Weekly Investor – April 20, 2020
Jobless Claims Rise
Stocks gained during another volatile week. Some of the headlines that helped the market last week included President Trump’s announced plan to reopen states as well as new treatments to fight the coronavirus that showed promise. Patients are responding well to a drug developed by Gilead Sciences with patients “seeing rapid recoveries in fever and respiratory symptoms.” The flattening of the curve and new treatments were counterbalanced by rapidly deteriorating economic activity. Retail sales fell by 8.7% in March and initial jobless claims crossed 5 million for the week, bringing the combined total of lost jobs to over 22 million.
With investors flocking to safety, work-from-home exposed stocks and big technology once again paced the market. The Nasdaq-100 Index rose 7.2%, led by a 16.3% gain from Amazon.com, Inc. The six major money center banks kicked-off earnings season. JPMorgan Chase & Co. set aside over $8 billion for loan loss provisions, while The Goldman Sachs Group, Inc. had large write-downs in its investment portfolio. The financial systems as a whole remains on stronger footing than during the global financial crisis with America’s largest banks providing funding to corporations, small businesses and help individuals in need. Over the next few weeks many of the largest corporations will report results.
The S&P 500® Index was up 3.0% for the week. Its top-performing sectors were Consumer Discretionary (7.9%) and Health Care (6.1%), while the bottom-performing sectors were Real Estate (-2.8%) and Financials (-4.0%). In the fixed-income market, the 10-year Treasury yield was even, ending at 0.7%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Target Corporation is the second-largest general merchandise retailer in the United States, selling products through its physical stores as well as its digital channels. Based in Minneapolis, Minnesota, the company was founded in 1902 as Goodfellow Dry Goods.
Target is in the midst of several changes. It is resetting its pricing strategy to close the gap with Walmart, its biggest competitor, and is addressing its e-commerce needs by rolling out same-day delivery in selected markets around the country. Because of the coronavirus pandemic, Target is seeing increased grocery sales. Offsetting that are decreased sales in higher profit areas such as apparel. We think Target can navigate its way through today’s environment. For these reasons, we believe Target fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.4% |
| Mastercard Incorporated | 5.4% |
| Target Corporation | 5.2% |
| Fiserv, Inc. | 5.2% |
| Apple, Inc. | 5.1% |
Small Cap Core
| Fortinet, Inc. | 3.6% |
| UFP Technologies, Inc. | 3.1% |
| Lumentum Holdings, Inc. | 3.0% |
| Upland Software, Inc. | 2.6% |
| Atkore International Group | 2.5% |
Dividend Select
| Microsoft Corporation | 6.2% |
| Target Corporation | 5.8% |
| JPMorgan Chase & Co. | 5.3% |
| General Mills, Inc. | 4.5% |
| PepsiCo, Inc. | 3.8% |
Mid Cap
| Amedisys, Inc. | 5.8% |
| CDW Corporation | 4.3% |
| NVIDIA Corporation | 4.2% |
| Cintas Corporation | 3.7% |
| Ciena Corporation | 3.7% |
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.
