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News & Our Thinking

Weekly Investor

Weekly Investor – October 21, 2019

21 October 2019

Trade Deal Progress

Stocks closed slightly higher last week. The markets were buoyed by positive news on U.S.-China trade after rumors of a possible short-term deal, helped by Chinese agriculture purchases. China characterized the agreement as progress but fell short of announcing it as a trade deal.

Earnings season started after 51 companies in the S&P 500® Index announced quarterly results. Banks were the headliners as JPMorgan Chase & Co., CitiGroup, Inc., Wells Fargo & Co. and Bank of America Corp. all posted results. Bank of America led the four mega-cap banks with a 5% return last week after reiterating net interest income growth of 1% during 2019, along with strong mobile banking user growth and quarterly revenues of $91.2B. JPMorgan rose 3.8% after posting a 10% earnings surprise on top of a 3.3% revenue surprise. Meanwhile, Wells Fargo returned 1.5% and Citi declined 0.5% as its results were more muted than its mega bank rivals. Boeing dropped 8.2% for the week after it delivered more documents to the U.S. Federal Government over its 737 Maxx safety issues. Looking ahead to this week, earnings season is in full swing as 129 names in the S&P 500 are scheduled to report, among them are: Amazon Inc., Microsoft Corp,. Visa Inc., and Proctor & Gamble Co.

The S&P 500® Index was up 0.5% for the week. Its top-performing sectors were Health Care (2.0%) and Real Estate (1.8%), while bottom-performing sectors were Technology (-0.9%) and Energy (-1.7%). In the fixed-income market, the 10-year Treasury yield was even, ending at 1.8%.

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


Change Based Investment

Trimble, Inc. was founded in 1978 and is based in Sunnyvale, California. The company is best know for its Global Positioning System (GPS) technology. The company also develops Global Navigation Satellite Systems receivers, laser rangefinders, unmanned aerial vehicles and software processing tools. Trimble’s products and services are used in land survey, agriculture, construction, transportation and government.

Trimble has been shifting its business mix away from hardware and toward software and services. Acquisitions have pushed Trimble’s software and services offerings, now representing 50% of its revenue. The company also has moved to a subscription model, which may allow Trimble to build longer-term, more profitable relationships with customers, as opposed to a one-time purchase. Because of these positive changes, Trimble is a good fit for Argent’s Change-BasedSM investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.8%
Mastercard, Inc. 5.3%
Fiserv, Inc. 5.2%
Post Holdings, Inc. 5.1%
Target Corporation 4.9%

Small Cap Core

Atkore International Group 2.9%
Fortinet, Inc. 2.8%
World Fuel Services 2.7%
Callaway Golf Company 2.7%
Upland Software, Inc. 2.4%

Dividend Select

JPMorgan Chase & Co. 5.9%
Target Corporation 5.1%
Microsoft Corporation 4.2%
Marvell Technology Group 4.0%
Comcast Corporation 3.9%

Mid Cap 

CDW Corporation 4.2%
Cintas Corporation 4.2%
NVR, Inc. 3.6%
Amedisys, Inc. 3.4%
Copart, 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.