Artificial intelligence (AI) has become a pervasive technology in the Healthcare sector. Companies have been adopting AI in medical imaging, drug discovery, documentation, and administration. In medical imaging and diagnostics, AI is advancing rapidly in the detection of tumors, infections, and fractures. In drug discovery, vast data sets are being used to identify potential drugs to treat disease and predict their efficacy. AI also can improve trial design and create treatments for a wider range of people, including those with rare diseases. The technology also has helped to create more-efficient methods for documenting medical information with Automatic Speech Recognition (ASR). ASR enables voice-to-text technology and increases the productivity of medical staff by nearly 10%. For administrative tasks, AI has streamlined billing, scheduling, and fraud detection (a major issue that raises medical expenses for consumers). Here is a list of Argus BUY-rated Healthcare stocks that are leaders in the use of AI.

Earnings news is the big driver today. All the action is mostly in individual stocks reacting to whether last quarter was positive or negative, plus any intel on outlook. The major indices are muted though small caps are showing momentum higher.

Management's ability to "raise guidance" can often be a catalyst for market-beating returns in the quarters ahead. The first-quarter earnings season has crossed the 90% mark and is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a year-over-year gain of almost 7%, according to Refinitiv. That is considerably better than the 4%-7% advance expected at the start of the earnings period. Leading the outperformance were strong gains in Communication Services earnings, up 43%, and Consumer Discretionary, up 26%. On the flipside, Healthcare and Energy, both down 24%, are performing the worst. Our analysts are always on the lookout for companies that boost outlooks during earnings season, as this is often a signal for momentum in the months ahead. Here is an initial list of BUY-rated companies in the Argus Fundamental Universe of Coverage at which management raised guidance or increased its outlook during the 1Q24 EPS reporting season.

Despite April Stumble, Positive Stock-Market Outlook for 2024

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 labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

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.

Stocks were mixed on Thursday morning following new economic data. For the week ending February 3, initial jobless claims were 218,000, down from the previous-week's revised 227,000. Ongoing unemployment was 1,871,000, a decrease of 23,000 from the previous-week's revised 1,894,000. On the earnings front, shares of Arm Holdings (ARM) are up 58% on positive 4Q earnings and forward guidance. The Walt Disney Co. (DIS) rose 12% on an earnings beat and dividend raise. The S&P 500 was trading just below the flatline, the Dow was down 0.3%, while the Nasdaq was up 0.3%. Crude oil traded near $76 per barrel and gold fell $5 to $2046 per ounce.

Stocks continued to fall last week, as any positive earnings-related news was overwhelmed by issues that include offsetting disappointing earnings, interest rates, Treasury yields, and volatile geopolitical developments. Turning our attention to insider-sentiment data from Vickers Stock Research, transaction volume remains historically low (and therefore less meaningful) as insiders are broadly sidelined by trading restrictions currently in place. Add it all up, and it is easy to assume there is nothing of interest in Vickers' data this week.

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 labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services (such as Zoom calls) and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

We see some possible gems right now in the Healthcare sector. Overall, we have a sector rating of Market-Weight, but this category is broad and has underperformed the S&P 500 year-to-date. The Healthcare ETF (XLV) is down 1.6% year-to-date compared to a gain of 19% for the S&P 500. We see opportunity to pick up some consistently steady companies, with big brands, and solid financials. These companies are science-focused, enhance lives, and are innovators. Some have recently raised guidance, communicating management's confidence. In our list this week, we look across several subsectors within the industry and pull out some leaders that we like.

Earnings season is now largely completed, and, as usual, turned out much better than Wall Street expected. S&P 500 earnings from continuing operations fell 3.4% year-over-year from 2Q22 -- much better than the preliminary forecast for a 6%-7% decline. Excluding the Energy sector, earnings actually rose 3% YOY. Earnings exceeded expectations as they usually do: almost four-fifths of S&P 500 companies reported earnings above expectations, compared to the long-term average of 66%. And the "beat" was above normal. Companies tended to exceed pre-reporting estimates in 2Q by about 8%, compared to the average surprise factor of 4.1%. By sector, the strongest earnings growth came from Consumer Discretionary, Communication Services, and Industrials. Lagging sectors were Energy, Materials, and Healthcare. The all-important Technology sector reported a 3% increase in EPS. Some sector trends are starting to emerge. Energy, which was the strongest EPS contributor in 2022, is facing difficult comparisons as oil prices have slumped; sector earnings are expected to decline 40% in 3Q. Materials are no longer benefitting from peak commodity prices and EPS for the group are expected to decline 20% next quarter. On the brighter side, Communication Services earnings are expected to ramp higher, generating a 35% gain in 3Q compared to the 16% advance in the recently completed 2Q. Overall, the 2Q EPS decline followed EPS declines in 4Q22 and 1Q23 and thus constituted an "earnings recession." At this point, 3Q S&P 500 EPS are expected to rise 1% and then continue to grow into 2024.

Stocks fell on Tuesday morning on concerns about weak trade data from China, as both exports and imports declined more than expected in July. Investors also weighed Moody's credit downgrades of 10 U.S. banks. On the earnings front, UPS shares fell after the company reported mixed 2Q results and lowered its full-year revenue and margin forecasts. Meanwhile, Lilly jumped 17% after reporting strong 2Q results, helped by sales of its new diabetes drug, and raised its 2023 guidance. The Dow fell 1.0%, the S&P 1.1%, and the Nasdaq 1.4%. Crude oil fell slightly to $81.50 per barrel, while gold traded near $1960 per ounce.

Friday was quite a day for the stock market. Before the opening bell, a slew of large Financial sector companies reported better-than-expected results and were all seeing nice premarket gains. That helped stock futures rise, leading to decent gains for the major indices until about 10:15 a.m. But most of the gains in the Financial stocks fizzled quickly, with many eventually ending lower for the sessions and far off their early-day levels.

The Nasdaq and Nasdaq 100 (NDX) are taking a breather from strong rallies in May and June, and the S&P 500 is seemingly on a break from its so-far nice June rally. But while the indices have run into important resistance, we are seeing good signs of market breadth in large-market-cap stock indices.

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 Research.

The first-quarter earnings season is largely completed and turned out much better than Wall Street expected. S&P 500 earnings from continuing operations fell less than 1% year-over-year compared to the preliminary forecast for a 5% decline. Earnings exceeded expectations, as they usually do. Slightly more than three-quarters of companies reported earnings above consensus expectations, in line with the historical average. And the earnings "beat" was also back to normal. Companies tended to exceed pre-reporting estimates in 1Q by about 7%. By sector, the strongest earnings growth came from Consumer Discretionary, Industrial and Energy. Lagging sectors included Basic Materials and Utilities, each of which makes up less than 3% of the S&P 500. The all-important Technology sector reported a 10% decline in EPS. Looking ahead, some sector trends are starting to emerge. Energy, which was the strongest EPS contributor in 2022, is now facing difficult comparisons as oil prices have slumped. Energy earnings are expected to decline 40% in 2Q. On the brighter side, Communication Services earnings are expected to turn positive, generating a double-digit gain compared to a 9% decline in the recently completed 1Q. Overall, the 1Q EPS decline followed an EPS decline in 4Q and thus constituted an "earnings recession." At this point, 2Q EPS is expected to decline 6% -- extending the earnings recession -- and then turn to growth in 2H23. Of course, earnings likely will come in better than the current outlook, and we would not be surprised if S&P 500 EPS return to growth a quarter "early."

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 Salesforce Inc (CRM); Royal Caribbean Group (RCL); Canadian Pac Kansas City Ltd (CP); Intuitive Surgical Inc (ISRG) and the Focus List deletions are Honeywell International Inc (HON); Danaher Corp. (DHR); Skechers U S A, Inc. (SKX); Palo Alto Networks Inc (PANW).

Artificial Intelligence (AI) is red-hot on Wall Street. Microsoft's ChatGBT and Nvidia's super-fast chips are driving the massive computational power behind AI and getting most of the attention. But companies in the Healthcare sector have been using AI for years and offer another path for investing in AI. Our below list, provided by Senior Healthcare Analyst David Toung, looks at some of the BUY-rated Healthcare companies in our coverage universe that stand out for their use of AI. By no means is this survey as complete listing of how AI is used in healthcare - but here are the BUY-rated Healthcare companies under coverage at Argus Research that we highlight today.

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, when uncertainty is high due to high inflation and rising interest rates, we look to innovative companies to successfully navigate the challenges. At Argus, an 88-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. Here are some examples of companies, featured in our Innovation Theme Model Portfolio.

Our list this week identifies companies that received an Argus target-price increase in April. As the stock prices of these companies approached their target prices, Argus analysts saw those prices going even higher. We are in the thick of earnings season and our analysts are scouring quarterly reports to evaluate how the companies they follow are doing. With economists busy analyzing economic data to determine whether the economy might slip into recession, companies have been attending to their businesses. Some are weathering current economic conditions better than others. The economic pressures are real - including rising interest rates, inflation, the strong dollar, and wavering consumer spending patterns. These stressors are on top of normal competitive pressures, as companies fight to sell their products and services, outmaneuver peers, and make profits. Looking back at April, our analysts found companies where the business outlook is solid - and went through the mechanics of our valuation framework to adjust target prices upwards. Our framework includes analysis of historical multiples, peer multiples, and future dividends and cash flows. Here are the stocks on which we raised target prices in April. All are rated BUY at Argus.

Stocks rose modestly on Friday morning, extending Thursday's rally. Exxon shares rose after the company reported strong 1Q earnings that topped the consensus forecast, though sales were down from the prior year. Chevron also posted strong earnings, helped by growth in its refining business. Amazon shares fell, despite strong first-quarter results, on concerns about slowing growth in the company's cloud business. The Dow rose 0.5%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil rose more than 2% to $76.50 per barrel, while gold traded near $1999 per ounce.

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 labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services (such as Zoom calls) and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

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.

Vickers Stock Research, a subsidiary of The Argus Research Group, tracks and analyzes insider trading and institutional stock ownership trends. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters, and have now come in for 4Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Activists have made progress in the past quarter with high-profile investments into blue-chip companies such as Walt Disney and Salesforce. Based on data from Vickers, here are some recent new purchases and key holdings of activist investors, as well as other high-profile money managers such as Warren Buffet of Berkshire Hathaway and Ken Griffin of Citadel Advisors LLC.

Stocks fell on Wednesday morning, a day after rallying following a speech from Fed Chair Jerome Powell. Mr. Powell said that the economy was in the 'very early stages of disinflation,' and that the process would take time, largely echoing his comments after the Fed's rate hike last week. On the earnings front, Uber shares rose after the ride-hailing service posted much better-than-expected fourth-quarter results. Yum! Brands also rose following strong 4Q sales and earnings. The Dow fell 0.6%, the S&P 1.0%, and the Nasdaq 1.5%. Crude oil rose 1% to $78 per barrel, while gold traded near $1888 per ounce.

Our End-of-Year Note to Clients

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.

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 labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services (such as Zoom calls) and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the innovative U.S. economy.

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, when uncertainty is high due to high inflation and rising interest rates, we look for innovative companies to navigate the challenges successfully. At Argus, an 88-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. Here are some examples of companies, featured in our Innovation theme model portfolio.

Stocks finished lower on Thursday after giving up early gains, as investors weighed mixed earnings reports along with new employment and housing market data. First-time claims for state unemployment benefits fell by 12,000 to 214,000 for the week ended October 15, below the Bloomberg consensus forecast of 230,000. Continuing claims rose by 21,000 to 1.385 million. On the housing front, existing home sales fell 1.5% in September to an annualized 4.71 million units, slightly above the consensus estimate. The Dow fell 0.30%, the S&P 0.80%, and the Nasdaq 0.61%. Crude oil rose to $86 per barrel, while gold fell slightly to $1633 per ounce.

Stocks fell on Thursday morning, led by declines in the Energy and Consumer Staples sectors. First-time unemployment claims rose by 6,000 to 260,000 for the week ended July 30 and were slightly above the consensus forecast. Continuing claims also rose by 48,000 to 1.416 million. On the earnings front, Conoco posted better-than expected second-quarter results and said that it would substantially boost returns to shareholders through dividends and buybacks. The Dow fell 0.3%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil fell more than 2% to $88.50 per barrel, while gold jumped $27 to $1804 per ounce.

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, even during the pandemic, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. Consider that U.S. GDP was approximately $1 trillion in 1930 but was more than $24 trillion at the end of 2021. That's growth of 24-times. Meanwhile, the U.S. population has grown less than three-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven, in large part, by innovation.

Stocks rose modestly on Wednesday morning following Tuesday's massive selloff. Microsoft shares rose 6% after the company posted stronger-than-expected fiscal 3Q results and projected double-digit revenue growth for the next fiscal year. On the negative side, Alphabet shares fell 3% after disappointing first-quarter sales and earnings. The Dow rose 0.3%, the S&P 0.4%, and the Nasdaq 0.4%. Crude oil fell slightly to $101.50 per barrel, while gold dropped $18 to $1886 per ounce.

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 were not innovating, creating new products and services, and moving into new markets and applications, the domestic economy would be contracting, not expanding. As well, capital would not be flooding into the country. Particularly at this juncture of the market and economic cycles, when uncertainty is high due to the pandemic and upcoming changes to interest rates by the Federal Reserve, we look to innovative companies to navigate the challenges successfully. At Argus, an 88-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. Here are some examples of companies that are featured in our Innovation Theme Model Portfolio.

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 stock market had its worst week since the pandemic began, and the Nasdaq Composite fell firmly into correction territory (down more than 10% from peak). On Friday, the Dow Jones Industrial Average fell 450 points, or 2.02%. The S&P 500 was off 1.89%, and the Nasdaq Composite was down 2.72%. For the week, the DJIA was down 1,646 points, or 4.58%, the S&P 500 was down 5.68%, and the Nasdaq Composite was down 7.55%. Year-to-date, the Dow is down 5.70%; the S&P 500 is off 7.73%; and the Nasdaq Composite is deeply lagging, down 11.99%.

The stock market had its worst week since the pandemic began, and the Nasdaq Composite fell firmly into correction territory (down more than 10% from peak). On Friday, the Dow Jones Industrial Average fell 450 points, or 2.02%. The S&P 500 was off 1.89%, and the Nasdaq Composite was down 2.72%. For the week, the DJIA was down 1,646 points, or 4.58%, the S&P 500 was down 5.68%, and the Nasdaq Composite was down 7.55%. Year-to-date, the Dow is down 5.70%; the S&P 500 is off 7.73%; and the Nasdaq Composite is deeply lagging, down 11.99%.

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, when uncertainty is high due to the pandemic and upcoming changes to interest rates by the Federal Reserve, 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, BUY-rated stocks were recently added to our Growth Model Portfolio, our new Innovative Growth Separately Managed Account and our Modern Innovators UIT. The full list of stocks can also be found in our Innovation Theme Model Portfolio.

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, even during the pandemic, has expanded to record levels. If U.S. corporations weren't innovating, the domestic economy would not be growing and capital would not be flooding into the country. Consider that U.S. GDP was approximately $1 trillion in 1930 but nearly $23 trillion at the end of 1H21. That's growth of 23-times. Meanwhile, the U.S. population has grown less than three-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven, in large part, by innovation. In addition, the value of listed corporations on U.S. stock exchanges at the end of 2020 was approximately $41 trillion, according to SIFMA, representing 38% of global equity market capitalization, while U.S. GDP represented only 26% of global GDP. The current low level of interest rates and the relatively high level of the dollar both attest to the confidence that global investors have in the innovative U.S. economy.

As Earnings Roll in, the Economy Rolls on

Stocks kept momentum going in July and August. Our analysts have been progressing through earnings season and have come across many stocks that have approached target prices. We set targets through our valuation framework, which includes analysis of historical multiples, peer multiples, and future dividends and cash flows. After adjusting for the latest information, here are some of the stocks on which we raised target prices over the past month. All of the following stocks are rated BUY at Argus.

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.

Stocks continued their rally on Friday morning amid strong earnings reports from American Express and Twitter. However, Intel shares fell more than 6%, despite solid second-quarter results, after the company projected declining gross margins over the remainder of the year. The Dow rose 0.5%, the S&P 0.8%, and the Nasdaq 0.8%. Crude oil traded near $72 per barrel, while gold fell $6 to $1799 per ounce.