Weekly Investor – November 2, 2020
Election Takes Center Stage
The S&P 500® Index posted its worst week since March of this year. COVID-19 cases hit new highs across the U.S. and Europe. In addition, earnings reports from mega-cap technology companies underwhelmed high expectations. The five largest technology firms, which account for over 20% of the S&P 500’s total weight, reported mostly disappointing results. Apple, Inc. missed on iPhone sales and further disappointed investors by not providing an outlook for next quarter. Amazon.com, Inc. beat estimates, but its guidance on profit margins disappointed the market on higher COVID-19 related expenses. Although revenue increased by 12%, shares of Microsoft Corporation fell over 7% on cautious guidance. By contrast, Alphabet, Inc., or Google, posted better-than-expected results on strength from YouTube and a resurgence in digital advertising. That digital strength carried over to Facebook, Inc. and Pinterest, Inc. Past the halfway point for S&P 500 quarterly results, over 85% of firms have beat expectations on earnings, a better-than-average trend.
In economic news, Gross Domestic Product (GDP) grew at a 33.1% annualized rate for the third quarter, led by a recovery in consumer spending. Looking to this week, tomorrow’s election will take center stage, with the outcome likely to drive policy changes across many industries.
The S&P 500 Index was down 5.6% for the week. Its top-performing sectors were Utilities (-3.7%) and Communication Services (-3.9%), while the bottom-performing sectors were Technology (-6.5%) and Industrials (-6.5%). In the fixed-income market, the 10-year Treasury yield was up, ending at 0.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Monster Beverage Corporation is a beverage company that manufactures energy drinks including Monster Energy, Relentless and Burn.
In addition to a stable and attractive growth business in the United States, Monster is benefitting from successful expansion into international markets that remains in its early stages. A key to Monster’s success over the years has been the company’s ability to develop new products and enter new markets. Argent expects international expansion and the company’s product pipeline to drive growth, making Monster Beverage a fit for Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc.(Google) | 6.8% |
| Apple, Inc. | 6.7% |
| Danaher Corporation | 6.1% |
| Target Corporation | 5.9% |
| Mastercard Incorporated | 5.1% |
Small Cap Core
| Medpace Holdings, Inc. | 3.9% |
| OneMain Holdings, Inc. | 3.2% |
| Addus Homecare Corp. | 3.0% |
| Upland Software, Inc. | 2.9% |
| Fortinet, Inc. | 2.9% |
Dividend Select
| Target Corporation | 6.8% |
| Microsoft Corporation | 6.1% |
| JPMorgan Chase & Co. | 4.7% |
| Eaton Corporation Plc | 3.9% |
| Life Storage, Inc. | 3.9% |
Mid Cap
| NVIDIA Corporation | 5.6% |
| Cintas Corporation | 4.4% |
| CDW Corporation | 3.8% |
| Marvell Technology Group | 3.6% |
| Zebra Technologies Corp. | 3.3% |
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.
