Chewy is an e-commerce retailer of pet food and pet supplies, as well as of pet medication and insurance. It provides products for dogs, cats, fish, birds, small pets, horses, and reptiles. Established under the name 'Mr. Chewy' in 2011, the company was purchased by PetSmart in 2017 but continued to operate as an independent business. It went public in 2019. PetSmart distributed its remaining shares of Chewy about two years later. Based in Plantation, Florida, Chewy has approximately 18,000 employees. It currently operates only in the U.S.

U.S. stocks were mixed on Friday morning following Israel's limited retaliatory strike against Iran. American Express (AXP) topped 1Q estimates and rose 4%. Meanwhile, Netflix (NFLX) shares are down sharply, despite the company easily beating expectations in the latest quarter and providing strong guidance. In a significant deviation from past practices, the company has decided to stop reporting subscriber numbers or average revenue per member, which is causing concerns among investors that the absence of these key metrics could point to stagnating growth. The Dow was up 0.4%, the S&P 500 fell 0.4% and the Nasdaq lost 1.1%. Crude oil is trading above $83 per barrel and gold rose $12 to $2410 per ounce.

The first quarter of 2024 was rewarding for equity investors, as the S&P 500 increased 10.2%. Much of the market participated, as the S&P 500 Growth Index advanced 12.6% and the S&P 500 Value Index rose 7.4%. Leading sectors included Communication Services (+15.6%), Energy (+12.7%), Technology (+12.5%), Financials (+12%), and Industrials (+10.6%). The average stock in the Argus Universe of Coverage rose 8.0% during the year, and the median stock advanced 7.2%. The average BUY-rated stock increased 9.9%, while the average HOLD-rated stock gained 3%. Will the market's breadth hold up for the balance of 2024 or will investors revert to the so-called Magnificent 7? Will small-caps pick up their pace (the Russell 2000 was up "only" 4.8% in 1Q) or is the current bull-market rally due for a break, with some profit-taking coming into play? Given declining interest rates, we expect growth stocks to continue to lead stocks higher, while the risk of recession puts a premium on clean balance sheets, which are also more prevalent among large-caps. Investors seeking value are encouraged to focus on dividends and look for yields in the 3%-4% range. Here are the Top 10 Performers from the Argus Universe last quarter (including representatives of six of the 11 major sectors) as well as the Bottom-Five Performers.

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues with China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps, with the P/E ratio on the Russell 2000 Small-Cap Index of 13 compared to a trailing P/E of 25 for the S&P 500. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. From 2003-2021, the Russell 2000 Index had climbed 450%, compared to an advance of 330% for the S&P 500 index. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over our 2003-2021 test period, versus 4.3% for large-caps. SMID stocks fell further in negative years during our test period, with an average 15% drop versus a 12% pullback for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks. That's generally the allocation we target for our ETF Model Portfolios.