Singular Research Director's Letter: August Performance 2019
Singular Research’s August 2019 Director’s Letter
The equity markets consolidated while economic data shows a potential slowdown, raising hopes for rate cuts as trade war threats continue. The August Purchasing Managers Index (PMI)registered 49.1 percent, a decrease of 2.1 percentage points from the July reading of 51.2 percent. The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.5 percent in July to 112.2 (2016 = 100), following a 0.1 percent decline in June, and a 0.1 percent decline in May. Global economies weakened further as U.S. bond markets became the investment of choice, causing the yield curve to invert slightly once again.
The Singular coverage list slightly underperformed the S&P 500 while outperforming the Russell 2000 by 260 basis points in August. Our top performers were largely driven by better than expected earnings and guidance. The same factors drove underperformance as earnings season ended in August.
Roku, RUBI, and LUNA all performed well as they had double digit revenue growth and beat expectations and raised guidance. The Alamo Group continues to show resilience in these turbulent times with double digit revenue growth and a growing backlog.
GSKY management noted that they are seeking strategic alternatives; QNST continues to battle back from the loss of their largest Education client; HSC remains under pressure as management is selling their Industrial segment to start a new Clean Earth business.
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Robert Maltbie, CFA
Singular Research, President
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