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Weekly Investor

Weekly Investor – August 10, 2020

10 August 2020

Unemployment Rate Drops

Stocks rose last week even in the face of uncertainty around an extension of unemployment benefits and continued tensions with China. On the domestic front, Republicans and Democrats remain trillions of dollars apart in stimulus talks. Regarding China, President Trump signed an executive order that imposed a 45-day deadline for TikTok to sell to an American company or cease operations in the U.S. Jobs data last week indicated some improvement, as the U.S. added 1.8 million jobs in July versus expectations for 1.5 million, dropping the unemployment rate down to 10.2%.

Earnings last week led to large selloffs in some of the high flying tech stocks. Shares of Fastly, Inc., a leader in edge computing, fell nearly 20.0% after disclosing 12.0% of its revenues are tied to TikTok. Similarly, despite growing revenue by 68.0%, Datadog, Inc. fell nearly 20.0% after reporting decelerating growth in public cloud spending. On the positive side, Industrial stocks were the top performers for the week as additional aid to the airlines is expected and the ban on international travel was lifted. Although volatile, market leadership started to shift towards smaller companies, more economically sensitive cyclicals and value names before the start of earnings season. Since July 9th, the Russell 2000® Index has returned 11.6% versus 6.0% for the S&P 500® Index.

The S&P 500 Index was up 2.5% for the week. Its top-performing sectors were Industrials (4.8%) and Financials (3.3%), while the bottom-performing sectors were Health Care (0.9%) and Real Estate (0.7%). In the fixed-income market, the 10-year Treasury yield was even, ending at 0.6%.

We continue to seek companies that reflect our Change-BasedSM investment approach.


Change Based Investment

Comcast Corporation, headquartered in Philadelphia, Pennsylvania is a telecommunications conglomerate serving both residential and commercial customers. Comcast owns many well-known companies such as Universal Studios and NBCUniversal. Comcast offers cable TV, internet, home telephone services and produces feature films and television programs.

Comcast is experiencing growth in its internet business as it gains market share from traditional providers such as AT&T as customers place a higher emphasis on performance. Argent also sees opportunity given Comcast’s attractive valuation and its ability to increase profit margins. Recently, the company has been pressured from COVID-19. Longer term, with the positive changes of higher subscriber rates, increasing profit margins and an attractive valuation, we believe Comcast fits our Change-BasedSM  investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet, Inc. (Google) 8.2%
Apple, Inc. 6.7%
Mastercard Incorporated 5.7%
Danaher Corporation 5.4%
Target Corporation 5.1%

Small Cap Core

Medpace Holdings, Inc. 3.8%
Fortinet, Inc. 3.2%
UFP Industries, Inc. 2.9%
PRA Group, Inc. 2.8%
Lumentum Holdings, Inc. 2.8%

Dividend Select

Microsoft Corporation 6.5%
Target Corporation 5.9%
JPMorgan Chase & Co. 4.8
Marvell Technology Group 3.8%
Eaton Corporation Plc 3.7%

Mid Cap 

NVIDIA Corporation 5.1%
Cintas Corporation 4.4%
Ciena Corporation 4.0%
CDW Corporation 3.6%
Marvell Technology Group 3.5%


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.