Weekly Investor – February 10, 2020
Positive Quarterly Earnings
Equities climbed back last week. The S&P 500® Index rose over 3.0% Stocks were fueled by waning global risks of a coronavirus pandemic and positive quarterly earnings results. Earnings season was a focus last week as 112 companies in the S&P 500 reported quarterly results.
Twitter Inc. announced quarterly results and soared 15% on Thursday. Google’s parent company Alphabet, Inc. announced earnings slightly ahead of estimates by revenues were short of expectations. However, the stock returned 3% for the week after Google’s earnings call highlighted $3 billion in YouTube subscription revenue with over 20 million paying users and cloud sales backlog worth over $11 billion. Ford Motor Company dropped nearly 10% after announcing disappointing earnings and revenue guidance fueled by delays in its new Explorer SUV launch and a change in leadership as Jim Farley was named COO, Looking ahead to this week, quarterly earnings season continues as mega-cap companies Cisco Systems, Inc., PepsiCo, Inc., NVIDA Corporation, AbbVie Inc. and CVS Health Corporation are all expected to report.
The S&P 500 Index was up 3.2% for the week. Its top-performing sectors were Technology (4.5%) and Basic Materials (4.2%), while the bottom-performing sectors were Energy (0.8.%) and Utilities (-0.6%). In the fixed-income market, the 10-year Treasury yield was up, ending at 1.6%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Facebook, Inc. provides various social networking products to connect and share through mobile devices, personal computers and other devices worldwide. Its solutions include the company’s namesake Facebook website and app, Instagram, WhatsApp Messenger and Oculus VR. Facebook was founded in 2004 and is headquartered in Menlo Park, California.
With 2.9 billion active users across various services, Facebook has established itself as the undisputed leader in social media. From dorm room startup to becoming one of the largest companies in the world, Facebook’s rapid rise to dominance across the globe has brought much praise over the years. Though, of late, criticism and scrutiny have been applied to Facebook and social media as a whole. In addition, regulatory concerns over Facebook’s dominance of social media has pressured the stock’s valuation. Overall, negative news has done little to change Facebook’s user behavior. Advertisers continue to place more and more ads on the various platforms Facebook owns, indicating that the reach and frequency Facebook provides is increasingly valuable relative to other options to reach consumers. While it is impossible to know the impact of future regulation on Facebook’s business model, we believe the company’s growth prospects remain bright. As such, we believe Facebook represents a good holding for Argent’s Large Cap strategy.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.3% |
| Mastercard, Incorporated | 5.8% |
| Fiserv, Inc. | 5.4% |
| Apple, Inc. | 5.0% |
| Post Holdings, Inc. | 4.6% |
Small Cap Core
| Fortinet, Inc. | 3.4% |
| Atkore International Group | 3.0% |
| OneMain Holdings, Inc. | 2.8% |
| UFP Technologies, Inc. | 2.6% |
| World Fuel Services | 2.6% |
Dividend Select
| JPMorgan Chase & Co. | 6.3% |
| Microsoft Corporation | 5.4% |
| Target Corporation | 5.0% |
| Life Storage, Inc. | 3.7% |
| Fidelity National Financial | 3.7% |
Mid Cap
| Amedisys, Inc. | 4.3% |
| CDW Corporation | 4.1% |
| Cintas Corporation | 4.1% |
| Copart, Inc. | 3.8% |
| NVR, 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.
