable Odds

CBS Corporation (CBS) operates a worldwide mass media company and is headquartered in New York, New York. Founded in 1986, CBS has operations in many fields of media including broadcast television, cable television,  publishing, interactive media, and entertainment.

A structural change between content providers, such as CBS, and distributors, such as cable and satellite operators, has provided additional profitability for CBS. CBS now has the ability to leverage the value of its content when negotiating retransmission fees. In addition, increased demand for online content from video distributors such as Netflix provide a new and meaningful growth source for CBS.  We expect CBS will successfully continue to generate value from its content, therefore creating favorable odds for our clients.


Top 10 Equity Holdings

Alphabet, Inc. (Google, Inc.) 6.8%
Post Holdings, Inc. 4.3%
Baxter International Inc. 4.0%
ON Semiconductor Corp. 4.0%
JP Morgan Chase & Co. 3.9%
Masco Corporation 3.9%
Marvell Technology Group 3.9%
Lincoln National 3.9%
Skyworks Solutions, Inc. 3.8%
CBS Corporation 3.8%

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.