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News & Our Thinking

Weekly Investor

Weekly Investor – July 24, 2017

25 July 2017

 

Corporate America Shines

U.S. equity markets closed the week up and the S&P 500® Index hit another all-time closing high of 2,473.83 on Wednesday. U.S. economic data was mixed as the NAHB Housing Market Index was slightly lower than expected while initial jobless claims came in at 233k.  This was lower than the consensus estimate of 245k and the previous week’s reading of 247k.  Crude oil declined 1.65% for the week and closed at $45.77 per barrel.  Earnings season continued and strength from Corporate America provided equity markets with the resilience to push forward.  No losses were reported by the 67 S&P 500 companies that released second quarter earnings and according to Bloomberg, over 80% beat earnings estimates.  Investors were pleased by these results.  Overseas, the European Central Bank decided to leave its monetary policy unchanged.  Looking ahead to this week, earnings season continues and investors hope the momentum continues.

The S&P 500® Index was up 0.5% for the week. The top-performing sectors in the S&P 500® Index included Utilities (2.6%) and Technology (1.1%) while bottom-performing sectors included Energy (-0.5%) and Industrials (-1.0%).  In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.2%.

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


Housing Recovery

SunTrust Banks, Inc. (STI) was founded in 1891 and is headquartered in Atlanta, Georgia.  STI provides various financial services within the United States.  Historically, STI has been a solid, southeast regional bank.  However, since 2008 the severe housing bubble in Florida combined with the global financial crisis has put significant earnings and capital pressure on STI.

STI’s CEO, Bill Rogers, is committed to lowering cost and rebuilding STI’s business. In Argent’s view, the current depressed valuation of STI is due to the expectation of a relatively slow recovery and worries over the company’s exposure to older and troubled mortgages.  Therefore, we believe STI’s upside potential is substantial as the company works to return to a solid, healthy regional bank within the next few years and offers favorable odds for our clients.

 

Top 10 Equity Holdings


.
Alphabet, Inc. (Google, Inc.) 7.5%
Baxter International Inc. 4.8%
Masco Corporation 4.2%
Celgene Corp. 4.0%
Skyworks Solutions, Inc. 4.0%
Post Holdings, Inc. 4.0%
Marvell Technology Group 3.8%
Red Hat, Inc. 3.8%
Wynn Resorts Ltd. 3.8%
JP Morgan Chase & Co. 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.