When management at a company raises guidance, it can be a catalyst for market-beating returns in the quarters ahead. The second-quarter earnings season is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a year-over-year gain of 12%, according to Refinitiv. That is considerably better than what was expected at the start of the earnings period. Leading the outperformance are strong gains in Financial, with earnings up 20%. On the flipside, Materials is performing the worst, down 6%. Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Here is a partial list of BUY-rated companies in Argus' Fundamental Universe of Coverage at which management raised guidance or increased its outlook during the 2Q24 EPS reporting season. We like this theme, as it crosses numerous industries and generates a robust list of potential portfolio candidates.

U.S. stocks closed higher following new labor market data that gave investors confidence in the economy. The S&P 500 gained 2.3%, its best day since 2022. The Dow advanced 1.76% and the Nasdaq was up 2.87%. Crude oil traded above $76 per barrel and gold rose $35 dollars to $2,467 per ounce.

At midday Wednesday, the major benchmarks are not making any big moves as investors appear to consider the next move for the artificial intelligence market leaders. Also Wall Street is waiting to see what happens with several big news events coming up in the next few days. The first U.S. Presidential debate is tomorrow and highly-anticipated inflation data, the Personal Consumption Expenditures Price Index, is due Friday morning.

Inflation Taps the Market on the Shoulder

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.

Monday Tee Up: Walmart and CPI

Regarding insider sentiment, our premise for the past two weeks has been that insiders have parked themselves on the sidelines and are awaiting a meaningful catalyst before they make any decisions about buying or selling shares. And indeed, the data from Vickers Stock Research this week continues to reflect corporate executives, directors, and beneficial owners who are simply not engaged at the moment -- and the weekly barometers from Vickers could not be more neutral.

Despite a strong equity market for most of 2023 (especially since the March low), we have seen numerous days when the major indices all fell at least 1%, -- with most of those prior to April. The S&P 500 (SPX), the Nasdaq, and the Nasdaq 100 (QQQ) all gave back about 1.1% on Tuesday, while the S&P MidCap 400 (MDY) and the Russell 2000 (RUT) fell 1.3%. Overall, that was not close to being a terrible day. But we did see some abysmal results in market breadth statistics.

Monday Tee Up: Earnings and an Eye on Next Week

Monday Tee Up: Short Week Features the Jobs Report

For our list this week, we are focusing on the Healthcare Sector, which we rank as one of our favorites with an Over-Weight rating. Healthcare was an outperformer in 2022, falling only 4% while the S&P 500 dropped 19%, but has lagged in the early weeks of 2023. We think the recent relative weakness may offer a buying opportunity. Post-COVID, consumers are more willing to spend on lifestyle enhancements along with necessary spending on life-saving treatments. In addition, the survival of the Affordable Care Act has kept the ranks of insured U.S. citizens above the historical average, further increasing consumer spending on healthcare services and products. Meanwhile, companies with experience in diagnostic testing, vaccines, and antiviral medicines, as well as suppliers of protective equipment and other hospital products, have benefited from efforts to contain the pandemic. The sector accounts for 14.7% of the S&P 500, and includes companies in the pharmaceuticals, medical devices, healthcare services, and insurance industries. Here's our list of Argus BUY-rated Healthcare stocks that are large-cap and have solid books. We sorted by the largest percentage from the 52-week high.

U.S. equities were mixed on Thursday morning as investors digest recent economic data. The Consumer Price Index for December rose 6.5% in prices year-over-year but fell 0.1% sequentially, which was in line with expectations. Initial jobless claims fell by 1,000 to a seasonally adjusted 205,000 last week. Employers added 223,000 jobs in December. The dollar has fallen to a 7-month low. The Nasdaq is down 0.3%, the S&P is down 0.04%, while the Dow Jones is up 0.3%. Crude oil is trading above $78 per barrel, while gold rose $16 to $1895 per ounce.

Each December, Argus surveys its team of analysts, seeking their best ideas for the upcoming year. The Argus Research team draws on its experience (the average analyst has 18 years of Wall Street experience and 10 year at Argus), as well as the company's proprietary six-point research framework and earnings and valuation models to make the calls. Argus analysts cover the waterfront (every sector from Energy to Healthcare to Consumer to Technology), so each sector is represented. This year's list includes some long-time favorites, as well as some recent upgrades and new initiations. The list includes mostly large-caps and mid-caps, and both growth and value stocks. We will be going over the list in more detail during our January webinar and detailing why each stock has been selected by the covering analyst. In the interim, more information on each of these BUY-rated stocks is available on our website.

Healthcare is a sector that includes many categories and investing disciplines. It is innovative, can be either growth or value, and can involve start-ups or mature companies. A healthcare company can be built around one product that is leveraged in broad and creative ways, or a company with depth, breadth and products that have many touchpoints. Many of the companies are truly science-based, some with managers who are stronger as scientists than as executives running a company; others have scientists focus on science while practiced managers mind the books. The Healthcare sector accounts for 15% of the S&P 500, with an overall market cap of $1.4 trillion dollars. Subsectors include Biotechnology, Healthcare Distributors, Healthcare Equipment, Healthcare Supplies, Life Sciences Tools and Services, Managed Healthcare, and Pharmaceuticals. We think investors should Over-Weight the sector and consider allocating about 15% of their diversified portfolios to stocks in the sector. Healthcare is slightly outperforming the S&P 500 thus far in 2022, with a loss of 14% compared to the 25% loss for the S&P 500. The following are some Argus BUY-rated Healthcare companies. The stocks were selected using the Argus screening tool and the following criteria: BUY-rated; large-cap (greater than $8 billion market capitalization); a Financial Strength rating of Medium-High or High; and paying a dividend. We feel these companies currently are best in class for the sector. Some are also part of our model portfolios (Growth & Income, Equity Income, Growth, and Institutional).

Stocks extended their rally on Tuesday morning, with strong gains in all sectors. Job openings fell sharply, suggesting that Fed rate hikes are beginning to cool demand for labor. In its monthly JOLTS survey, the Labor Department said that U.S. job openings fell by 1.1 million to 10.1 million on the last day of August. The reading was well below the Reuters consensus forecast of 10.775 million and marked the largest monthly decline since April 2020. The Dow rose 2.5%, the S&P 2.8%, and the Nasdaq 3.2%. Crude oil traded near $86.50 per barrel, while gold jumped $35 to $1737 per ounce.

Stocks plummeted on Thursday amid mounting recession fears, as investors continued to assess the impact of the Fed's 75-basis-point rate hike and the ability of the central bank to control inflation. The S&P fell to its lowest level since December 2020 and is now down 23% year-to-date. On the employment front, first-time claims for state unemployment benefits fell to 229,000 for the week ended June 11, down from 232,000 a week earlier but above the consensus estimate of 215,000. The Dow fell 2.42%, the S&P 3.25%, and the Nasdaq 4.08%. Crude oil traded near $117 per barrel, while gold soared 2% to $1860 per ounce.

Our rating on the Healthcare sector is Over-Weight. Consumers are now more willing to spend on lifestyle enhancements along with necessary spending on life-saving treatments. In addition, the survival of the Affordable Care Act has kept the ranks of insured U.S. citizens above the historical average, further increasing consumer spending on healthcare services and products. Meanwhile, companies with experience in diagnostic testing, vaccines, and antiviral medicines, as well as suppliers of protective equipment and other hospital products, should benefit from efforts to contain the pandemic. The sector accounts for 13.7% of the S&P 500, and includes companies in the pharmaceuticals, medical devices, healthcare services, and insurance industries. The sector is outperforming the market thus far in 2022, with a gain of 1.3% through early April, while the S&P 500 has declined 6%. The following are examples of how we use our analysts' Healthcare sector ideas in our Focus List and Model Portfolios. All stocks 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 Linde Plc (LIN); Sysco Corp. (SYY); Target Corp (TGT); Vertex Pharmaceuticals, Inc. (VRTX) and the Focus List deletions are DuPont de Nemours Inc (DD); Zoetis Inc (ZTS); Lululemon Athletica inc. (LULU); Tyson Foods, Inc. (TSN).

Current Correction Similar to Past Near-Bear Phases, not Classic Bear Markets

Stocks rebounded on Thursday morning following positive earnings reports from Travelers and Baker Hughes, a day after the Nasdaq dropped into correction territory. On the employment front, the Labor Department said that first-time claims for state unemployment benefits rose to 286,000 for the week ended January 15, up from 231,000 a week earlier and above the consensus forecast of 225,000. The Dow rose 1.2%, the S&P 1.3%, and the Nasdaq 1.8%. Crude oil rose to near $88 per barrel, while gold fell $3 to $1840 per ounce.

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. But 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.

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.

This edition features pet healthcare; utilities' dividends; hotel REITs; and notes from AutoNation and new coverage Marqeta and Blackstone.

Stocks edged higher on Wednesday morning as investors weighed prospects for the Biden administration's $3.5 trillion budget plan, which was approved by the House on Tuesday, and looked ahead to the Federal Reserve's symposium later in the week. The Commerce Department reported that core capital goods orders were flat in July, down from a 1.0% increase in June and below the Reuters consensus forecast calling for 0.5% growth. The Dow rose 0.3%, the S&P 0.3%, and the Nasdaq 0.1%. Crude oil traded near $67.50 per barrel, while gold fell $23 to $1786 per ounce.

Consumers are now more willing to spend on lifestyle enhancements along with necessary spending on life-saving treatments. In addition, the survival of the Affordable Care Act has kept the ranks of insured U.S. citizens above the historical average, further increasing consumer spending on healthcare services and products. Meanwhile, companies with experience in diagnostic testing, vaccines, and antiviral medicines, as well as suppliers of protective equipment and other hospital products, should benefit from efforts to contain the coronavirus pandemic. The sector accounts for 13.0% of the S&P 500, and includes companies in the pharmaceuticals, medical devices, healthcare services, and insurance industries. The sector is underperforming the market thus far in 2021, with a gain of 12.9%. We think the sector should account for 15-17% of diversified portfolios. Here is how we use our analysts' Financial Services sector ideas in our Focus List and Model Portfolios. All stocks are rated BUY at Argus.

Sustainable Impact investing continues to grow. According to Opimas, a management consultancy focused on global capital markets, global assets under management in ESG strategies grew to $40.5 trillion in 2020, doubling in four years and tripling in eight. As assets have flowed in, SRI investing has evolved over the past 40 years. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all businesses that can have an "impact" on global issues such as workers' rights, poverty, hunger, and the climate. Based on numerous requests from clients, we have compiled a portfolio of companies followed by Argus Research that are in position to have this type of "sustainable impact" on the environment, workplace, and community. These firms have exemplary records not only in delivering on the bottom line, but also in improving the environment, contributing to community relations, and showing respect for their employees. We built our portfolio by identifying companies that are BUY-rated by Argus analysts and also score well on ESG (Environmental, Social and Governance) criteria established by the JUST Capital Foundation. JUST Capital utilizes a combination of polling, data-driven research, and strategic engagement to shift behaviors and activities in corporate America and the financial markets. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric, inclusive form of capitalism that reflects the priorities of the American public. JUST ranks the Russell 1000 on these criteria against a scale of 1-100. Here are company highlights from the Argus U.S. ESG Model Portfolio.

Stocks finished mostly higher on Thursday, but gave up most of their early gains in afternoon trading. On the employment front, first-time jobless claims fell to a new pandemic era low of 406,000, down from the prior week and below consensus. Continuing claims also fell to 3.642 million, down from 3.738 million a week earlier and below the consensus forecast of 3.68 million. Housing data disappointed. The National Association of Realtors said that its pending home sales index fell 4.4% in April to 106.2. The reading reflected the low inventory of homes available for sale and came in below the Reuters consensus forecast, which called for growth of 0.8%. The Dow rose 0.41%, the S&P rose 0.12%, and the Nasdaq fell 0.01%. Crude oil fell nearly 1% to $67 per barrel, while gold fell $3 to $1901 per ounce.

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.

Stocks rose on Friday morning amid strong earnings reports from Deere and Applied Materials and new housing market data. The National Association of Realtors said that U.S. existing home sales rose 0.6% to an annualized 6.69 million units in January, above the Reuters consensus forecast of 6.61 million. The inventory of previously owned homes available for sale also fell to a record low of 1.04 million last month, down nearly 26% from the prior year. The Dow rose 0.4%, the S&P 0.4%, and the Nasdaq 0.8%. Crude oil traded near $59.50 per barrel, while gold rose $10 to $1785 per ounce.

Stocks rose on Friday morning amid strong earnings reports from Deere and Applied Materials and new housing market data. The National Association of Realtors said that U.S. existing home sales rose 0.6% to an annualized 6.69 million units in January, above the Reuters consensus forecast of 6.61 million. The inventory of previously owned homes available for sale also fell to a record low of 1.04 million last month, down nearly 26% from the prior year. The Dow rose 0.4%, the S&P 0.4%, and the Nasdaq 0.8%. Crude oil traded near $59.50 per barrel, while gold rose $10 to $1785 per ounce.

A handful of sectors shined through the pandemic in 2020, while others struggled. For the year, seven of 11 GICS sectors had positive performances, while the S&P 500 was up 16%. The leading sectors included Information Technology (up 42%), Consumer Discretionary (+32%) and Communication Services (+22%). The badly lagging sectors include Real Estate (-5%), Financials (-4%) and Energy (-37%). On a three-year basis, two clear trends emerge: the IT sector has outperformed three years in a row, while the Energy sector has lagged badly three years in a row. Will the trends reverse in 2021? We think that is doubtful. Investors are increasingly eager to allocate capital to innovative IT companies that are connecting people (even as people are social distancing) and making corporations more efficient. Meantime, the Energy sector is facing "peak demand" forecasts at some point in the next 2-3 decades, suggesting the long-term growth outlook is severely capped. In addition to IT, the other sectors we favor for "secular" long-term EPS growth include Healthcare (which is on the front lines fighting COVID-19), Consumer and Financial Services.

Stocks rose modestly on Thursday morning amid new employment and services sector data. The Labor Department reported that first-time claims for state unemployment benefits fell to 712,000 for the week ended November 28, down from 787,000 a week earlier and below the Bloomberg consensus forecast of 775,000. Services sector data slowed for a second straight month. The Institute for Supply Management said that its nonmanufacturing index fell to 55.9 in November, down from 56.6 in October and below the consensus forecast of 56.0. The Dow rose 0.5%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose slightly to $45 per barrel, while gold traded near $1829 per ounce.

Stocks rose modestly on Thursday morning amid new employment and services sector data. The Labor Department reported that first-time claims for state unemployment benefits fell to 712,000 for the week ended November 28, down from 787,000 a week earlier and below the Bloomberg consensus forecast of 775,000. Services sector data slowed for a second straight month. The Institute for Supply Management said that its nonmanufacturing index fell to 55.9 in November, down from 56.6 in October and below the consensus forecast of 56.0. The Dow rose 0.5%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose slightly to $45 per barrel, while gold traded near $1829 per ounce.

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.

Stock prices, as expressed by the S&P 500, have slipped from all-time highs but still are above fair value, which our model pegs at closer to 3000 due to an expected earnings decline in 2020. Our stock-market valuation model takes into account factors such as stock prices, five-year normalized earnings (three historical years, two forward-looking), GDP, inflation, and T-bond and T-bill yields. We note that stocks rarely trade right at fair value. Although since 1960, on average, the index has traded at a tight 2% above fair value, the standard deviation to the mean is 16%. As such, we normally expect the S&P 500 to trade between 14% undervalued and 18% overvalued. At current prices, the stock market is almost 20% above fair value, implying that investors are quite optimistic about equities. We'd feel better about the outlook for stocks if valuations were not so stretched. Several factors could improve valuations: a pullback in stock prices, lower bond yields or better earnings. Still, given the current fully valued level of the market, disappointments could be painful.

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).

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).

The stock market had another bad day on Wednesday, with the S&P 500 falling 3.5%, the Nasdaq losing 3.8%, and the Nasdaq 100 clipped for 3.9%. The three-day losses for the indices are 5.6%, 4.7%, and 4.6%, respectfully. NYSE market breadth was terrible at -2,688, the worst since June 11. The "500" is quickly falling toward key chart support from the September low at 3,209.

Often overlooked amid the market's gyrations, dividend income is an important element of total return. Consider recent results: in 2015, the S&P 500 delivered a total return of 1.4%, including dividends -- but excluding dividends, the market was down 0.7%. Capital gains were a bit easier to achieve in 2016-17, though we note that dividend payments still contributed about 15%-20% of total return for investors. And dividend payments softened the blow in 2018, when most market indices declined as the Federal Reserve hiked rates. Between 1930 and 2012, dividend income accounted for 42% of total return of the S&P 500, according to Morgan Stanley. Not all dividends are created equal, though, and it is important to understand the difference between high-yield stocks and dividend-growth stocks, particularly in a slow-growth or recessionary economic environment.

Often overlooked amid the market's gyrations, dividend income is an important element of total return. Consider recent results: in 2015, the S&P 500 delivered a total return of 1.4%, including dividends -- but excluding dividends, the market was down 0.7%. Capital gains were a bit easier to achieve in 2016-17, though we note that dividend payments still contributed about 15%-20% of total return for investors. And dividend payments softened the blow in 2018, when most market indices declined as the Federal Reserve hiked rates. Between 1930 and 2012, dividend income accounted for 42% of total return of the S&P 500, according to Morgan Stanley. Not all dividends are created equal, though, and it is important to understand the difference between high-yield stocks and dividend-growth stocks, particularly in a slow-growth or recessionary economic environment.

This is among our most important themes for 2020, and stretches across industries. We think companies that raise their dividends consistently at a double-digit rate are delivering three important signals amid all the recent market volatility: 1) the company's balance sheet is strong enough to pay a dividend; 2) management is focused on providing shareholder returns; and 3) management is confident enough in the near-term outlook to raise the payout aggressively. This third factor is especially important as the pandemic upends the nation's recent record of long-term economic growth. Here are 13 stocks that meet our double-digit dividend test and are on the Argus BUY List. They are also new holdings in our Dividend Growth Separately Managed Account and in the Dividend Growers Total Return Trust, sponsored by SmartTrust.

This is among our most important themes for 2020, and stretches across industries. We think companies that raise their dividends consistently at a double-digit rate are delivering three important signals amid all the recent market volatility: 1) the company's balance sheet is strong enough to pay a dividend; 2) management is focused on providing shareholder returns; and 3) management is confident enough in the near-term outlook to raise the payout aggressively. This third factor is especially important as the pandemic upends the nation's recent record of long-term economic growth. Here are 13 stocks that meet our double-digit dividend test and are on the Argus BUY List. They are also new holdings in our Dividend Growth Separately Managed Account and in the Dividend Growers Total Return Trust, sponsored by SmartTrust.

Stocks rose on Wednesday morning, rebounding from a late-day selloff on Tuesday despite the continued fiscal stimulus stalemate in Washington. The Labor Department reported that consumer prices rose 0.6% in July, unchanged from the prior month but above the Reuters consensus forecast of 0.3% growth. Prices also rose 1.0% from the prior year, above the consensus of 0.8%. Moderna shares rose on news that the company had won a $1.5 billion vaccine supply contract with the U.S. government. The Dow rose 1.0%, the S&P 1.3%, and the Nasdaq 2.0%. Crude oil traded near $42 per barrel, while gold rose $3 to $1949 per ounce.