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Weekly Investor

Weekly Investor – July 8, 2019

08 July 2019

A Strong Start to Third Quarter

The S&P 500® Index closed out last week with a 1.7% return.  The strong jobs report released last Friday added to the case that the Federal Reserve does not need to cut interest rates, much to President Trump’s dismay. Ten of the 11 sectors in the S&P 500 traded higher last week. Pressure in the Energy sector was felt as the sector fell by almost 1.0% with the price of oil declining. Communication Services, led by Viacom, was the best performing sector in the index, returning over 2.7%. Even as stocks have trended higher throughout the year, merger and acquisition activity has been steady. Last week Broadcom, primarily a semiconductor manufacturer, was rumored to be considering a $16 billion-dollar takeover of cybersecurity software maker Symantec.

As we enter the second half of 2019 investors have enjoyed a stock market that had its best first half since 1997. The same market drivers will persist into the second half of the year. With trade, interest rates, and geopolitical risks keeping investors on alert in the second half.

The S&P 500® Index was up 1.7% for the week. Its top-performing sectors were Communication Services (2.7%) and Real Estate (2.4%), while bottom-performing sectors were Industrials (0.1%) and Energy (-0.9%). In the fixed-income market, the 10-year Treasury yield was even, ending at 2.0%.

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


Change Based Investment

FLIR Systems is the world’s largest commercial company specializing in the design and production of thermal imaging cameras, components and imaging sensors. It is a technological leader in infrared sensors. Its technology takes advantage of temperature differences of objects to help users “see” in situations where lighting is limited or normal vision is impaired by smoke, fog or other conditions. FLIR was founded in 1978 and is headquartered in Wilsonville, Oregon.

Although FLIR has a large exposure to military spending, the company is actively diversifying its portfolio of products via mergers and acquisitions. We view this change in strategy as a long-term positive for the company. In May 2017, FLIR hired James Cannon as its new CEO. Cannon has introduced a new reporting structure and refreshed the executive management team, which should translate into more efficient operations going forward. These events make FLIR a good fit for our Change-BasedSM investment approach and provide favorable prospects for long-term growth.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.2%
Post Holdings, Inc. 5.5%
Mastercard, Inc. 5.5%
Marvell Technology Group 4.7%
First Data Corporation 4.6%

Small Cap Core

Planet Fitness, Inc. 2.8%
Fortinet Inc. 2.7%
Upland Software Inc. 2.7%
Wintrust Financial 2.6%
Vonage Holdings 2.4%

Dividend Select

JPMorgan Chase & Co. 5.6%
Microsoft Corp. 4.3%
Marvell Technology Group 4.2%
Pfizer Inc. 4.2%
Target Corporation 4.1%

Mid Cap 

CDW Corporation 3.8%
Cintas Corporation 3.7%
Bright Horizons Family 3.3%
Worldpay Inc. 3.1%
NVR, Inc. 3.1%


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.