News & Our Thinking

Weekly Investor

Weekly Investor – July 16, 2018

17 July 2018

Tech Sector Fuels S&P 500 Gains

Equities traded up last week despite continued tariff risks. The S&P 500® Index returned more than 1.5%, led by the technology sector. The sector’s largest contributors were Microsoft, Apple, Alphabet (Google) and Facebook.

In the financial services sector, JPMorgan Chase & Co., Wells Fargo and Citigroup all announced quarterly results on Friday that were roughly in line with expectations. They ended the day down slightly, but their quarterly performance continues to bolster the overall strength of the U.S. economy.

Last week, nonfarm payrolls were very strong and hourly earnings robust. The unemployment rate ticked up from 3.8% to 4%, bucking recent trends. However, the rise in unemployment was likely driven by the labor force participation rate growing, rather than people losing their jobs. This trend underscores the strength of the current job market as more previously discouraged workers are back searching for jobs.

The S&P 500 was up 1.5% for the week. Its top-performing sectors included Technology (2.3%) and Industrials (2.2%), while bottom-performing sectors included Utilities (-1.2%) and Telecommunications (-1.6%). In the fixed-income market, the 10-year Treasury yield was up slightly, ending at a little over 2.8%.

We continue to seek companies that reflect our Change-BasedSM investment approach.

Exciting Prospects for ON Semiconductor 

ON Semiconductor Corp. (ON) designs, manufactures and markets semiconductor components for electronic systems and products worldwide. The company was founded in 1999 and is headquartered in Phoenix, Arizona.

ON is well-positioned to benefit from the increasing need for electronic components to power safer, smarter, more connected cars over the next few years. ON is also making acquisitions. It acquired Aptina, a smaller peer, as well as Fairchild Semiconductor. These acquisitions allow ON to generate much of its revenue from the auto industry. We believe this market will only grow for ON as the number of sensors and cameras on cars increase. We also believe the growth of connected devices, stemming from the “internet of things,” can lead to robust sales and profit growth for ON. Finally, shares of ON are trading at a discount to peers. Because of these positive changes, ON is a good fit for Argent’s Change-BasedSM investment approach.

 Top 5 Equity Holdings

Large Cap Growth

Alphabet Inc. 7.9%
Baxter International 4.9%
Marvell Technology 4.4%
Mastercard Inc. 4.3%
Fortive Corporation 3.8%

Small Cap Core

Fortinet Inc. 3.3%
Wintrust Financial 2.9%
Mastec Inc. 2.5%
Merit Medical Systems 2.4%
G-III Apparel Group LTD 2.3%

Dividend Select

JP Morgan Chase & Co. 5.4%
Occidental Petroleum 4.6%
ConocoPhillips 4.4%
Marvell Technology Group 3.9%
Las Vegas Sands Corp. 3.7%

Mid Cap 

NVIDIA Corporation 3.3%
NetApp Inc. 3.3%
Cintas Corporation 3.2%
CDW Corporation 3.1%
NVR Inc. 3.1%

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.