Weekly Investor – January 22, 2019
On the Rise Again
Stocks continued to rise for a fourth week in a row last week as the S&P 500® Index returned 2.9%. JP Morgan reported earnings on Tuesday that came in below expectations, but management showed increased investments in key customer growth segments. Netflix reported on Thursday in the face of a 50% return since its Christmas Eve low. Revenue for the company grew by 27% in the fourth quarter and the company announced a price increase of $1 to $2 a month in the U.S.
Oil prices climbed over $53 a barrel, the highest price in five weeks. Strong factory data coupled with a path to a trade truce with China improved investor confidence in the global economy. Trade sensitive industrial stocks such as Deere and Caterpillar rose on the news Friday.
Fifty-nine companies are set to report earnings this week. Industry bellwethers Johnson & Johnson and Proctor & Gamble are set to report Tuesday and Wednesday respectively. Home sales, wholesale inventories, and durable goods are all on the economic calendar next week. Investors will look to these indicators as well as the long-running government shutdown to navigate the market during the holiday shortened week.
The S&P 500 was up 2.9% for the week. Its top-performing sectors were Financials (6.1%) and Industrials (3.3%), while bottom-performing sectors were Consumer Staples (1.5%) and Utilities (-0.2%). In the fixed-income market, the 10-year Treasury yield was up, ending at 2.8%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Positive Changes
Masco Corporation (MAS) manufactures and distributes home improvement and building products. Products include faucets, cabinets, architectural coatings and windows. Masco distributes these products through home improvement retailers and wholesalers, as well as directly to homebuilders.
With well-known brands like Behr paints, Delta faucets and KraftMaid cabinets, we believe that Masco is well-positioned to grow profitably. In addition, Masco has changed its product mix, spinning off its installation business and restructuring its cabinets business. We believe these actions address problems that have plagued Masco in the past. With these changes, including a renewed focus on execution and its established position as a supplier to the housing industry, we believe Masco embraces Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.9% |
| Post Holdings, Inc. | 5.8% |
| Mastercard, Inc. | 4.6% |
| First Data Corporation | 4.2% |
| JP Morgan Chase & Co. | 4.0% |
Small Cap Core
| Fortinet Inc. | 3.0% |
| Wintrust Financial Corp. | 2.9% |
| Planet Fitness, Inc. | 2.9% |
| Merit Medical Systems | 2.7% |
| Amphastar Pharma. | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 5.7% |
| ConocoPhillips | 4.5% |
| Pfizer Inc. | 4.4% |
| Occidental Petroleum | 3.9% |
| Microsoft Corp. | 3.7% |
Mid Cap
| Amedisys, Inc. | 3.6% |
| Cintas Corporation | 3.3% |
| CDW Corporation | 3.2% |
| Ciena Corporation | 3.1% |
| Bright Horizons Family | 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.
