News & Our Thinking

Weekly Investor

Weekly Investor – June 4, 2018

04 June 2018

S&P Ends Month on High Note

The Memorial Day observance last Monday resulted in a shortened trading week. The S&P 500® Index returned 0.54%, but displayed some volatility over the four days of trading. The index closed May with a 2.41% return, showing its best performance since January’s 5.73%.

Equities were pressured on Tuesday as Italian political news raised concerns over the country’s sovereign debt and the effects it would have globally. Stocks rallied Wednesday after Italy was able to issue sovereign debt. Equities encountered more resistance Thursday as trade war concerns began to rise again after the U.S. announced it would enact its steel and aluminum tariffs.

In economic news, U.S. nonfarm payrolls showed 223,000 new jobs in May, much higher than the expected 190,000. The U.S. unemployment rate dropped to 3.8%, the lowest rate since April 2000. U.S. initial jobless claims of 221,000 were lower than the consensus estimate of 228,000 and the previous week’s 234,000. Crude oil prices were down 3.05% last week, closing at $65.81 per barrel.

The S&P 500 was up 0.5% for the week. Its top-performing sectors included Energy (2.5%) and Technology (2.1%), while bottom-performing sectors included Telecommunications (-0.9%) and Financials (-1.3%). In the fixed-income market, the 10-year Treasury yield was down for the week, ending at 2.89%.

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

Good Prospects for Fortive 

Two years ago, Danaher Corporation (DHR) spun off its industrial segments, creating Fortive Corporation (FTV). Fortive operates as a diversified industrial growth company that focuses on professional instrumentation, automation, sensing and transportation technologies.

FTV has taken the very successful Danaher Business Systems (DBS) model and applied it to FTV’s industrial businesses. The company possesses a strong balance sheet and potential to expand its profit margins. In addition, FTV has the ability to drive organic growth faster than the industrial economy and can supplement that organic growth with selective acquisitions. Since the spinoff, FTV has made two significant acquisitions, taking another page from the DHR playbook. For these reasons, Argent believes FTV fits our change-based investment model.

 Top 5 Equity Holdings

Large Cap Growth

Alphabet Inc. 7.6%
Baxter International 4.9%
Marvell Technology 4.5%
Mastercard Inc. 4.1%
JP Morgan Chase & Co. 3.9%

Small Cap Core

Wintrust Financial 3.1%
Fortinet Inc. 3.1%
Mastec Inc. 2.3%
Lumentum Holdings Inc. 2.3%
Pacific Premier Bancorp 2.2%

Dividend Select

JP Morgan Chase & Co. 5.5%
Occidental Petroleum 4.7%
ConocoPhillips 4.2%
Las Vegas Sands Corp. 4.1%
Marvell Technology Group 3.9%

Mid Cap 

NVIDIA Corporation 3.5%
Cintas Corporation 3.1%
NVR Inc. 3.1%
Globus Medical Inc. 3.0%
CDW Corporation 3.0%

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.