
Weekly Investor – August 7, 2017
High Investor Confidence
U.S. equity markets closed last week mixed but the S&P 500® Index traded higher, posting a 0.2% return. U.S. investor confidence in the economy was bolstered by a strong July payroll report and an upward revision to May and June’s jobs numbers. Average hourly earnings also rose month over month at a 0.3% rate. The Federal Reserve will review these statistics as it contemplates another rate increase later this year. Many speculate that despite a tight labor market, the Fed may hold off any further increases until 2018. Second quarter earnings season has been positive both at home and abroad. With more than two thirds of U.S. and European companies reporting quarterly results, earnings growth has been just above 10%. Looking ahead to this week, inflation will be top of mind as investors look to the Consumer Price Index report on Friday.
The S&P 500® Index was up for the week. The top-performing sectors in the S&P 500® Index included Financials (1.8%) and Utilities (1.5%) while bottom-performing sectors included Basic Materials (-0.8%) and Energy (-1.0%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Long Term Potential
Alphabet, Inc. (GOOG / GOOGL) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video which merged with YouTube, Google Docs, Google Toolbar, Google Desktop, and of course Gmail. This Mountain View, California-based company was founded in 1998 and prides itself on maintaining a corporate culture that encourages creativity and community.
We believe the current trend of allocating additional advertising dollars to internet search ads will continue, and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG is able to proficiently match buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it accordingly. In addition, GOOG’s incubated services, like self-driving cars, could provide additional value to shareholders for the long-term.
The combination of GOOG’s current operations coupled with potential future products create favorable odds for our clients.
Top 10 Equity Holdings
. | |
---|---|
Alphabet, Inc. (Google, Inc.) | 7.2% |
Baxter International Inc. | 4.6% |
Masco Corporation | 4.3% |
Post Holdings, Inc. | 4.2% |
Celgene Corp. | 4.0% |
JP Morgan Chase & Co. | 3.9% |
Fortive Corporation | 3.9% |
Skyworks Solutions, Inc. | 3.8% |
Lincoln National | 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.