Weekly Investor – December 17, 2018
Year-To-Date Gains Erased
Last week the S&P 500® Index declined 1.3%. The index has declined 5.7% in the first two weeks of December, establishing a year-to-date loss for 2018 with only ten trading days remaining in the year. Positive news on perceived improving trade relations with China and UK Prime Minister Theresa May’s vote of confidence to retain her leadership helped buoy stocks through mid-Wednesday. Negative news that President Trump’s former attorney was sentenced to prison, increased concerns over global growth, and the European Central Bank essentially ending its quantitative easing program contributed to the market’s decline for the remainder of the week. Financials and energy led the decline in the S&P 500 last week. Crude oil prices closed the week at $51.20 per barrel, down 2.7% for the week. Crude has declined approximately $25 per barrel from its 12-month closing high in early October.
Economic data released last Friday from China and Europe exacerbated concerns that economic growth will slow in 2019. In China, growth in industrial production and retail sales slowed while the Euro-area composite Purchasing Managers’ Index unexpectedly fell. This week, the Federal Reserve Open Market Committee meets on Tuesday and Wednesday and is expected to raise rates for the fourth time this year.
The S&P 500® was down –1.3% for the week. Its top-performing sectors were Utilities (0.6%) and Communication Services (0.5%), while bottom-performing sectors were Energy (-3.3%) and Financials (-3.5%). In the fixed-income market, the 10-year Treasury yield was even, ending at 2.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
In mid-2016, 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.
Fortive has taken the very successful Danaher Business Systems model and applied it to Fortive’s industrial businesses. The company possesses a strong balance sheet and potential to expand its profit margins. In addition, Fortive has the ability to drive organic growth faster than the industrial economy and can supplement that organic growth with selective acquisitions. Since the spinoff, Fortive has made two significant acquisitions. For these reasons, Argent believes Fortive fits our Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.0% |
| Post Holdings, Inc. | 5.6% |
| MasterCard, Inc. | 4.7% |
| Red Hat, Inc. | 4.3% |
| JP Morgan Chase & Co. | 4.1% |
Small Cap Core
| Fortinet Inc. | 3.2% |
| Merit Medical Systems | 3.0% |
| Wintrust Financial Corp | 2.8% |
| Planet Fitness, Inc. | 2.8% |
| Premier, Inc. | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 5.7% |
| Pfizer, Inc. | 4.7% |
| ConocoPhillips | 4.4% |
| Life Storage, Inc. | 4.0% |
| Occidental Petroleum | 4.0% |
Mid Cap
| Amedisys, Inc. | 3.7% |
| CDW Corporation | 3.6% |
| Cintas Corporation | 3.1% |
| Helen of Troy Ltd. | 3.1% |
| Ciena Corporation | 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.
