Weekly Investor – July 13, 2020
Earnings Season Begins
The market continued to shrug off increased cases of COVID-19 last week, helped in part by better news for treatment of the virus. On Friday, Gilead Sciences, Inc. reported that its Remdesivir drug reduces virus deaths by 62.0%. In other stock news, Walgreens Boots Alliance, Inc. fell after the drugstore announced a loss and plans to reduce headcount by 4,000 in the U.K. due to reduced traffic. Bed Bath & Beyond Inc. shares declined after the home-goods retailer announced it would close 200 of its stores permanently. By contrast, leading growth stocks Amazon.com, Inc., Netflix, Inc. and Tesla, Inc. hit all-time highs on Friday.
Looking ahead to this week, earnings season is set to kick-off, starting with the banks. On Tuesday, JPMorgan Chase & Co., Wells Fargo & Company and CitiGroup Inc. are expected to report second quarter results. With most firms having removed profit guidance and expectations for S&P 500® earnings to fall by 44.0%, individual stock swings are likely to be higher than average during this earnings season.
The S&P 500 Index was up 1.8% for the week. Its top-performing sectors were Consumer Discretionary (4.8%) and Communication Services (4.7%), while the bottom-performing sectors were Real Estate (-1.8%) and Energy (-4.6%). 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
Biogen, Inc. discovers, develops, manufactures and delivers therapies to treat neurological and autoimmune diseases worldwide. Biogen, Inc. was founded in 1978 and is headquartered in Cambridge, Massachusetts.
Biogen’s CEO, named in 2016, announced a more focused strategy aimed at accelerating the company’s growth prospects through internal research as well as business development efforts. This comes on the heels of a new product launch that is driving better-than-expected results for the company. We continue to believe investors are under-appreciating the depth of Biogen’s pipeline, which includes therapies targeting Parkinson’s disease, stroke and Alzheimer’s disease, to name a few. Although Biogen’s unfavorable patent decision on its multiple sclerosis drug Tecfidera was a setback for the company, with clinical data for ten mid-to-late stage drug trials over the near-term, Biogen’s attractive valuation offers a compelling opportunity. These changes within Biogen make it a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 9.0% |
| Apple, Inc. | 6.2% |
| Mastercard Incorporated | 5.5% |
| Danaher Corporation | 5.2% |
| Target Corporation | 4.9% |
Small Cap Core
| Fortinet, Inc. | 4.0% |
| Medpace Holdings, Inc. | 3.3% |
| PetIQ, Inc. | 3.2% |
| Lumentum Holdings, Inc | 2.8% |
| ASGN Incorporated | 2.7% |
Dividend Select
| Microsoft Corporation | 6.8% |
| Target Corporation | 5.6% |
| JPMorgan Chase & Co. | 4.9 |
| Marvell Technology Group | 4.2% |
| Comcast Corporation | 3.6% |
Mid Cap
| NVIDIA Corporation | 5.2% |
| Cintas Corporation | 4.2% |
| Marvell Technology Group | 4.1% |
| Ciena Corporation | 3.9% |
| CDW Corporation | 3.9% |
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.
