Weekly Investor – April 22, 2019
Earnings Season in Full Swing
Last week equity markets were mixed during a busy week of earnings as health care stocks sold-off on renewed concerns over tighter regulation. Despite a beat-and-raise quarter, shares of UnitedHealth Group declined after earnings due to increased investor worries over a proposal by Democrats to provide universal government healthcare. By contrast, the industrial sector led for the week on strong earnings from Honeywell, which saw an 8% jump in organic revenue, and Union Pacific, which performed better-than-expected despite weather delays. In other corporate news, Qualcomm Inc. surged over 40% for the week after agreeing to a settlement with Apple over patents. Looking ahead to this week, a bevy of bellwethers are set to report earnings, including technology names Microsoft, Facebook and Amazon.
In economic news, retails sales grew 1.6% in March as temporary factors abated, including the drawn-out government shut downtown and the fourth-quarter market sell-off. Industrial production data surprised to the downside as producers coped with an inventory overhang. In addition, the initial reading on first-quarter GDP will be reported. Earnings and economic data points will be key in the coming weeks and should provide some clarity if last quarter’s slowdown in economic activity was a blip on the radar or is likely to persist.
The S&P 500® Index was down 0.1% for the week. Its top-performing sectors were Industrials (1.3%) and Technology (1.3%), while bottom performing sectors were Real Estate (-3.2%) and Health Care (-4.4%). In the fixed-income market, the 10-year Treasury yield was up, ending at 2.6%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
Cognizant Technology Solutions Corp. (CTSH), a New Jersey-based company, provides technology and operations services worldwide. Cognizant’s services include areas such as business and technical consulting, application development and maintenance, IT infrastructure services and supply chain management.
In an effort to increase profits and returns to shareholders, Cognizant plans to implement a share buyback and dividend program. The company also has refreshed its board of directors by electing new members. After a disappointing 2016, Cognizant reported results that aligned with guidance and were better than overall market expectations. Given these changes, we believe Cognizant is a good fit for our Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.9% |
| Post Holdings, Inc. | 5.7% |
| Mastercard, Inc. | 4.9% |
| Marvell Technology Group | 4.9% |
| Fortive Corporation | 4.2% |
Small Cap Core
| Planet Fitness, Inc. | 3.2% |
| Fortinet Inc. | 3.2% |
| G-III Apparel Group | 2.9% |
| Wintrust Financial | 2.7% |
| Gray Television Inc. | 2.7% |
Dividend Select
| JPMorgan Chase & Co. | 5.7% |
| Marvell Technology Group | 4.4% |
| ConocoPhillips | 4.0% |
| Microsoft Corp. | 3.9% |
| Target Corporation | 3.9% |
Mid Cap
| CDW Corporation | 3.7% |
| Xilinx Inc. | 3.4% |
| Cintas Corporation | 3.4% |
| Zebra Technologies | 3.1% |
| Amedisys, Inc. | 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.
