Weekly Investor – January 27, 2020
Coronavirus Fear
Last week the widening outbreak of the coronavirus rattled investors, leading to the biggest weekly decline in the S&P 500® Index since August of last year. Investors worry a breakout like the SARS virus of 2003, could lead to a global slowdown.
With earnings season in full swing for financials, American Express Company guided above most analysts’ estimates after increasing benefits on some cards. By contrast, Discover Financial Services tumbled after announcing a large increase in spending in the coming year on marketing and technology to mitigate loan losses. In other earnings announcements, shares of Intel Corporation rose after posting robust growth from PC and data center processors. International Business Machines Corporation gained after reporting an increase in quarterly sales, snapping a long streak of shrinking revenues.
Looking to this week, investors will be watching the spread of the coronavirus. Earnings will include Apple Inc., Starbucks Corporation and 3M Company. Economic news will also be center stage with the first reading of fourth-quarter GDP and the Federal Reserve’s January meeting.
The S&P 500 Index was down 1.0% for the week. Its top-performing sectors were Utilities (2.4%) and Real Estate (1.0%), while the bottom-performing sectors were Basic Materials (-2.3.%) and Energy (-4.2%). 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
Danaher Corporation, headquartered in Washington, D.C., designs, manufactures and markets healthcare equipment. Its product line includes Life Sciences and Diagnostics tools and products.
Danaher has a long history of delivering consistent earnings growth by continually improving its business. The company also is adept at acquiring businesses that are fast-growing and improving the returns of those businesses. Over the years, Danaher’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. Danaher’s management team has not been afraid to cull its businesses as well, to drive shareholder value. For instance, in 2016, Danaher spun off its industrial businesses to shareholders as Fortive. In mid-2018, the company announced its intent to spin off its dental operations. These changes leave the stand-alone Danaher as a more focused healthcare organization with higher organic growth prospects. We believe Danaher’s management embraces Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.2% |
| Mastercard, Incorporated | 5.7% |
| Fiserv, Inc. | 5.3% |
| Apple, Inc. | 4.9% |
| Post Holdings, Inc. | 4.8% |
Small Cap Core
| Fortinet, Inc. | 3.3% |
| Atkore International Group | 2.9% |
| OneMain Holdings, Inc. | 2.6% |
| Callaway Golf Company | 2.5% |
| World Fuel Services | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 6.1% |
| Target Corporation | 4.9% |
| Microsoft Corporation | 4.8% |
| Fidelity National Financial | 3.9% |
| Life Storage, Inc. | 3.7% |
Mid Cap
| CDW Corporation | 4.3% |
| Amedisys, Inc. | 4.0% |
| Cintas Corporation | 4.0% |
| Copart, Inc. | 3.7% |
| NVR, Inc. | 3.4% |
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.
