Weekly Investor – April 13, 2020
Earnings Week Starts
The market was strong las week, with the S&P 500® Index retracing some losses, getting back to mid-March levels. All but ten stocks in the index had positive returns last week with the index posting its biggest weekly gain since 1974. Retailers and cruise liners, some of the hardest hit industries since the spread of the coronavirus, were some of the best-performing stocks for the week. Kohl’s Corporation rallied over 70%, Royal Caribbean Cruises Ltd. and Norwegian Cruise Lines Holdings Ltd. were also top performers, but their earnings are in question after the Center for Disease Control extended its “no sail order” for at least 100 days.
To combat an even greater economic slowdown, the Federal Reserve pledged to provide support of up to $2.3 trillion in loans to various institutions including small and mid-sized businesses and state and local governments. This fresh round of available funds is on top of the record stimulus the Fed has provided since the disruption.
This week 34 companies in the S&P 500 report quarterly earnings. Investors will look to the big banks such as JPMorgan Chase & Co. and Bank of America Corporation and the health care sector names like UnitedHealth Group Inc. and Johnson & Johnson to gauge the impact of COVID-19 on the corporate earnings during the first quarter.
The S&P 500 Index was up 12.1% for the week. Its top-performing sectors were Real Estate (21.2%) and Basic Materials (20.7%), while the bottom-performing sectors were Health Care (9.4%) and Consumer Staples (4.9%). In the fixed-income market, the 10-year Treasury yield was up, ending at 0.7%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Starbucks Corporation is a coffee company and coffeehouse chain. It operates as a roaster, marketer and retailer of speciality coffee worldwide. The company was founded in Seattle, Washington in 1971 and operates over 30,000 locations worldwide.
Starbucks is finding new ways to improve margins and speed of delivery from its enhanced technology, platforms and processes within its cafes and mobile ordering application. Additionally, Starbucks has significant growth opportunities such as the Chinese market and the potential for increased cold beverage and food sales worldwide. While the company is being impacted by the coronavirus today we believe Starbucks’ positive growth opportunities will be realized over time for our long-term investors.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.1% |
| Mastercard Incorporated | 5.7% |
| Fiserv, Inc. | 5.2% |
| Post Holdings, Inc. | 5.0% |
| Apple, Inc. | 5.0% |
Small Cap Core
| Fortinet, Inc. | 3.2% |
| Lumentum Holdings, Inc. | 3.1% |
| UFP Technologies, Inc. | 3.0% |
| Atkore International Group | 2.8% |
| Universal Forest Products | 2.4% |
Dividend Select
| Microsoft Corporation | 5.8% |
| JPMorgan Chase & Co. | 5.7% |
| Target Corporation | 5.4% |
| General Mills, Inc. | 4.3% |
| Life Storage, Inc. | 4.0% |
Mid Cap
| Amedisys, Inc. | 5.6% |
| CDW Corporation | 4.2% |
| NVIDIA Corporation | 3.8% |
| Ciena Corporation | 3.8% |
| Cintas Corporation | 3.6% |
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.
