Weekly Investor – November 11, 2019
More Record Highs
Stocks closed at a record highs last week. For the year, the S&P 500® Index is up over 25%. The index has closed in positive territory for the fifth straight week. Consumer sentiment improved again for the third month in a row as Americans are confident in their financial positions as the market moves higher. The trade war with China continues to be at the forefront for equity markets. Headlines are rolling back tariffs from officials from both U.S. and China were met by President Trump’s comments disputing the pledge.
Travel company Expedia Group, Inc. was the worst-performing stock of the S&P 500 last week. The company reported quarterly sales in line with expectations, but its short-term rental unit VRBO came up short of analyst estimates. The disappointing growth of that division resulted in the company lowering its full-year outlook. As stocks push higher towards the end of the year, investors have looked to more economically sensitive sectors of the market, such as Industrials, Consumer Discretionary and Financials. In contrast, defensive sectors were the poorest groups in the S&P 500 with Real Estate, Utilities and Consumer Staples comprising the bottom three performers.
The S&P 500® Index was up 0.9% for the week. Its top-performing sectors were Financials (2.4%) and Energy (2.0%), while the bottom-performing sectors were Real Estate (-3.4%) and Utilities (-3.7%). In the fixed-income market, the 10-year Treasury yield was up, ending at 1.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Alphabet, Inc. has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the company also provides targeted advertising solutions (Google AdSense), collaboration tools for organizations (Google Apps), and a host of additional utilities such as Google Maps, YouTube, and Gmail. This Mountain View, California-based company was founded in 1998.
Recently, there has been more regulatory concern over concentration with the technology industry. Argent will carefully track any changes that may affect Alphabet. In the meantime, we believe the current trend of allocating additional dollars to internet search ads will continue, and that Alphabet is well-positioned to benefit from this trend. With its sophisticated search engine, Alphabet is able to match buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it. In addition, Alphabet’s incubated services, such as self-driving cars, could provide additional value to shareholders for the long term. The combination of Alphabet’s current operations, coupled with potential future products, creates a compelling addition to Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.8% |
| Mastercard, Inc. | 5.2% |
| Fiserv, Inc. | 5.2% |
| Post Holdings, Inc. | 5.1% |
| Marvell Technology Group | 5.0% |
Small Cap Core
| Fortinet, Inc. | 3.4% |
| Atkore International Group | 3.2% |
| World Fuel Services | 2.8% |
| OneMain Holdings, Inc. | 2.6% |
| Callaway Golf Company | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 6.1% |
| Target Corporation | 4.8% |
| Marvell Technology Group | 4.4% |
| Microsoft Corporation | 4.3% |
| Fidelity National Financial | 3.9% |
Mid Cap
| CDW Corporation | 4.4% |
| Cintas Corporation | 3.9% |
| Amedisys, Inc. | 3.6% |
| Copart,Inc. | 3.2% |
| 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.
