Weekly Investor – January 7, 2019
A Postitive Start to 2019
Equities closed the New Year holiday shortened week in positive territory, with the S&P 500® Index up 1.9%. Stocks were hit at the beginning of last week after weaker than expected economic reports came out of China and Europe, as well as weak manufacturing data from the US. On Friday, U.S. payroll data had a large upside surprise with 312k new jobs created versus expectations of 184k jobs. The strong jobs data alleviated some concerns of a slowing economy. Further, on Friday, Federal Reserve Chair Powell indicated a more flexible approach to interest rates in 2019, saying policymakers “wouldn’t hesitate to make a change” if needed and that the Federal Reserve is listening to the concerns of the market. This welcomed news helped equities as the S&P 500 Index rose over 3.3% for the day.
In company news, Bristol-Myers Squibb Co. agreed to acquire Celgene Corp. The combined company, with a market cap over $150b, would be the fourth largest pharmaceutical company. In other company news, Apple Inc. reduced its sales guidance for the first quarter 2019, citing slower demand in China. Apple shares fell nearly 9% on Thursday but did recover nearly 3.5% on Friday. As would be expected, the negative Apple news rippled through its parts suppliers as Skyworks Solutions Inc. and Broadcom Inc. both fell more than 8% Thursday.
The S&P 500 Index was up 1.9% for the week. Its top-performing sectors were Energy (5.0%) and Communication Services (4.1%), while bottom-performing sectors were Utilities (0.0%) and Real Estate (-0.8%). In the fixed-income market, the 10-year Treasury yield was even, ending at 2.7%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Growth
JPMorgan Chase & Co. (JPM) is a financial holding company that provides financial services worldwide. Founded in 1823 and headquartered in New York, JPMorgan operates in several segments: investment banking, commercial banking, asset management, retail finance and credit card and auto finance.
JPMorgan emerged from the U.S. financial crisis with a solid balance sheet that provided its management team the opportunity to execute their business plan. As a result, JPMorgan was able to gain market share and improve its profitability. We believe JPMorgan is well-positioned to take advantage of a gradually improving interest rate environment, a robust U.S. economy and an improving European business environment. Because of this, JPMorgan fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.2% |
| Post Holdings, Inc. | 5.7% |
| Mastercard, Inc. | 4.6% |
| Red Hat, Inc. | 4.3% |
| JP Morgan Chase & Co. | 4.2% |
Small Cap Core
| Fortinet Inc. | 3.0% |
| Wintrust Financial Corp | 2.9% |
| Planet Fitness, Inc. | 2.9% |
| Merit Medical Systems | 2.8% |
| Amphastar Pharma. | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 5.8% |
| Pfizer, Inc. | 4.7% |
| ConocoPhillips | 4.4% |
| Occidental Petroleum | 3.9% |
| Microsoft Corp. | 3.7% |
Mid Cap
| Amedisys, Inc. | 3.4% |
| Cintas Corporation | 3.3% |
| CDW Corporation | 3.2% |
| Helen of Troy Ltd. | 3.0% |
| Ciena 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.
