Weekly Investor – July 17, 2017
All Eyes on U.S. Corporate Earnings
U.S equity markets closed the week up and the S&P 500® Index hit a new all-time closing high of 2,459.7 on Friday. The index returned 9.34% for the first half of 2017, recording the best performance since the index returned 13.82% for the first six month of 2013. Comments by Federal Reserve Chairwoman Janet Yellen drove equity markets higher mid-week as she stated before Congress that any decisions for future rate hikes would need to be data dependent. U.S. economic data was mixed with U.S. initial jobless claims coming in at 247k which was higher than consensus estimates of 245k. Crude oil advanced 5.22% for the week and closed at $46.54 per barrel. Regarding equity markets, investors began to digest earnings reports. Argent holding NetApp, Inc., a provider of storage and data management solutions, climbed 13.10% last week after shares of the company were placed on a large investment bank’s buy list. Financials, particularly banks, also turned in positive performance and heavy hitters such as JP Morgan Chase & Co., Citigroup, Inc. and Wells Fargo & Co. all beat earnings estimates. Looking ahead, many more companies are set to report this week and investors hope for continued positive news from Corporate America.
The S&P 500® Index was up 1.4% for the week. The top-performing sectors in the S&P 500® Index included Technology (3.8%) and Energy (2.1%) while bottom-performing sectors included Financials (-0.6%) and Telecommunications (-1.0%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Taking Market Share
Schlumberger LTD (SLB) is a global oilfield services company that employs more than 95,000 people in more than 80 countries. The company’s technologies and services help the world’s largest exploration and production (E&P) companies discover and produce the energy required to fuel the global economy. Founded in 1927 and based in Houston, Texas, SLB’s service portfolio includes some of the most sophisticated drilling, testing and production equipment in the industry.
As the best-in-breed oilfield services company, we believe SLB stands to benefit from the recent rebound in oil and natural gas prices as well as the subsequent recovery in drilling activity. Additionally, SLB continues to have a technological advantage over competition and reputation for execution as the company takes market share from smaller players utilizing their integrated, holistic drilling and servicing offerings. In addition, oil and natural gas are becoming more difficult to find, leading to more complex and expensive exploratory programs which has created an increased demand for SLB’s services. For these reasons, along with SLB’s history of withstanding the volatility of world energy market cycles, we believe SLB offers our portfolio favorable odds.
Top 10 Equity Holdings
|Alphabet, Inc. (Google, Inc.)||7.4%|
|Baxter International Inc.||4.7%|
|Post Holdings, Inc.||3.9%|
|Marvell Technology Group||3.9%|
|Skyworks Solutions, Inc.||3.9%|
|JP Morgan Chase & Co.||3.8%|
|Red Hat, Inc.||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.