Weekly Investor – July 6, 2020
S&P Rises on Economic Optimism
The S&P 500® Index rose over 4.0% on economic optimism during the holiday-shortened week. The market continues to seesaw between the optimism of economic recovery and pessimism on the continued COVID-19 pandemic. The story of a bifurcated market has been a running theme since the beginning of the shutdown. Despite the constant push and pull of market forces, small and midcap companies outperformed large caps in the second quarter, with the Russell 2000® Index returning 25.0% and the S&P 400 MidCap® Index returning 23.5%, which the S&P 500 returned just under 20.0%.
Last Wednesday, Pfizer, Inc. was the latest company to show results of a COVID-19 vaccine. The early trial showed success in the production of antibodies in defence against the virus. New coronavirus cases continued to rise last week with the highest daily case growth seen since early May. The record growth is a result of increased testing at the same time states begin to reopen their economies. This has prompted hot-spot states such as Texas, Florida and California to reexamine their reopening procedures and institute new rules to combat rising cases. Looking to the rest of this week, investors will pay attention to initial jobless claims data due out on Thursday.
The S&P 500 Index was up 4.0% for the week. Its top-performing sectors were Communication Services (5.6%) and Real Estate (5.6%), while the bottom-performing sectors were Energy (2.3%) and Financials (1.6%). 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
Applied Materials, Inc. is a U.S. corporation that supplies equipment, services and software for the manufacture of semiconductor chips for electronics, smartphones, televisions, flat panel displays and solar products.
Applied Materials is a well-run company and considered a “best-in-breed” semiconductor equipment supplier. Additionally, there is a trend in the industry toward more complexity in semiconductors. This trend should drive a higher level of spending for semiconductor manufacturing equipment and as a consequence, higher earnings for Applied Materials. COVID-19 is impacting the operations of Applied Materials near-term. Longer-term, the positive changes going on at the company make Applied Materials a good fit for Argent’s Large Cap Growth Strategy.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 8.7% |
| Apple, Inc. | 6.0% |
| Mastercard Incorporated | 5.7% |
| Danaher Corporation | 5.1% |
| Target Corporation | 5.0% |
Small Cap Core
| Fortinet, Inc. | 3.8% |
| PetIQ, Inc. | 3.3% |
| Medpace Holdings, Inc. | 3.2% |
| UFP Technologies, Inc. | 2.9% |
| Lumentum Holdings, Inc. | 2.8% |
Dividend Select
| Microsoft Corporation | 6.6% |
| Target Corporation | 5.6% |
| JPMorgan Chase & Co. | 4.7 |
| Marvell Technology Group | 3.9% |
| Life Storage, Inc. | 3.5% |
Mid Cap
| NVIDIA Corporation | 4.8% |
| Cintas Corporation | 4.2% |
| CDW Corporation | 4.0% |
| Ciena Corporation | 3.8% |
| Marvell Technology Group | 3.7% |
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.
