News & Our Thinking

Weekly Investor

Weekly Investor – May 7, 2018

07 May 2018

S&P Surges Ahead

Equities took a strong leg-up last Friday, but it wasn’t enough to make up for the declines earlier in the week as the S&P 500® Index returned -0.21%. The index closed April with a gain of 38 basis points after large losses in March and February.

The Federal Open Market Committee met on Tuesday and Wednesday and acknowledged the strengthening labor market, increased economic activity and strong job gains. The committee left rates unchanged as many investors expected.
Two days of trade talks between the U.S. and China also were held last week in Beijing in hopes of avoiding a trade war. While Chinese media reported some trade issue agreements, the meetings ended with most trade issues unresolved.

Information technology was the best-performing sector last week with strong performances from larger technology companies such as Apple Inc., Mastercard Inc. and NVIDIA Corp. Apple returned 13.25% after the company reported better-than-expected results, a board approved $100 billion share repurchase and a 16% increase in its quarterly dividend.

The S&P 500 was down -0.2% for the week. Its top-performing sectors included Technology (3.2%) and Real Estate (1.0%), while bottom-performing sectors included Health Care (-3.0%) and Telecommunications (-4.6%). In the fixed-income market, the 10-year Treasury yield was down slightly for the week, ending at nearly 3%.

We continue to seek companies that reflect our Change Based InvestingSM approach.

Changes Prove Attractive

E-Trade Financial Corporation (ETFC) is a New York-based financial services company that provides online brokerage products and services primarily to individual investors.

Since 2013, ETFC has been able to achieve growth in accounts and assets while decreasing the size of its troubled legacy home equity loan portfolio. In October 2016, dissatisfied with the company’s growth rate, ETFC’s board removed and replaced its CEO. At the same time, the board gave the company a mandate to grow faster or consider strategic initiatives. While ETFC has made progress in realizing the board’s growth goals, more work remains. We believe the change going on in the company and the consolidation in ETFC’s industry create a positive backdrop for the stock — and for our clients.

 Top 5 Equity Holdings

Large Cap Growth

Alphabet Inc. 7.2%
Red Hat Inc. 5.7%
Baxter International 4.8%
Marvell Technology 4.5%
JP Morgan Chase & Co. 4.1%

Small Cap Core

Wintrust Financial 3.1%
Fortinet Inc. 2.8%
Lumentum Holdings Inc. 2.3%
Mastec Inc. 2.2%
Merit Medical Systems 2.2%

Dividend Select

JP Morgan Chase & Co. 5.7%
Occidental Petroleum 4.4%
ConocoPhillips 4.2%
Las Vegas Sands Corp. 4.0%
Marvell Technology Group 3.9%

Mid Cap 

NVIDIA Corporation 3.3%
NVR Inc. 3.3%
Cintas Corporation 3.0%
CDW Corporation 2.9%
E*Trade Financial Corp. 2.9%

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.