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Weekly Investor

Weekly Investor – July 22, 2019

22 July 2019

Earnings Season in Full Swing

The S&P 500® Index declined 1.2% last week, the first down week in July. Communication services was the worst performing sector of the week.  Driving that downward performance was Netflix. The Internet subscription based streaming service was the worst performing stock in the S&P 500 falling 15.6% for the week. The stock dropped after the company’s earnings were released Wednesday night. Netflix all-important subscriber growth missed expectations. Symantec, a security software company, fell 12.9% last week after media reports that its deal with potential acquirer Broadcom had ended. JB Hunt, a trucking company, was the best performing stock in the S&P 500, rising 11.6% for the week. The stock jumped after JB Hunt’s second quarter revenue met expectations. Earnings announcements expected this week are many and include Amazon, Alphabet, Facebook, Visa, AT&T, Intel, Comcast, Starbucks and many others.

The S&P 500 down 1.2% for the week. Its top-performing sectors were Consumer Staples (0.2%) and Basic Materials (0.2%), while bottom-performing sectors were Energy (-2.7%) and Communication Services (-3.1%). In the fixed-income market, the 10-year Treasury yield was even, ending at 2.1%.

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


Change Based Investment

Headquartered in Atlanta, Georgia, HD Supply Holdings, Inc. is one of the largest distributors of products to the facilities maintenance, construction and industrial markets.

Initially, HD Supply’s growth opportunities were constrained by high debt levels; however, following sales of non-core assets and reduction of debt to a normal level, management is free to focus on growth in its two remaining divisions, Facilities Maintenance and Construction and Industrial. Since restructuring the balance sheet, HD Supply has done one acquisition in Construction and Industrial and made changes in the sales force at the Facilities Maintenance division.  From these changes, better results are beginning to come through. We believe HD Supply’s lower debt, higher margin and higher growth make it a good fit for our Change BasedSM investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.2%
Post Holdings, Inc. 5.7%
Mastercard, Inc. 5.5%
Marvell Technology Group 5.0%
First Data Corporation 4.7%

Small Cap Core

Fortinet Inc. 3.1%
Upland Software Inc. 2.8%
Planet Fitness, Inc. 2.8%
Wintrust Financial 2.4%
Gray Television Inc. 2.4%

Dividend Select

JPMorgan Chase & Co. 5.6%
Marvell Technology Group 4.5%
Microsoft Corp. 4.3%
Target Corporation 4.0%
Pfizer Inc. 4.0%

Mid Cap 

CDW Corporation 3.9%
Cintas Corporation 3.8%
Bright Horizons Family 3.2%
NVR, Inc. 3.2%
Worldpay, Inc. 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.