Weekly Investor – May 6, 2019
A Great Start to 2019
US equity markets climbed higher last month as the S&P 500® Index returned 4.1% for April. The S&P is up 18.3% for the first four months of 2019 giving it the best four-month start in the last 30 years. The S&P 500 Index hit an all-time closing high of 2,945.83 last Wednesday as the index recorded a 0.2% gain for the week. Some of the highlights for individual stocks included Alphabet, the internet giant known for Google and the Android operating system, declined 7.5% last Tuesday after releasing earnings. Alphabet reported sales that were below Wall Street expectations. Incyte Corp, a biopharmaceutical focused on small molecule cancer drugs, increased 10.7% last week as it beat sales and earnings estimates. Many more earnings announcements expected this week.
The Federal Reserve issued a statement on Wednesday leaving rates unchanged and acknowledged that inflation had decreased below its 2% objective. In other economic news, the US unemployment rate fell to 3.6% for April, the lowest level since December 1969.
The S&P 500® Index was up 0.2% for the week. Its top-performing sectors were Health Care (1.3%) and Financials (1.2%), while bottom performing sectors were Communication Services (-1.8%) and Energy (-3.3%). 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
Bristol-Myers Squibb Company (BMY) develops, licenses, manufactures, markets and distributes biopharmaceutical products worldwide. The company was founded in 1887 and is headquartered in New York.
Bristol-Myers’ stock has lagged behinds its peers as the excitement surrounding its lead cancer therapy has dimmed somewhat on competitive concerns. Investor worry has led to a stock that is much more attractively valued. We believe it continues to possess one of the most exciting cancer programs in the health care industry. In addition, Bristol-Myers has agreed to acquire Celgene Corp. for nearly $74 billion dollars to create the number one cancer focused company in the world. Together, the strong cash flow generation along with a more diverse business mix and pipeline provide upside potential. The combination of Bristol and Celgene provides the company with six near-term product launch opportunities targeting $15 billion in sales based on Bristol’s estimates. Because of these changes and the potential upside the offer for shareholders, we believe Bristol-Myers fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.6% |
| Post Holdings, Inc. | 5.3% |
| Mastercard, Inc. | 5.0% |
| Marvell Technology Group | 4.8% |
| First Data Corporation | 4.3% |
Small Cap Core
| Planet Fitness, Inc. | 3.2% |
| Fortinet Inc. | 2.9% |
| G-III Apparel Group | 2.9% |
| Wintrust Financial | 2.7% |
| Lumentum Holdings Inc. | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 5.9% |
| Marvell Technology Group | 4.3% |
| Microsoft Corp. | 4.1% |
| Pfizer Inc. | 4.0% |
| Comcast Corporation | 3.8% |
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.
