Research Reports

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.

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.

The FOMC maintained the target range for the fed funds rate at 5.25 to 5.50%. The FOMC does not expect it will be appropriate to reduce the range until it has gained greater confidence that inflation is moving sustainably toward 2%. The FOMC will continue reducing its holdings of Treasury securities and agency debt and agency MBS, but said that the central bank will begin to slow its balance sheet runoff soon. Recent indicators suggest that the economy has been expanding solidly. Job gains have remained strong and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

We see what we believe are some great opportunities right now in Healthcare -- and we like the sector overall. Argus Director of Research Jim Kelleher, CFA, recently completed his quarterly sector review and raised Healthcare sector to Over-Weight from Market-Weight. The healthcare environment is undergoing rapid transitions, and we now see an unfolding period of significant promise and opportunity. Our newly-favored stance is based on resumption of deferred medical procedures and significant new quality-of-life drugs and treatments. The category is broad and has underperformed the S&P 500 over the past year. The Healthcare sector ETF (XLV) is up 15% over the past year compared to a gain of 31% for the S&P 500. We see opportunity here to pick up some steady companies, with big brands and solid financials. These companies are science-focused and enhance lives. They are innovators. In our list this week, we look across several subsectors within the Healthcare sector and pull out some leaders we like. These stocks also are included in our Focus List and Model Portfolios, as noted below.

U.S. stocks were mixed intraday on Friday as investors digested new economic data. In February, total nonfarm payrolls rose 275,000 according to the latest Bureau of Labor Statistics report. This was higher than the expected 198,000, and higher than last month's 229,000 (revised down from 353,000). While a hotter-than-expected jobs reading initially sparked a sell-off, the rise in unemployment on the next line of the report led stocks to bounce back. The unemployment rate ticked up to 3.9% in February, rising 0.2% from the month prior. In February, total nonfarm payrolls rose 275,000 according to the latest Bureau of Labor Statistics report. This was higher than the expected 198,000, and higher than last month's 229,000 (revised down from 353,000). The unemployment rate ticked up to 3.9% in February, rising 0.2% from the month prior.

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 Capital One Financial Corp. (COF); Dominos Pizza Inc (DPZ); Novo Nordisk (NVO); Shell Plc (SHEL) and the Focus List deletions are Alcon Inc. (ALC); Expedia Group Inc (EXPE); Morgan Stanley (MS); Exxon Mobil Corp. (XOM).

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.

Our stock/bond asset-allocation model, which we call the Stock-Bond Barometer, is indicating that bonds are the asset class offering the most value at the current market juncture. But not by much. Our model takes into account current levels and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks, of 0.16 sigma, with a standard deviation of 0.98. The current valuation level is a 0.18 sigma premium for stocks, which is down sharply from a 0.85 sigma premium at the end of 3Q23. Other valuation measures also show reasonable multiples for stocks. The current forward P/E ratio for the S&P 500 is approximately 19, which is within the normal range of 13-24 and down from 23 in 2021. The current S&P 500 dividend yield of 1.4%, while below the historical average of 2.9%, is up from an ultralow 1.2%, also in 2021. And that current S&P 500 dividend yield is 33% of the 10-year Treasury yield, compared to the long-run average of 39% and the all-time low of 18% in 1999. Looking ahead, we expect the results from our stock/bond valuation model to favor stocks, as interest rates head lower in 2024 and EPS growth picks up. Based in part on the output from our Stock-Bond Barometer, our current recommended asset allocation model for moderate accounts is 73% growth assets, including 68% equities and 2% alternatives; and 27% fixed income, with a focus on Core and Opportunistic segments of the bond market.

Make it 16 out of 18 weeks to the upside, as the S&P 500 (SPX), Nasdaq, and Nasdaq 100 (QQQ) continued to witness relentless buying in the week ended March 1. Stocks were flat until the final two days of that week, when inflation worries were squashed by the January PCE report. It wasn't just stocks that reacted, as metals, oil, and bonds all popped on March 1. Bitcoin surged 21%.

The stock market has been on hold this week, as investors await the Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures Price Index (PCE). The report tends to show inflation trends that are less affected by short-term price changes. Stocks threw a bit of a tantrum when the January CPI and PPI were released a few weeks ago, but the market has since shaken off these single data points. There are at least four Fed governor/president speeches as well today -- and more on Friday.

Confounding the Experts