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 Director of Research Kelleher 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 Anthem Inc (ANTM); Activision Blizzard Inc (ATVI); Coca-Cola Co (KO); International Business Machine (IBM) and the Focus List deletions are Procter & Gamble Co. (PG); Electronic Arts, Inc. (EA); CIENA Corp. (CIEN); Vertex Pharmaceuticals, Inc. (VRTX).

The U.S. economy lost 140,000 jobs in December -- reversing a positive pattern of employment recovery that had been in place since May. Job losses in the leisure and hospitality sectors reflected the recent increase in coronavirus cases in the U.S. and the efforts of states to contain the pandemic. The unemployment rate was steady at 6.7%. Notable job losses occurred over the month in leisure, education and government. The number of jobs increased in the temporary help and courier segments. In December, 23.7% of employed persons teleworked because of the coronavirus pandemic, up from 21.8% in November. The number of unemployed persons, at 10.7 million, was up 5 million from the February level. On Thursday, the Labor Department reported that another 787,000 people filed initial unemployment claims, and the total of continuous claims was 5.2 million, down from 6.2 million a month ago. These data points indicate that the employment environment, while improving, is still under stress. We expect the unemployment rate will remain high (and the Federal Reserve will keep interest rates low) into 2021 as the U.S. economy slowly recovers.

ARGUS ANALYSTS' TOP PICKS FOR 2021

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks were mixed on Tuesday morning as investors awaited results from the Georgia Senate runoff elections, which could give Democrats control of the chamber. On the economic front, the Institute for Supply Management said that its U.S. manufacturing index rose to 60.7 in December, up from 57.5 in November and above the Reuters consensus forecast of 56.6. The Dow fell 0.3%, the S&P fell 0.1%, and the Nasdaq rose 0.3%. Crude oil traded near $50 per barrel, while gold rose $1 to $1948 per ounce.

Growth stocks may be outperforming value, again, in 2020. But in an environment of historically low interest rates (and with the coronavirus and economic shutdown seemingly poised to keep them low for a long time), many investors are still searching for high levels of income, which can often be found in value stocks. Progress on COVID-19 vaccines has given a lift to some of the cyclical companies (energy companies and regional banks) that have lagged in recent quarters, and value stocks have kept up the pace with growth stocks in the past quarter. The current yield on the iShares Russell 1000 Value Index ETF is 2.5%, compared to the 1.0% current yield on the iShares Russell 1000 Growth Index ETF. This is not unimportant, as the current yield on the 10-year Treasury bond is 0.95%.

Everyone is justifiably talking about the latest wave of the coronavirus. As such, little attention is being paid to U.S. debt levels that have quietly and quickly grown over the past 10 years. Total U.S. debt is now more than 120% of GDP -- the highest level since World War II. In the 1980s, the debt/GDP ratio was solidly in the 40% range, and moved up toward the 60% level by 2000. The debt level soared around 2010, as the government spent aggressively to brake the recession and rekindle growth (which is what the government is supposed to do). However, despite more than 10 years of economic growth prior to the pandemic, the debt level has only grown as a percentage of GDP. Now, in light of the fiscal spending in 2020, debt levels have surged further. This is not a problem that has to be fixed today. After all, interest rates are low and policies to change the trajectory (less spending, more taxes) could push the economy deeper into recession. But politicians should start to establish a plan to address the issue in the next 10-15 years. If the problem is not solved, the situation could result in hyper-inflation or an inability for the government to address long-term problems such as rebuilding the infrastructure or climate change.

The onset of the coronavirus earlier this year knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is still in recession and COVID-19 cases are spiking as the weather turns colder and people head indoors. Volatility, which was low in early 2020 after a robust year for equities in 2019, has spiked higher, and has remained elevated. Is it time to cash in the chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes such as fixed income and cash. As well, those returns are from eras when the 10-year Treasury bond yield was not sub-1.0%. So what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods. Stocks included in our Min Vol model portfolio and typically industry leaders and have received a high score from our A6 Quant Model on Financial Strength and a low score on Risk. Stocks in the portfolio include the following.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

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 Director of Research Kelleher typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

Core prices are starting to increase a bit, though we don't think the U.S. Federal Reserve is too worried. Currently, the central bank is backstopping mortgage markets, money-market mutual funds, small businesses, mid-sized businesses, corporate debt, and some state and local governments. The total bill? The central bank is likely to (more than) double the $4.1 trillion in assets that were on its balance sheet at year-end 2019 (the current total is $7.1 trillion). Meanwhile, most inflation measures remain below the Fed's target of 2.0%, though on average they are up month-over-month. We track 14 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 1.04% rate, ahead of last month's reading, which was 0.95%. Looking at core inflation (which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy and the 10-year TIPs Break-even Interest Rate), our reading is 1.6%, lower month-to-month. With this inflation backdrop, we expect the Fed will focus on other issues and keep short-term rates close to zero until at least 2022.

Coty is a global beauty company that sells fragrances (56% of fiscal 2020 revenue), color cosmetics (31%), and skin/body care (13%). The firm licenses brands such as Calvin Klein, Hugo Boss, Gucci, and Davidoff for its fragrance portfolio. Coty’s most popular color cosmetic brands are CoverGirl, Max Factor, Rimmel, Sally Hansen, and Kylie. Francois Coty founded the firm in 1904 and it remained private until its 2013 IPO. It had focused on prestige fragrances and nail salon brands until the 2016 acquisition of Procter & Gamble's beauty care business. This nearly doubled the firm's revenue base, and launched it into mass channel cosmetics and professional hair care.

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 Clorox Co. (CLX); Zoetis Inc (ZTS); Square Inc (SQ); Williams-Sonoma, Inc. (WSM) and the Focus List deletions are CBOE Global Markets Inc. (CBOE); D.R. Horton Inc. (DHI); Incyte Corp. (INCY); Pepsico Inc. (PEP).

As earnings season moves towards completion, the volume of insider transactions is returning to normal, lending increased significance to the proprietary sentiment indicators from Vickers Stock Research. For three consecutive weeks during the heart of earnings, insiders turned bearish in a manner that exceeded the norm for that time on the calendar. During the bearish turn, the DJIA moved from 28,586 (close on 10/12/20) down to 26,501 (close on 11/2/20). Insiders then became bullish -- and one week later, the DJIA was back up to 28,323 (close on 11/6/20). So what gives this week?