News & Our Thinking

Weekly Investor

Weekly Investor – August 26, 2019

26 August 2019

Geopolitical Concerns

Equities started last week positive and looked to add gains into the weekend until mid-day Friday when China announced its intent to levy an additional $75B of tariffs on U.S. goods.  Shortly thereafter, President Trump responded with additional U.S. trade threats. This raised geopolitical and global Gross Domestic Product (GDP) growth concerns which sent the S&P 500® Index and the Dow Jones Industrial Average sharply downward. Concerns of lackluster global growth have taken over equity markets. Despite the slowing global backdrop, U.S. economic reports remain resilient. Initial jobless claims, continuing jobless claims and home sales reports all were as expected. The Conference Board U.S. Leading Indicator Index was better than expectations for July, with a 0.5% gain. Meanwhile, June’s leading indicator was revised from -0.3% up to -0.1%.

Second quarter 2019 earnings wound down last week with only 22 companies in the S&P 500 Index reporting results. There was a slew of retail announcements including The Gap, Nordstrom, Target, Home Depot, Lowes, L Brands and TJX. The headliner amongst them was Target, which soared nearly 24% last week after announcing earnings, same-store sales and guidance that all beat estimates. Further, Target announced its comparable digital sales grew 34%, bolstering the market’s confidence in Target’s prospects. Looking ahead to the remainder of this week, tariff news will surely be in the headlines and will likely determine the near-term direction of the stock market.

The S&P 500 was down 1.4% for the week. Its top-performing sectors were Utilities (0.2%) and Consumer Discretionary (0.1%), while the bottom-performing sectors were Communication Services (-2.0%) and Basic Materials (-3.0%). In the fixed-income market, the 10-year Treasury yield was down, ending at 1.5%.

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

Change Based Investment

Masco Corporation manufactures and distributes home improvement and building products. Products include faucets, cabinets, architectural coatings and windows. Masco distributes these products through home improvement retailers and wholesalers, as well as directly to homebuilders.

With well-known brands like Behr paints and Delta faucets, we believe that Masco is well-positioned to grow profitably. In addition, Masco has changed its product mix, spinning off its installation business and announced its intent to sell its cabinet business. We believe these actions address problems that have plagued Masco in the past. With these changes, including a renewed focus on execution and its established position as a supplier to the housing industry, we believe Masco embraces Argent’s Change-BasedSM investment approach.




Top 5 Equity Holdings

Large Cap Growth

Alphabet Inc. (Google) 7.6%
Mastercard, Inc. 5.7%
Fiserv, Inc. 5.4%
Post Holdings, Inc. 5.1%
Marvell Technology 4.8%

Small Cap Core

Fortinet Inc. 3.0%
World Fuel Services 2.7%
Upland Software, Inc. 2.7%
Vonage Holdings Corp. 2.7%
OneMain Holdings, Inc. 2.6%

Dividend Select

JPMorgan Chase & Co. 5.6%
Target Corporation 5.0%
Microsoft Corporation 4.4%
Marvell Technology Group 4.3%
Fidelity National Financial 4.0%

Mid Cap 

Cintas Corporation 4.1%
CDW Corporation 4.0%
Bright Horizons Family 3.7%
NVR, Inc. 3.4%
Amedisys, Inc. 3.3%

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.