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News & Our Thinking

Weekly Investor

Weekly Investor – March 4, 2019

04 March 2019

Positive Economic Growth

Last week stocks were slightly higher during an up and down week as investors weighed better-than-expected economic growth with geopolitical and trade concerns. GDP grew at 2.6% in the 4th quarter of 2018, beating consensus expectations of 2.2%, as business investment remained strong. In trade news, President Trump announced a delay to an increase in tariff rates and his top trade negotiator later in the week told reporters that the U.S. was in the process of abandoning plans to increase rates on Chinese goods due to progress on a deal.

In stock news, high-growth cloud-based technology firms Box Inc. and Nutanix Inc. both issued disappointing guidance that sent their shares falling. General Electric Co. agreed to sell its life sciences unit to Danaher Corp. for over $21 billion. That move sent both stocks higher as the cash deal should help General Electric’s balance sheet and should expand Danaher’s health care offerings.

The S&P 500® was up 0.4% for the week. Its top-performing sectors were Energy (1.1%) and Technology (1.0%), while bottom-performing sectors were Real Estate (-1.1%) and Basic Materials (-1.6%). 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

V.F. Corporation (VFC) designs, produces, procures, markets and distributes branded lifestyle apparel, footwear and related products worldwide. The company was founded in 1899 and is based in Greensboro, North Carolina.

V.F. Corporation has a proven track record of successful mergers and acquisitions in footwear and apparel. The company has consistently purchased brands at reasonable prices, increased their profitability and, in some cases, it has grown those brands for decades. After several years of declining sales, V.F. is selectively repositioning its brands, with the biggest change yet to come – a spin-off of Wrangler and Lee into a separately traded company, which is expected to be completed in the first half of 2019. This move should result in higher growth and provide additional flexibility for V.F. to pursue more profitable acquisitions. We believe this positive change, along with the company’s strong management team, provides a long runway for growth.

 

 Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.5%
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%
Planet Fitness, Inc. 2.7%
Amphastar Pharma. 2.7%
Merit Medical Systems 2.7%
Wintrust Financial 2.7%

Dividend Select

JPMorgan Chase & Co. 5.4%
ConocoPhillips 4.3%
Pfizer Inc. 4.3%
Occidental Petroleum 3.8%
Microsoft Corp. 3.7%

Mid Cap 

CDW Corporation 3.4%
Cintas Corporation 3.4%
Xilinx Inc. 3.3%
Amedisys, Inc. 3.2%
Ciena Corporation 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.