Weekly Investor – September 4, 2018
S&P Continues Climbing Despite Trade Issues
Stocks continued to grind higher for the third consecutive week in August, as potential tariffs and trade deals remained in the headlines. Equities rose early in the week after Presidents Donald Trump and Enrique Peña Nieto of Mexico announced a joint trade deal that’s set to modify the North American Free Trade Agreement. However, stocks lost ground in the latter half of the week as a trade deal with Canada stalled and $200 billion in new tariffs loomed for China.
In economic news, consumer spending increased by 0.4% in July, while incomes increased by 0.3%, missing expectations of a 0.4% increase. The S&P 500® Index posted 24% earnings growth for the second quarter. In addition, 81% of S&P 500 members posted positive earnings surprises for the second quarter of 2018, versus 72% for the same period last year.
Looking ahead to next week, investors will remain focused on any new trade deal developments with China and Canada. Additionally, August’s job report, to be released Friday, will be a key barometer for the economy.
The S&P 500 Index was up 0.9% for the week. Its top-performing sectors included Technology (2.0%) and Consumer Discretionary (1.8%), while bottom-performing sectors included Utilities (-0.6%) and Telecommunications (-1.7%). In the fixed-income market, the 10-year Treasury yield was up slightly, ending at a little less than 2.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Ushering in Positive Changes
Williams-Sonoma Inc. (WSM) is a home-products retailer that operates in two segments: e-commerce and retail. Based in San Francisco, California, Williams-Sonoma has more than 600 stores in the U.S., Canada, Australia and the United Kingdom, and franchises its brands elsewhere in the world. The company’s most recognizable brand is Pottery Barn, but others include Pottery Barn Kids, PBTeen, Williams-Sonoma Home and West Elm. The company was founded in 1956.
Although Williams-Sonoma’s same store sales have lagged in recent years, the company has made significant efforts to improve its results. These changes include lower shipping costs for online customers and lower in-store prices in an effort to become more competitive. At Pottery Barn, merchandise has been overhauled to stay in line with current trends in home furnishings and décor. Because of these changes, we believe Williams-Sonoma is a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.7% |
| Post Holdings Inc. | 4.9% |
| Baxter International | 4.7% |
| Mastercard Inc. | 4.3% |
| Marvell Technology Group | 4.0% |
Small Cap Core
| Fortinet Inc. | 3.5% |
| Wintrust Financial Corp. | 2.8% |
| Health Insurance Innovations | 2.7% |
| Lumentum Holdings Inc. | 2.4% |
| PetIQ Inc. | 2.4% |
Dividend Select
| JP Morgan Chase & Co. | 5.7% |
| ConocoPhillips | 4.4% |
| Occidental Petroleum | 4.3% |
| Target Corporation | 4.0% |
| Pfizer Inc. | 3.9% |
Mid Cap
| NVIDIA Corporation | 3.5% |
| Cintas Corporation | 3.3% |
| NetApp Inc. | 3.3% |
| Amedysis Inc. | 3.1% |
| 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.
