Weekly Investor – April 29, 2019
All-Time Highs
Several key U.S. equity indices closed at all-time highs last week as corporate earnings and economic announcements were strong. The S&P 500® Index and the NASDAQ Composite closed at all-time highs Friday, eclipsing their previous records set in late 2018. Last week’s market rally started with stronger than expected first quarter Gross Domestic Products (GDP) data of 3.2%, compared to expectations of 2.3%. The strength in GDP helped to fuel the U.S. Dollar, as the greenback reached its highest levels since May 2017.
Further, earnings season was off to a good start. According to Bloomberg, 80% of the companies in the S&P 500 that have reported results so far have topped estimates. Facebook beat earnings estimates by nearly 17%, after announcing ad revenue growth of 31% which fueled the stock to a 7% gain last week. Microsoft briefly saw its market cap hit $1T during intraday trading on Thursday after reporting cloud revenue was up 22% year-over-year. Looking ahead to this week, earnings season continues as over 160 companies in the S&P 500 are expected to report quarterly results, including mega-cap technology names Apple, Google, Mastercard and Qualcomm, along with mega-cap health care names Pfizer, Merck, Eli Lilly and Amgen.
The S&P 500® Index was up 1.2% for the week. Its top-performing sectors were Health Care (3.7%) and Communication Services (2.7%), while bottom performing sectors were Basic Materials (-1.3%) and Energy (-1.3%). In the fixed-income market, the 10-year Treasury yield was down, ending at 2.5%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
Biogen Inc. (BIIB) discovers, develops, manufactures and delivers therapies to treat neurological and autoimmune diseases worldwide. Biogen Inc. was founded in 1978 and is headquartered in Cambridge, Massachusetts.
Biogen’s CEO, named in 2016, announced a more focused strategy aimed at accelerating the company’s growth prospects through internal research as well as business development efforts. This comes on the heels of a new product launch that is driving better-than-expected results for the company. While Biogen’s most anticipated drug trial focused on Alzheimer’s failed in early 2019, we continue to believe investors are under-appreciating the depth of Biogen’s pipeline. Biogen’s attractive valuation offers a compelling opportunity ahead of several product milestones that offer the potential for renewed growth expectations, if successful. These changes within Biogen make it a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.1% |
| Post Holdings, Inc. | 5.7% |
| Mastercard, Inc. | 5.0% |
| Marvell Technology Group | 4.9% |
| First Data Corporation | 4.2% |
Small Cap Core
| Planet Fitness, Inc. | 3.3% |
| Fortinet Inc. | 3.2% |
| G-III Apparel Group | 2.9% |
| Wintrust Financial | 2.7% |
| Gray Television Inc. | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 5.8% |
| Marvell Technology Group | 4.4% |
| Microsoft Corp. | 4.1% |
| Pfizer Inc. | 3.9% |
| ConocoPhillips | 3.8% |
Mid Cap
| CDW Corporation | 3.7% |
| Cintas Corporation | 3.4% |
| Amedisys, Inc. | 3.4% |
| Zebra Technologies | 3.1% |
| Xilinx 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.
