Weekly Investor – February 25, 2019
Positive Trade Talks
US equity markets were closed last Monday in observation of Presidents’ Day. The S&P 500® Index returned 0.6% for the shortened trading week, adding to its year-to-date return of 11.7%. Garmin Ltd., a consumer electronics manufacturer of GPS-enabled products, was the S&P 500’s best performing stock, climbing 16.0%. Garmin opened higher on Tuesday after posting positive fourth quarter earnings results, beating Wall Street expectations. Kraft Heinz, a producer of food products, was the S&P 500’s worst performing stock, falling 26.6%. The stock opened lower on Friday after releasing disappointing earnings which included an announcement of a write down of over $15 billion of goodwill and intangible assets.
United States President Donald Trump and Chinese Vice Premier Liu He met in Washington last Friday and into the weekend as part of ongoing trade talks. President Trump announced that the March 1 deadline for a trade agreement could be extended a month to prevent higher American tariffs from kicking in. Optimism over positive trade talks with China helped boost copper prices, as copper futures climbed to their highest level since July 2018. In economic news, US initial jobless claims of 216K were lower than the previous week’s 239K and the consensus estimate of 228K.
The S&P 500 was up 0.6% for the week. Its top-performing sectors were Utilities (2.4%) and Basic Materials (2.3%), while bottom-performing sectors were Health Care (-0.3%) and Energy (-0.5%). 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.
Changed-Based Investment
Target Corporation (TGT) is the second-largest general merchandise retailer in the United States, selling products through its physical stores as well as its digital channels. Based in Minneapolis, Minnesota, the company was founded in 1902 as Goodfellow Dry Goods.
Target is implementing several meaningful changes. It is resetting its pricing strategy to close the gap with Walmart, its biggest competitor. In addition the company is addressing its e-commerce needs by rolling out same-day delivery in selected markets around the country. We believe these changes will increase same store sales for Target and will drive a higher valuation for its stock. For these reasons, we believe Target fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.4% |
| Post Holdings, Inc. | 5.4% |
| Mastercard, Inc. | 4.7% |
| First Data Corporation | 4.4% |
| Fortive Corporation | 4.1% |
Small Cap Core
| Fortinet Inc. | 3.1% |
| Merit Medical Systems | 2.8% |
| Wintrust Financial Corp. | 2.7% |
| Health Ins. Innovations | 2.7% |
| Planet Fitness, Inc. | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 5.5% |
| ConocoPhillips | 4.4% |
| Pfizer Inc. | 4.3% |
| Occidental Petroleum | 3.7% |
| Microsoft Corp. | 3.7% |
Mid Cap
| CDW Corporation | 3.4% |
| Amedisys, Inc. | 3.4% |
| Cintas Corporation | 3.3% |
| Ciena Corporation | 3.3% |
| Xilinx Inc. | 3.2% |
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.
