Weekly Investor – July 20, 2020
Cautious Optimism Surrounds Earnings
Stocks rose for a third straight week as the S&P 500® Index gained 1.2%. Cautious optimism surrounded earnings season as the first wave of corporate earnings were reported last week. Some of the high flying stocks that have been leading the market lagged, however. Netflix, Inc. reported less than stellar results last Friday and gave disappointing guidance for its user growth next quarter.
States have begun to lay out their plans for various stages of reopening. On Friday, California ordered its hardest-hit counties to offer only online learning with no option for on-campus instruction. This move comes after Governor Gavin Newsom ordered a reversal of opening restaurants, bars, gyms, and hair salons earlier this month. On the relief front, Treasury Secretary Steven Mnuchin told the House Small Business Committee the government should consider forgiving small business loans under the Paycheck Protection Program (PPP), although he did not specify which business would qualify for loan forgiveness. Earnings will be in focus this week as 88 companies in the S&P 500 are set to report quarterly results.
The S&P 500 Index was up 1.2% for the week. Its top-performing sectors were Industrials (5.8%) and Basic Materials (5.4%), while the bottom-performing sectors were Technology (-1.2%) and Consumer Discretionary (-1.6%). 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
Boston Scientific Corporation develops, manufactures and markets medical devices used in a broad range of interventional medical specialties.
Boston Scientific has undergone a multi-year turnaround effort that has been driven by several new product introductions yielding positive results for the company. We believe these encouraging changes have put Boston Scientific in a position to be a leading growth company within the medical device space. While COVID-19 is affecting Boston Scientific’s sales in the near-term, with its potential for accelerating sales growth as the world normalizes and its improving profitability, we feel Boston Scientific fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 8.7% |
| Apple, Inc. | 6.1% |
| Mastercard Incorporated | 5.5% |
| Danaher Corporation | 5.2% |
| Target Corporation | 4.9% |
Small Cap Core
| Fortinet, Inc. | 3.5% |
| Medpace Holdings, Inc. | 3.5% |
| PetIQ, Inc. | 3.2% |
| Lumentum Holdings, Inc | 2.8% |
| PRA Group, Inc. | 2.7% |
Dividend Select
| Microsoft Corporation | 6.4% |
| Target Corporation | 5.6% |
| JPMorgan Chase & Co. | 4.9 |
| Marvell Technology Group | 4.0% |
| Eaton Corporation Plc | 3.7% |
Mid Cap
| NVIDIA Corporation | 5.0% |
| Cintas Corporation | 4.3% |
| CDW Corporation | 4.0% |
| Ciena Corporation | 3.8% |
| Marvell Technology Group | 3.8% |
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.
