Argus is an interesting firm that generates research ideas. Unlike the traditional bulge bracket Wall Street brokerage giants, and unlike boutique investment banking shops, Argus is truly independent in its research. The firm just does not have the traditional conflicts of interest. And it has made some significant changes to its model portfolios for growth investors and dividend investors alike for its September allocations.
In the Growth & Income portfolio, Argus wants to buy 250 shares of Mattel Inc. (MAT), for a 4.6% portfolio position. It also wants to sell its entire position in United Technologies Corp. (UTX). United Tech is up 35% since being included in the list for the model portfolio. The team said on Mattel:
Mattel is a strong cash generator characterized by high margins, minimal capital requirements and short-cycle product lead times. Over the last few years, management has proven to be a superior allocator of capital, with a healthy emphasis on reinvesting earnings and returning capital to shareholders through dividends and buybacks.
For Mid-Cap Growth, Argus wants to buy 150 shares of Eaton Corp. PLC (ETN), for a 2.6% theoretical position. It wants to sell its entire position in Goodyear Tire & Rubber Co. (GT). Unloading Goodyear comes after 69% appreciation since being included in the model portfolio. Eaton is considered somewhat recession-resistant and the firm said:
Eaton’s acquisitive nature has turned the company into a growth story, posting 38% annual sales growth in 2Q13 that was primarily driven by the Cooper acquisition. Although ETN’s EPS growth may moderate across the back half of 2013 as this major asset is integrated, we look for very strong 24% EPS growth in 2014.
In Equity Income, Argus says it wants to buy 120 shares of Clorox Co. (CLX), for a 3.5% theoretical position, and to sell 471 shares (100% of its position) of KKR & Co. L.P. (KKR). Argus likes the 3.3% dividend yield of Clorox.