News & Our Thinking

Weekly Investor

Weekly Investor – March 29, 2021

29 March 2021

S&P Up for the Week

The S&P 500® Index rose 1.6% last week. Crude oil closed at $60.97 per barrel on Friday, declining 0.7% for the week. Oil prices have increased over 25% in 2021, driving the energy sector up 34.8% this year, making it the best sector in the market.

The best performing stock in the S&P 500 Index was Kansas City Southern, a rail freight transportation company, which gained 13.1%. The stock opened higher on Monday on news that Canadian Pacific Railway Limited would be acquiring the company. Semiconductor equipment stocks Applied Materials, Inc., KLA Corporation, and Lam Research Corporation also had a good week, returning 12.0%, 9.2%, and 7.7% respectively. The group got a boost after Intel Corporation announced it plans to build two semiconductor foundries in the U.S. and further increase its capital spending. Media stocks ViacomCBS Inc. and Discovery, Inc. were the two worst performing stocks last week in the S&P 500 Index, falling 50.5% and 45.5% respectively. The stocks dropped as more analysts downgraded them for being overvalued. In addition, it was rumored that large block trades were placed Friday as Archegos Capital Management, a multi-billion dollar hedge fund, was being liquidated, roiling the market.

The S&P 500 Index was up 1.6% for the week. Its top-performing sectors were Real Estate (4.2%) and Consumer Staples (3.9%), while the bottom-performing sectors were Consumer Discretionary (-0.2%) and Communication Services (-1.9%). In the fixed-income market, the 10-year Treasury yield was even, ending at 1.7%.

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 are 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

Alphabet, Inc.(Google) 6.6%
Target Corporation 6.1%
Apple, Inc. 5.8%
Mastercard Incorporated 5.0%
D.R. Horton, Inc. 4.9%

Small Cap Core

Medpace Holdings, Inc. 4.2%
OneMain Holdings, Inc. 4.2%
Fortinet, Inc. 3.7%
America’s Car-Mart, Inc. 3.1%
UFP Industries, Inc. 3.0%

Dividend Select

Target Corporation 7.0%
JPMorgan Chase & Co. 5.8%
Microsoft Corporation 5.6%
Eaton Corporation Plc 4.1%
Truist Financial Corp. 4.0%

Mid Cap 

Zebra Technologies Corp. 4.3%
CDW Corporation 4.0%
Cintas Corporation 3.7%
Marvell Technology Group 3.4%
Builders FirstSource, Inc. 3.4%

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.