Weekly Investor – May 26, 2020
Stocks Rise After Vaccine Trial
The S&P 500® Index returned 3.2% last week, gaining back the previous week’s losses. The index is now down less than 7.8% year-to-date and is up over 32.5% from its closing low on March 23, 2020. Last Monday showed its best performance since early April, as the index climbed 3.2% with strength in energy stocks as crude oil futures gained 8.1%. Crude oil closed at $33.25 per barrel on Friday, increasing nearly 13% for the week. Stocks rose on the back of early positive results from Moderna’s COVID-19 vaccine trial. Positive comments both from Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde reinforced the optimism.
In stocks, L Brands, Inc. was the best performer in the S&P 500 Index, returning 38.9%. Though the company reported large first-quarter losses last week, the stock rallied on news that the company was intent on separating its Victoria’s Secret line into a standalone business. United Airlines Holdings, Inc. rose 27.5% as vaccine optimism helped lift some of the hard-hit airline industry stocks. Earnings announcements expected this week include Salesforce.com, Inc., Costco Wholesale Corporation, Dollar General Corporation, Autodesk, Inc., AutoZone, Inc., HP, Inc., Keysight Technologies, Inc. and Ulta Beauty, Inc.
The S&P 500 Index was up 3.2% for the week. Its top-performing sectors were Industrials (7.2%) and Energy (6.1%), while the bottom-performing sectors were Consumer Staples (0.2%) and health Care(-0.8%). 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
The Walt Disney Company is a diversified international entertainment and media company with the following business segments: Media Networks, Studio Entertainment, Direct-to-Consumer & International, Parks and Experiences & Products. Some of the most recognized names under the Disney umbrella include: ESPN, ABC, Walt Disney World theme parks, 20th Century Fox and Pixar Animation Studios.
Disney has always held a strong base of diversified core assets but recently the company has begun to reposition its media networks away from the traditional cable bundle toward more online streaming services through the purchase of 20th Century Fox, a stake in Hulu and its successful launch of Disney +. This gives Argent confidence that Disney can stay as relevant in the future as it has been historically. Disney is feeling the negative effects of COVID-19, as its theme parks are closed and sporting events are shuttered. As the economy re-opens we believe the changes going on in the company make Disney a good fit for Argent’s Large Cap Strategy.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 8.8% |
| Mastercard Incorporated | 5.8% |
| Apple, Inc. | 5.5% |
| Target Corporation | 5.1% |
| Fiserv, Inc. | 5.1% |
Small Cap Core
| Fortinet, Inc. | 4.2% |
| Medpace Holdings, Inc. | 3.3% |
| UFP Technologies, Inc. | 3.1% |
| PetIQ, Inc. | 2.8% |
| Addus Homecare Corp | 2.8% |
Dividend Select
| Microsoft Corporation | 6.3% |
| Target Corporation | 5.9% |
| JPMorgan Chase & Co. | 4.9% |
| General Mills, Inc. | 4.3% |
| Comcast Corporation | 3.7% |
Mid Cap
| NVIDIA Corporation | 4.8% |
| Ciena Corporation | 4.0% |
| Cintas Corporation | 4.0% |
| CDW Corporation | 3.9% |
| Helen of Troy Limited | 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.
