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News & Our Thinking

Weekly Investor

Weekly Investor – August 24, 2020

25 August 2020

S&P Sets All-Time High

The market rose a little under 1.0% last week, delivering its fourth straight week of gains. The S&P 500® Index  pushed past its high set in February, setting an all-time high Friday. On a year-to-date basis, the index is up 6.5%.

The Information Technology sector led the market higher last week with big names like Adobe Inc., Apple, Inc., NVIDIA Corporation, and salesforce.com, Inc. Apple made headlines as it became the first U,S, company to cross over $2 trillion in market capitalization, only two years after becoming the first company to reach the $1 trillion market capitalization level in early August 2018. The company’s stellar performance last week contributed to the record high for the S&P 500 Index. A select group of Consumer Discretionary stocks performed well last week. Target Corporation and L Brands, Inc. rose 13.1% and 12.9% respectively. Both retailers reported better-than-expected second quarter results on Wednesday. On the other hand, Kohl’s Corporation was the worst-performing stock in the S&P 500, falling -19.2%. Last Tuesday, the company reported a sales decline of 23.0% versus a year ago. Earnings announcements expected this week include Autodesk, Inc., Best Buy Co., Inc., Dollar General Corporation, Dollar Tree, Inc., Hormel Foods Corporation, HP, Inc., Intuit Inc., salesforce.com, Inc., Ulta Beauty, Inc., and many others.

The S&P 500 Index was up 0.7% for the week. Its top-performing sectors were Technology (3.5%) and Consumer Discretionary (2.4%), while the bottom-performing sectors were Financials (-3.4%) and Energy (-6.1%). 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

D.R. Horton, Inc. is a home builder headquartered in Arlington, Texas. The company is one of the largest home builders in the United States. The company operates three separately branded divisions: Express Homes for entry-level buyers, Emerald Homes for the luxury buyer and Freedom Homes which cater to an adult community aged 55 and over.

D.R. Horton has made a change to its strategy by reducing the amount of inventory in land it owns, which should help improve the company’s cash flow. Additionally, D.R. Horton focuses on entry-level homes, which is currently the highest demand segment of new home construction. D.R. Horton also trades at an attractive valuation. The company’s strategy change, along with positive industry demand creates upside potential for our clients.

 

Top 5 Equity Holdings


Large Cap Growth

Apple, Inc. 7.4%
Alphabet, Inc. (Google) 6.5%
Target Corporation 5.8%
Mastercard Incorporated 5.8%
Danaher Corporation 5.4%

Small Cap Core

Medpace Holdings, Inc. 3.8%
Fortinet, Inc. 3.3%
UFP Industries, Inc. 3.0%
PRA Group, Inc. 2.9%
Gibraltar Industries, Inc. 2.9%

Dividend Select

Target Corporation 6.9%
Microsoft Corporation 6.5%
JPMorgan Chase & Co. 4.7
Eaton Corporation Plc 3.8%
Comcast Corporation 3.6%

Mid Cap 

NVIDIA Corporation 5.7%
Cintas Corporation 4.5%
Ciena Corporation 3.9%
NVR, Inc. 3.6%
Helen of Troy Limited 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.