Weekly Investor – December 14, 2020
Stimulus Gridlock Pressures Market
The S&P 500® Index posted its worst weekly return since late October as stimulus gridlock in Washington pressured the market. In addition, investors continued to weigh rising COVID-19 cases in the near term with two vaccines on the horizon. The Pfizer vaccine could start being distributed as early as today under emergency use, according to Health and Human Services Secretary Alex Azar.
Economic data has weakened recently, coinciding with further mobility restrictions in many states, as November’s payroll disappointed and unemployment claims rose. In stock news, shares of Facebook, Inc. fell after the Federal Trade Commission and 46 states sued the social media giant for anti-competitive practices. The antitrust case aims to force Facebook to divest itself of WhatsApp and Instagram. FireEye, Inc. fell sharply after the cybersecurity firm disclosed it was the victim of a cybersecurity attack. Toll Brothers, Inc., the luxury home builder, fell as the company beat quarterly expectations but guided below street consensus for next quarter on lower-than-expected closings. Looking ahead, traders will be focused on the path of COVID-19, how fast the vaccine gets distributed, the likelihood of further stimulus and the Georgia Senate runoffs.
The S&P 500 Index was down 1.0% for the week. Its top-performing sectors were Energy (1.1%) and Communication Services (0.1%), while the bottom-performing sectors were Financials (-1.8%) and Real Estate (-2.9%). In the fixed-income market, the 10-year Treasury yield was down, ending at 0.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Trimble, Inc. was founded in 1978 and is based in Sunnyvale, California. The company is best known for its Global Positioning System (GPS) technology. The company also develops Global Navigation Satellite Systems receivers, laser rangefinders, unmanned aerial vehicles and software processing tools. Trimble’s products and services are used in land survey, agriculture, construction, transportation, and government.
Trimble has been shifting its business mix away from hardware and toward software and services. Acquisitions have pushed Trimble’s software and services offerings, now representing over 50% of its revenue. The company also has moved to a subscription model, which may allow Trimble to build longer-term, more profitable relationships with customers, as opposed to a one-time purchase. The current environment is creating headwinds for the company’s sales. Two of Trimble’s end markets, energy and transportation, are feeling the effects of the coronavirus. While this will impact Trimble in the near term we believe the company’s positive changes make Trimble a good fit for Argent’s Change -BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc.(Google) | 6.6% |
| Apple, Inc. | 6.6% |
| Target Corporation | 5.9% |
| Danaher Corporation | 5.3% |
| Mastercard Incorporated | 5.1% |
Small Cap Core
| Medpace Holdings, Inc. | 4.2% |
| OneMain Holdings, Inc. | 3.6% |
| Fortinet, Inc. | 3.1% |
| PetIQ, Inc. | 3.0% |
| Envestnet, Inc. | 2.9% |
Dividend Select
| Target Corporation | 6.7% |
| Microsoft Corporation | 5.7% |
| JPMorgan Chase & Co. | 5.1% |
| Eaton Corporation Plc | 3.8% |
| Comcast Corporation | 3.7% |
Mid Cap
| NVIDIA Corporation | 5.1% |
| Cintas Corporation | 4.3% |
| Zebra Technologies Corp. | 3.9% |
| Marvell Technology Group | 3.6% |
| Nuanace Communications | 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.
