Weekly Investor – April 27, 2020
Congress Adds More Stimulus
The S&P 500® Index fell -1.3% last week following two weeks of gains. While volatility is still evident in the stock market, the larger daily point swings of mid-March have decreased. The U.S. Congress added more stimulus last week in an effort to help small businesses and overall employment. U.S. initial jobless claims of 4.4 million were lower than the consensus estimate of 4.5 million and the previous week’s claims of 5.2 million. The University of Michigan Consumer Sentiment Index’s April reading showed a 17.3 point drop from March, the largest one-month decline in the history of the index.
Crude oil closed at $16.94 per barrel on Friday, declining 7.3% for the week. Diminished demand and oversupply, along with minimal storage options, caused the May crude oil futures contract to trade at a negative price last Monday. However, crude oil rallied back later in the week helping several energy companies post large positive returns, seven of which were in the top ten performers in the S&P 500 Index. Earnings reporting for the first quarter 2020 is well underway.
The S&P 500 Index was down 1.3% for the week. Its top-performing sectors were Energy (1.7%) and Communication Services (0.0%), while the bottom-performing sectors were Utilities (-3.8%) and Real Estate (-4.4%). In the fixed-income market, the 10-year Treasury yield was down, ending at 0.6%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Trimble, Inc. was founded in 1978 and is based in Sunnyvale, California. The company is best known for its Global Positioning System (GPS) technology. The company also develops Global Navigation Satellite Systems receivers, laser rangefinders, unmanned aerial vehicles and software processing tools. Trimble’s products and services are used in land survey, agriculture, construction, transportation, and government.
Trimble has been shifting its business mix away from hardware and toward software and services. Acquisitions have increased Trimble’s software and service offerings, now representing over 50% of its revenue. The company also has moved to a subscription model, which may allow Trimble to build longer-term, more profitable relationships with customers, as opposed to a one-time purchase. The current environment is creating headwinds for the company’s sales. Two of Trimble’s end markets, energy and transportation, are feeling the effects of the coronavirus, While this will impact Trimble in the near-term we believe the company’s positive changes make Trimble a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.5% |
| Mastercard Incorporated | 5.4% |
| Danaher Corporation | 5.3% |
| Apple, Inc. | 5.2% |
| Fiserv, Inc. | 5.0% |
Small Cap Core
| UFP Technologies, Inc. | 3.4% |
| Fortinet, Inc. | 3.4% |
| Lumentum Holdings, Inc. | 3.2% |
| Gibraltar Industries, Inc. | 2.5% |
| Qualys, Inc. | 2.5% |
Dividend Select
| Microsoft Corporation | 6.2% |
| Target Corporation | 5.6% |
| JPMorgan Chase & Co. | 5.1% |
| General Mills, Inc. | 4.5% |
| PepsiCo, Inc. | 3.8% |
Mid Cap
| NVIDIA Corporation | 4.3% |
| CDW Corporation | 4.2% |
| Ciena Corporation | 3.9% |
| Cintas Corporation | 3.7% |
| Fidelity National Info. | 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.
