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.

Each month, we examine at an aspect of sector investing. This month, we are examining growth and valuation. Investors hunting for stocks that reasonably balance long-term growth prospects and current value characteristics might look at companies in the Healthcare, Financial, and Information Technology sectors. These are among the industry groups currently selling for (price/earnings)/(growth+yield) ratios at or below the S&P 500's ratio of 2.1. To generate the PEGY ratios, we use the P/E ratio for each sector based on forward earnings as the numerator. For the denominator, we average the growth rates for the past five years along with two years of forward estimates, this to achieve a smoother earnings growth rate trend. Then we add the current yield, to approximate total return. As an example, the current S&P 500 P/E ratio is 17.9, the current yield is 1.2%, and the historical growth rate is 9%. The formula is 17.9/(1.2+9.0)=1.7. Sectors with favorable growth and valuation characteristics, in addition to the three listed above, also include Energy and Materials. Premium-valued sectors with low growth rates include the consumer groups. Based on our analysis of growth rates and valuations, along with other factors, our current over-weight sectors are IT, Financial, Healthcare, Utilities, and Consumer Staples. Our under-weight sectors are Materials and Consumer Discretionary. Our Market-Weight sectors are Energy, Communication Services, Real Estate, and Industrial.

The major indices closed with nice gains on Wednesday, but well off the highs achieved earlier in the session. The S&P 500 (SPX) gained 1.4%, the S&P 100 tacked on 1.7%, the Nasdaq rose 2.3%, and the Nasdaq 100 (QQQ) added 2.1%. So it shouldn't be hard to tell what sector led. Yes, it was Information Technology (XLK), with a 3% jump and broad industry participation. Consumer Discretionary was second, rising 2.4% due to a 5.5% gain is TSLA, while Communication Services added 1.7% on gains in GOOGL and META. Chart provider StockCharts has a proprietary system known as SCTR, or the StockCharts Technical Rank. It is a relative strength metric that rates a stock's technical strength against its peers. Stocks are assigned a score based on six key indicators covering different timeframes. Within the S&P 500, the strongest 10% are ranked from 90 to 99.99, while the weakest 10% are scored from 0 to 9.99. These rankings tell a story that should be obvious to anyone that follows the market closely. The three highest-ranked sectors are Consumer Staples (88), Utilities (79), and Financials (72). That's certainly not the type of leadership one would prefer and is reminiscent of defensive posturing during an ongoing correction/bear market. The weakest are Information Technology (7), Materials (12), and Energy (13). Drilling down, the weakest IT industries are renewable energy (6) and semis (12). While not impossible, it will be tough for strong returns from the majors unless Information Technology gets off the mat. (Mark Arbeter, CMT)

IBM looks to be a part of every aspect of an enterprise's IT needs. The company primarily sells software, IT services, consulting, and hardware. IBM operates in 175 countries and employs approximately 300,000 people. The company has a robust roster of business partners to service its clients, which include 95% of all Fortune 500 companies. Primary products include its mainframes, Red Hat software, transaction processing software, and IT consulting.