Weekly Investor – August 6, 2018
Earnings Reports Drive S&P Gain
The S&P 500® Index posted its fifth weekly gain to begin August. Positive earnings reports have propped up the market, with 75% of reporting companies in the index beating analysts’ estimates. After reporting quarterly earnings, Apple Inc. became the first U.S. company with a 13-digit ($1 trillion) market capitalization. The next-largest company, Amazon.com Inc., is more than $100 billion smaller.
Trade tensions between the U.S. and China are still in play, as the Chinese moved to prop up their currency, causing the dollar to fall on Friday. Emerging-market stocks rallied on Friday after declining through mid-week. President Donald Trump’s proposal to impose duties on $200 billion in Chinese imports was met with China’s disproportionate, but escalated, $60 billion list of goods on Friday.
Real Estate, Telecommunications, Health Care, Consumer Staples and Utilities were the top five of seven sectors with positive returns last week. Energy was the worst-performing sector after American oil companies scaled back drilling following Trump’s trade rhetoric. One-third of the S&P 500 has yet to report earnings, so investors will be looking for any clues about inflation or labor pressure on company margins.
The S&P 500 Index was up 0.8% for the week. Its top-performing sectors included Real Estate (3.3%) and Telecommunications (2.2%), while bottom-performing sectors included Industrials (-0.2%) and Energy (-1.8%). In the fixed-income market, the 10-year Treasury yield was down slightly, ending at almost 3.0%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Conditions Look Positive for Robert Half
Robert Half International Inc. (RHI) provides staffing and risk consulting services in North America and around the world. The company places part- and full-time workers in a variety of fields, including financial services, information technology and marketing. It is based in Menlo Park, California, and was founded in 1948.
As a professional staffing firm, Robert Half stands to benefit from tight labor markets and rising wages. Because of this, we believe Robert Half could experience stronger sales growth and increasing profits in the future. We also believe the market does not realize the company’s cash flow potential, which could enable it to invest in internal growth opportunities, raise its dividend and accelerate its stock buyback program. These dynamics fit Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.0% |
| Baxter International | 4.7% |
| Marvell Technology | 4.2% |
| Mastercard Inc. | 4.1% |
| JP Morgan Chase & Co. | 4.1% |
Small Cap Core
| Fortinet Inc. | 3.2% |
| Wintrust Financial | 3.0% |
| Health Insurance Innovations | 2.4% |
| Merit Medical Systems | 2.4% |
| G-III Apparel Group Ltd. | 2.3% |
Dividend Select
| JP Morgan Chase & Co. | 5.8% |
| Occidental Petroleum | 4.4% |
| ConocoPhillips | 4.3% |
| Pfizer Inc. | 3.8% |
| Target Corporation | 3.8% |
Mid Cap
| Cintas Corporation | 3.4% |
| NVIDIA Corporation | 3.3% |
| NetApp Inc. | 3.2% |
| CDW Corporation | 3.1% |
| Amedysis Inc. | 2.8% |
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.
