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.

Consumer confidence fell off the table in April 2020 after the U.S. shut down to combat COVID-19, and then bounced up and down as second and third waves of the virus swept the country. As the percentage of vaccinated Americans continues to increase, the Conference Board recently reported that its Consumer Confidence Index for May held steady month-to-month at 117.2. That's down only slightly from the 130 reading in February 2020. What's next for the consumer? It is worth looking back at the experience during the financial crisis, in 2007-2009. Back in 2007, confidence peaked at 112 in November, before falling sharply and consistently over the next year to a low of 25 in February 2009 as the bear market was bottoming. The index did not reclaim prior highs for another eight years. This time around, the recovery has been much quicker, though the durability of the consumer turnaround will depend on continued improvements in health, the effectiveness of government stimulus programs, and any consumer behavioral changes post-pandemic. From an investment standpoint, we have found that the bottom of the consumer confidence cycle -- when everybody has given up -- is generally a good time to buy. In other words, consumer confidence is often contrarian.

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 Vontier Corp (VNT); Discover Financial Services (DFS); U.S. Bancorp. (USB); LyondellBasell Industries NV (LYB) and the Focus List deletions are Linde Plc (LIN); ServiceNow Inc (NOW); Old Dominion Freight Line, Inc (ODFL); Square Inc (SQ).

Our rating on the Financial Services sector is Over-Weight. With market optimism rising on positive vaccine developments and the new administration in Washington, interest rates have started to move higher at the long end of the yield curve. We expect banks to benefit from wider net-interest margins and lower loan-loss provisions as the economy normalizes, and insurance companies to generate higher income in their investment portfolios. The sector now accounts for 11.4% of the S&P 500. Over the past five years, the weighting has ranged from 10% to 17%. We think the sector should account for 12%-15% of diversified portfolios. Here is how we use our analysts' Financial Services sector ideas in our Focus List and Model portfolios. All of the following stocks are rated BUY at Argus.

Often overlooked amid gyrations in the stock market is dividend income, which is an important element of total return. Between 1930 and 2012, dividend income accounted for 42% of total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

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 kept the momentum going in April, and are now up almost 12%, including dividends, in the year-to-date. Our analysts have been progressing through earnings season, and have come across many stocks in coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, future dividends, and cash flows. After adjusting the models for the latest earnings and dividend information -- most of which has been good -- here are some of the stocks on which we have raised target prices over the past month. All stocks are rated BUY at Argus.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks rose modestly on Thursday morning, but gave up strong early gains amid a range of first-quarter earnings reports and new GDP and employment data. Investors also weighed President Biden's ambitious plans for new spending on families and education. The Commerce Department said that the U.S. economy expanded at a 6.4% annualized rate in the first quarter, above the Reuters consensus forecast of 6.1% and up from 4.3% growth in the fourth quarter. The Dow rose 0.1%, the S&P 0.3%, and the Nasdaq 0.1%. Crude oil rose 1.5% to $65 per barrel, while gold traded near $1768 per ounce.

First-Quarter Review and Full-Year 2021 Outlook

Sustainable Impact Investing is gaining traction with the global investment community. In January 2020, BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. But the performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as the climate, hunger, poverty, disease, shelter, and workers' rights.

Innovation may be hard to define, but to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago -- textiles, televisions, even automobiles, to a large degree -- have moved overseas, where costs are lower. Yet the U.S. economy is at its largest point in history and still growing. If U.S. corporations weren't innovating, creating new products and services, and moving into new markets and applications, the domestic economy would be contracting, not expanding, and capital would not be flooding into the country. Particularly at this juncture of the market and economic cycles, we look to innovative companies to navigate the challenges. At Argus, an 85-year-old independent research firm that has innovated a time or two in its long history, we have focused on four types of innovative companies: Industry Disruptors; First to Market; New Product Specialists; and Product & Process Perfectors. The following innovative and BUY-rated companies recently were added to our Growth model portfolio, as well as our new Innovative Growth Separately Managed Account, and our Modern Innovators UIT. The full list of stocks also is in our Innovation theme model portfolio.

Stocks rose on Friday morning amid strong manufacturing and housing market data. The rally followed a Thursday afternoon selloff prompted by the Biden administration's plan for increased capital gains taxes on high earners with incomes above $1 million. IHS Markit said that its manufacturing purchasing managers' index rose to 60.6 in the first half of April, up from a final reading of 59.1 in March and slightly above the consensus forecast. On the housing front, the Commerce Department said that U.S. new home sales rose 20.7% to an annualized 1.021 million units in March, above the consensus of 886,000. The Dow rose 0.5%, the S&P 0.9%, and the Nasdaq 1.3%. Crude oil traded near $62 per barrel, while gold fell $6 to $1776 per ounce.

Stocks fell on Thursday afternoon after Bloomberg reported that President Biden would propose raising the capital gains tax rate for people earning at least $1 million. Prior to the tax news, stocks were mixed as investors weighed new 1Q earnings reports, a decline in existing home sales, and weekly employment data. First-time jobless claims fell to 547,000, a new post-pandemic low and below the consensus forecast of 610,000. Continuing claims fell to 3.674 million, down from 3.708 million a week earlier but slightly above the consensus forecast. The Dow fell 0.94%, the S&P 0.92%, and the Nasdaq 0.94%. Crude oil traded near $62 per barrel, while gold fell $9 to $1784 per ounce.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks fell for a second day on Tuesday morning, led by sharp declines in the Financial and Energy sectors. IBM shares rose more than 4% following stronger-than-expected first-quarter sales and earnings, helped by strength in the company's cloud computing business. On the negative side, Abbott Laboratories fell sharply after reporting slightly lower than expected sales, including a sequential decline in revenue from coronavirus test kits. The Dow fell 0.9%, the S&P 0.9%, and the Nasdaq 1.1%. Crude oil traded near $62 per barrel, while gold rose $9 to $1780 per ounce.

The stock market moved higher last week as earnings season got underway and volatility continued its downward trend. Tech stocks performed roughly in line with blue chips. During Friday's session, the Dow Jones Industrial Average increased 165 points, or 0.48%. The S&P 500 was up 0.36%, and the Nasdaq Composite was up 0.10%. For the week, the DJIA was up 400 points, or 1.18%, the S&P 500 was up 1.37%, and the Nasdaq Composite was up 1.09%. Year-to-date, the DJIA is up 11.74%, the S&P 500 is up 11.43%, and the Nasdaq Composite is up 9.03%.

Stocks were mostly higher on Friday morning following more bank earnings reports and new housing market data. Morgan Stanley posted strong 1Q earnings that topped consensus expectations, despite a nearly $1 billion loss from the collapse of Archegos Capital. Bank of New York Mellon also reported above-consensus results, though both EPS and revenue declined from the prior year. On the housing front, the Commerce Department said that U.S. housing starts jumped 19.4% to a seasonally adjusted annual rate of 1.739 million units in March, above the Reuters consensus forecast of 1.613 million. In China, the National Statistics Bureau reported first-quarter GDP growth of 18.3% from a depressed 1Q20; however, on a quarter-over-quarter basis, growth slowed to 0.6% from 3.2% in 4Q20. The Dow rose 0.4%, the S&P rose 0.2%, and the Nasdaq was flat. Crude oil traded near $63 per barrel, while gold rose $11 to $1778 per ounce.

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.