Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Laboratory Corp. Of America Hl (LH); Micron Technology Inc. (MU); Oracle Corp. (ORCL); Invesco Ltd (IVZ) and the Focus List deletions are Advanced Micro Devices Inc. (AMD); American Express Co. (AXP); Crowdstrike Holdings Inc (CRWD); Unitedhealth Group Inc (UNH).

In a new performance twist, the top growth-focused sectors are barely beating the market through 1Q24 rather than trouncing it as they did a year earlier. For 1Q24, the best sector performance in the S&P 500 came from Communication Services, up 12%; this sector was also a top performer in 1Q23. But the best performer in 1Q23, Technology, was in fourth place in 1Q24. Tied for second place in 1Q24 were Financial Services and Energy, both up 12%. Technology appreciated 10% in the quarter, which put it just behind the market's 10.2% capital-appreciation gain. Industrial was just behind Technology and the market with a 9.9% gain in 1Q24. Next up was Healthcare, logging 8% appreciation as the medical profession and healthcare industry continue their prolonged transition out of the post-pandemic phase. Three sectors - Consumer Staples, Materials, and Utilities - delivered 5%-7% capital appreciation in 1Q24. Utilities is a favored sector in a declining rate environment, and investors appear to be buying ahead of the anticipated shift to accommodative Fed policy from the current restrictive stance. Consumer Discretionary, one of the better performers in 2023, was eleventh among 11 sectors in 1Q24. The Wall Street narrative is that inflation is in retreat, the economy is strong, and people are employed. But the average consumer is weary and wallet-constrained after two years of inflation. High interest rates are a further impediment to big consumer-durable purchases such as homes and cars, particularly for the middle class and below. This disconnect between the top of the economy and the middle and bottom is likely to feature in the November elections.

Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% 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.