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News & Our Thinking

Weekly Investor

Weekly Investor – June 3, 2019

04 June 2019

Trade News Disappoints

Stocks fell last week as disappointing trade news dominated headlines. Uber announced quarterly financial results for the first time since its IPO on May 9 and saw its share rise 1.5% Friday, while the general market was down. U.S. retail continues to struggle, the most recent casualty was The Gap. Despite restructuring plans to spin off its Old Navy brand, the stock fell 9.3% for the week on poor earnings and has fallen 26% for the year.

President Trump returned from Japan with news that a near-term trade deal didn’t seem likely, China ‘was not ready to make a long-term deal’ and then ended last week announcing new tariffs on Mexico in an effort to stem the flow of illegal immigrants into the U.S. The new tariffs on imports from Mexico are scheduled to start on June 10 at 5% and to escalate to 25% by October 1. Mexican President Lopez Obrador has sent his foreign minister to Washington D.C. to negotiate with U.S. officials to try and avoid the June 10 tariffs.

The S&P 500® Index was down -2.6% for the week. Its top-performing sectors were Real Estate (-0.8%) and Technology (-1.9%), while bottom-performing sectors were Consumer Staples (-3.5%) and Energy (-4.4%). In the fixed-income market, the 10-year Treasury yield was down, ending at 2.1%.

We continue to seek companies that reflect our Change-BasedSM investment approach.


Change Based Investment

Danaher Corp. (DHR), headquartered in Washington, D.C., designs, manufactures and markets healthcare equipment. Its product line includes Life Sciences and Diagnostics tools and products.

Danaher has a long history of delivering consistent earnings growth through continually improving its business. The company also is adept at acquiring businesses that are fast-growing and improving the returns of those businesses. Over the years, Danaher’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. Danaher’s management team has not been afraid to cull its businesses as well, to drive shareholder value.  For instance, in 2016 Danaher spun off its industrial businesses to shareholders as Fortive (FTV).  In mid-2018, the company announced its intent to spin off its dental operations. These changes leave the stand-alone Danaher as a more focused healthcare organization with higher organic growth prospects. We believe Danaher’s management embraces Argent’s Change-BasedSM investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.5%
Post Holdings, Inc. 5.8%
Mastercard, Inc. 5.4%
Marvell Technology Group 4.7%
First Data Corporation 4.5%

Small Cap Core

Planet Fitness, Inc. 3.1%
Upland Software Inc. 3.0%
Fortinet Inc. 2.7%
Wintrust Financial 2.6%
Gray Television Inc. 2.4%

Dividend Select

JPMorgan Chase & Co. 5.7%
Pfizer Inc. 4.2%
Microsoft Corp. 4.2%
Marvell Technology Group 4.2%
Target Corporation 4.0%

Mid Cap 

Cintas Corporation 3.7%
CDW Corporation 3.6%
Wordplay Inc. 3.3%
NVR Inc. 3.2%
Bright Horizons Family 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.