Weekly Investor – July 31, 2017
Mixed Earnings
U.S. equity markets closed last week slightly down but that was not before reaching another all-time high. On Wednesday, the S&P 500® Index closed above 2477.8 for the first time. However, the euphoria was short lived after disappointing earnings announcements from a few mega-cap companies mid-week. Alphabet, Inc. fell approximately 3% after reporting a slight revenue miss. Despite strong earnings and growth, results were muted by a decrease in revenues per click. Amazon.com was next to disappoint as the company reported earnings per share well below consensus estimates despite having nearly 25% revenue growth during the quarter. A bright light came from The Boeing Co. as the company was the top performing stock in the S&P 500 and up over 13% on the week. News that the company boosted full year guidance as they continue to clamp down on costs sent shares up as margins grew. Looking ahead to this week, earnings seasons will be in full stride as over 130 companies are set to report.
The S&P 500® Index was even for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (7.0%) and Energy (1.9%) while bottom-performing sectors included Technology (-0.6%) and Health Care (-1.3%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Upside Potential
Wynn Resorts Ltd. (WYNN) develops, owns and operates luxury destination casino resorts. WYNN operates in two segments, Macau Operations, located in the Peoples Republic of China and Las Vegas Operations, located in Nevada. WYNN was founded in 2002 and is based in Las Vegas, Nevada.
Over the past few years, WYNN’s stock has underperformed as growth in a key gaming region, Macau, China has pressured results for the casino operator. While growth in China has certainly slowed in the near-term, we believe in the long-term potential of the Chinese consumer. More specifically, evidence of stabilization for the Macau gaming region has begun to appear, making us bullish on the long-term potential for WYNN.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 7.3% |
| Baxter International Inc. | 4.7% |
| Masco Corporation | 4.3% |
| Post Holdings, Inc. | 4.1% |
| Skyworks Solutions, Inc. | 4.0% |
| Celgene Corp. | 3.9% |
| JP Morgan Chase & Co. | 3.8% |
| Red Hat, Inc. | 3.8% |
| Lincoln National | 3.7% |
| Fortive Corporation | 3.7% |
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.
