Weekly Investor – November 4, 2019
Upbeat Earnings Reports
U.S. stocks moved higher last week helped by positive economic data, improving trade sentiment and upbeat earnings reports. Encouraging economic releases included a better than expected jobs report and third-quarter gross domestic product (GDP) growth above the estimates by economists. By contrasts, the ISM manufacturing index came in below expectations at 48.3. Readings above 50 signal a contraction. This was the third consecutive month with a reading below 50, increasing concern of an economic slowdown in manufacturing.
Stock specific news included Apple Inc., which hit new highs after reporting strong iPhone revenues, robust growth for AirPods and an 18% growth in service revenues. Shares of Facebook Inc. also rose after announcing better than expected revenues, lower expenses and positive active user growth. With many large companies reporting results, earnings season has provided a catalyst for stocks as expectations were depressed coming into the quarter. For this week, investors will remain focused on changes in economic activity, geopolitical risks and trade negotiations.
The S&P 500® Index was up 1.5% for the week. Its top-performing sectors were Health Care (3.0%) and Technology (2.1%), while bottom-performing sectors were Energy (-0.3%) and Real Estate (-0.7%). In the fixed-income market, the 10-year Treasury yield was down, ending at 1.7%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Willis Towers Watson is a multinational insurance broker, risk management and advisory company. It operates in more than 140 countries and is the third-largest insurance broker in the world. Willis Towers Watson was formed as a merger between London based Willis Group Holdings plc and Virginia based Towers Watson & Co. in early 2016.
After a series of acquisitions and difficulty in integrating those acquisitions, Willis Towers Watson is showing traction in its goals for higher organic revenue growth and free cash flow generation. Additionally, we believe Towers Watson is well-positioned to benefit from a growing economy. As companies grow, they look to the expertise of insurance brokers to assist in recommending benefits to employees and insuring their assets. Given these positive changes, we believe Willis Towers Watson fits with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.7% |
| Mastercard, Inc. | 5.4% |
| Fiserv, Inc. | 5.1% |
| Post Holdings, Inc. | 5.1% |
| Marvell Technology Group | 4.7% |
Small Cap Core
| Fortinet, Inc. | 3.1% |
| Atkore International Group | 3.0% |
| World Fuel Services | 2.8% |
| OneMain Holdings, Inc. | 2.6% |
| Callaway Golf Company | 2.4% |
Dividend Select
| JPMorgan Chase & Co. | 6.2% |
| Target Corporation | 4.8% |
| Microsoft Corporation | 4.4% |
| Marvell Technology Group | 4.2% |
| Fidelity National Financial | 3.9% |
Mid Cap
| CDW Corporation | 4.4% |
| Cintas Corporation | 4.1% |
| Amedisys, Inc. | 3.5% |
| NVR, Inc. | 3.3% |
| 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.
