Weekly Investor – August 3, 2020
Strong Quarterly Earnings
Last week, the S&P 500® Index increased 1.7% as mega-cap technology stocks led the way with a slew of strong quarterly earnings announcements. Apple, Inc. beat consensus revenue estimates by over $7.4B coming in at $59.7B. The beat drove Apple’s stock price up 14.7% in the week. Amazon.com, Inc. also beat consensus revenue estimates and the stock rallied 5.1% last week. Facebook, Inc. was up 9.9% last week after total revenue, ad revenue, earnings and monthly active users all beat Wall Street estimates. Alphabet, Inc., the parent company of Google, was down nearly 2.0% last week after announcing revenue and earnings that were in line with expectations. YouTube, search, cloud and advertising all met analyst expectations but didn’t beat them by enough for the stock to rally like other mega-cap technology names. This was all during a week where the CEO of each of these companies testified in front of the U.S. Congress about potential anti-trust issues with their varying businesses.
Looking ahead to the remainder of this week, Bloomberg expects 133 companies in the S&P 500 to announce quarterly results. As earnings season continues, equity markets look to learn more about how COVID-19 shutdowns are impacting U.S. companies.
The S&P 500 Index was up 1.7% for the week. Its top-performing sectors were Technology (5.0%) and Real Estate (4.1%), while the bottom-performing sectors were Basic Materials (-1.8%) and Energy (-4.2%). 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
Centene Corporation is a major health insurance company, based in St. Louis, Missouri. Centene’s main lines of business are government health care plans including Medicare, Medicaid, The Health Insurance Marketplace System and Tricare.
Centene continues to have a strong growth outlook as a leading managed care company. Centene recently acquired Wellcare, another managed care company. The acquisition of Wellcare strengthened and expanded Centene’s positions in both Medicaid and Medicare. Additionally, worries over the uncertainty of health care reform have resulted in a compelling valuation for Centene. The attractive valuation of Centene against the backdrop of strong industry fundamentals makes Centene a good fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc. (Google) | 8.4% |
| Apple, Inc. | 6.6% |
| Danaher Corporation | 5.5% |
| Mastercard Incorporated | 5.5% |
| Target Corporation | 5.0% |
Small Cap Core
| Medpace Holdings, Inc. | 3.8% |
| Fortinet, Inc. | 3.6% |
| PetIQ, Inc. | 3.1% |
| Lumentum Holdings, Inc. | 3.0% |
| UFP Industries, Inc. | 2.9% |
Dividend Select
| Microsoft Corporation | 6.4% |
| Target Corporation | 5.8% |
| JPMorgan Chase & Co. | 4.8 |
| Marvell Technology Group | 4.0% |
| Comcast Corporation | 3.7% |
Mid Cap
| NVIDIA Corporation | 5.0% |
| Cintas Corporation | 4.4% |
| Ciena Corporation | 4.0% |
| CDW 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.
