Weekly Investor – July 12, 2021
Markets Mixed for the Week
Markets were mixed for the holiday-shortened week. Growth stocks led the way over value. President Biden’s executive order to limit the power of many of the largest corporations sent jitters through the market on Thursday, but investors quickly shrugged it off, pushing the S&P 500® Index to an all-time high on Friday. Economic data points were mixed with the ISM Non-Manufacturing Index missing the consensus forecast but remaining a strong 60.1. Corporations are experiencing robust consumer demand; however, inventory issues, labor shortages and rising costs are current headwinds.
In stock news, railroad shares traded lower over speculation that President Biden’s executive order takes aim at perceived anti-competitive pricing in the ocean shipping and railroad industries. Shares of Kansas City Southern fell over 3% for the week. In technology news, the Joint Enterprise Defense Infrastructure (JEDI) Cloud contract, originally awarded to Microsoft Corporation, was shelved for a multi-vendor approach that is likely to make Amazon.com, Inc. the big winner. This week is the unofficial start to second quarter earnings season with banks first to report.
The S&P 500 Index was up 1.7% for the week. Its top-performing sectors were Real Estate (2.6%) and Consumer Discretionary (1.4%), while the bottom-performing sectors were Financials (-0.6%) and Energy (-3.4%). In the fixed-income market, the 10-year Treasury yield was even, ending at 1.4%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Target Corporation is the second-largest general merchandise retailer in the United States, selling products through its physical stores as well as its digital channels. Based in Minneapolis, Minnesota, the company was founded in 1902 as Goodfellow Dry Goods.
Target is in the midst of several changes. It has reset its pricing strategy to close the gap with Walmart, its biggest competitor, and is addressing its ecommerce needs by rolling out same-day delivery across the country. Because of the coronavirus pandemic, Target saw increased grocery sales. Offsetting that were decreased sales in higher profit areas such as apparel. We think Target can recoup some of its lost apparel sales as the country continues to open up post the pandemic. For these reasons, we believe Target fits well with Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet, Inc.(Google) | 7.6% |
| Target Corporation | 6.9% |
| Apple, Inc. | 6.4% |
| Danaher Corporation | 5.3% |
| Mastercard Incorporated | 4.7% |
Small Cap Core
| Fortinet, Inc. | 4.6% |
| OneMain Holdings, Inc. | 4.5% |
| Medpace Holdings, Inc. | 4.5% |
| Select Medical Holdings | 3.2% |
| FirstService Corporation | 2.9% |
Dividend Select
| Target Corporation | 7.9% |
| Microsoft Corporation | 6.0% |
| JPMorgan Chase & Co. | 5.4% |
| Life Storage, Inc. | 4.2% |
| Eaton Corporation Plc | 4.1% |
Mid Cap
| Zebra Technologies Corp. | 4.6% |
| CDW Corporation | 3.9% |
| Cintas Corporation | 3.9% |
| Marvell Technology, Inc. | 3.9% |
| NVR, Inc. | 3.0% |
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.
