Weekly Investor – June 8, 2020
Jobs Report Positive
The S&P 500® Index closed out last week having risen almost 5%, erasing losses incurred since the beginning of March. The market recovery was more pronounced in small and mid-cap stocks, with the S&P MidCap 400® Index and Russell 2000® Index up over 8% last week.
Investors eagerly anticipated the jobs report last Friday. Economists’ consensus estimates were for a loss of 7.5 million jobs, but, in an unprecedented reversal, the jobs number came in at +2.5 million. On monetary policy, the Federal Reserve had promised to make it easier for corporations to gain access to financing throughout the pandemic. In response to the Fed, companies have borrowed a record $1.1 trillion since the beginning of the year. The increased borrowing is nearly twice the pace set back in 2019. After a failed House bill to pump an additional $3.5 trillion of stimulus into the economy, President Trump said he would ask Congress for more economic aid. The new stimulus is expected to be close to $1.0 trillion. The president’s top economic advisor, Larry Kudlow, remarked that there could be a return-to-work incentive as part of the plan. Looking ahead to this week, economic releases include the Consumer Price Index (CPI) and the Producer Price Index (PPI), as well as the Federal Reserve Open Market Committee’s decision on interest rates.
The S&P 500 Index was up 4..9% for the week. Its top-performing sectors were Energy (15.4%) and Financials (12.2%), while the bottom-performing sectors were Consumer Staples (1.9%) and Health Care (0.2%). In the fixed-income market, the 10-year Treasury yield was up, ending at 0.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Founded in 1930, AMETEK, Inc. is a U.S.-based manufacturer of electronic instruments and electromechanical devices. The company operates through two business segments supplying devices to the medical (quality control equipment), energy (temperature measurement and calibration instruments), industrial (battery chargers and UPS systems) and aerospace and defense (engine sensors, cockpit indicators and display systems) markets.
Over and above trading at an attractive valuation, we believe AMETEK’s acquisitions in technology will make the company’s manufacturing more efficient and will be a catalyst for growth. AMETEK’s sales have been hurt near-term from the effects of COVID-19. Longer-term, because of AMETEK’s attractive valuation and acquisition strategy designed to increase efficiency and grow shareholder value, we believe AMETEK fits our Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 8.3% |
| Mastercard Incorporated | 5.7% |
| Apple, Inc. | 5.3% |
| Fiserv, Inc. | 4.9% |
| Target Corporation | 4.9% |
Small Cap Core
| Fortinet, Inc. | 3.7% |
| UFP Technologies, Inc. | 2.9% |
| Medpace Holdings, Inc. | 2.8% |
| OneMain Holdings, Inc. | 2.7% |
| PRA Group, Inc. | 2.6% |
Dividend Select
| Microsoft Corporation | 5.7% |
| Target Corporation | 5.4% |
| JPMorgan Chase & Co. | 5.4% |
| Truist Financial Corp | 3.9% |
| Marvell Technology Group | 3.8% |
Mid Cap
| Cintas Corporation | 4.3% |
| NVIDIA Corporation | 4.2% |
| CDW Corporation | 4.1% |
| Ciena Corporation | 3.7% |
| Marvell Technology Group | 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.
