Weekly Investor – May 14, 2019
Tariffs Back in Stock
The S&P 500® Index posted its biggest one-week price drop of the year as trade disputes between the U.S. and China returned to the headlines. On Friday, the U.S. increased tariffs to 25% on $200 billion of Chinese goods. Many investors fear this action will escalate a trade war and lead to slower economic growth. In other economic news, U.S. inflation data came in below expectations, furthering the case for the Federal Reserve to keep interest rates low. Looking to the future, near term market movements are likely to be driven by sentiment over the trade dispute between the U.S. and China.
In stock news, Uber Technologies closed below its Initial PublicOffering (IPO) price of $45 and competitor Lyft fell to its lowest price since beginning trading at the end of March as investors have become wary of the large losses both ride hailing companies currently report. AIG reported strong operating results as a turnaround in the property and casualty unit takes hold. Trip advisor’s shares dropped following disappointing revenue guidance due to weakness in hotel volume. Wal-Mart and Cisco Systems, two if the last bellwethers, are set to report results as earnings season wraps up.
The S&P 500® Index was down 2.2% for the week. Its top-performing sectors were Consumer Staples (-0.4%) and Energy (-0.6%), while bottom performing sectors were Basic Materials (-2.8%) and Technology (-3.6%). In the fixed-income market, the 10-year Treasury yield was even, ending at 2.5%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
ConocoPhillips (COP) is a major oil exploration and production company based in Houston, Texas. The company was formed in August 2002 when Phillips Petroleum acquired Conoco Inc.
ConocoPhillips is going through several changes. The company is focusing on a more disciplined approach to oil production. Additionally, it has pledged to maintain a high-quality balance sheet and to double free cash flow by 2020. In addition, the company plans to return a portion of its cash flow to investors in the form of dividends and share repurchases. We believe ConocoPhillips stands to benefit from its focus on a disciplined approach to oil production, higher cash flows and improving returns to shareholders. Further, ConocoPhillips’ goal of doubling free cash flow remains underappreciated by Wall Street; thus we feel the stock fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.7% |
| Post Holdings, Inc. | 5.7% |
| Mastercard, Inc. | 5.1% |
| Marvell Technology Group | 4.7% |
| First Data Corporation | 4.3% |
Small Cap Core
| Planet Fitness, Inc. | 3.1% |
| Fortinet Inc. | 2.9% |
| Upland Software Inc. | 2.7% |
| Wintrust Financial | 2.7% |
| G-III Apparel Group LTD | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 5.8% |
| Marvell Technology Group | 4.2% |
| Microsoft Corp. | 4.1% |
| Pfizer Inc. | 4.0% |
| Comcast Corporation | 3.9% |
Mid Cap
| CDW Corporation | 3.7% |
| Cintas Corporation | 3.5% |
| NVR, Inc. | 3.1% |
| Worldpay Inc. | 3.0% |
| 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.
