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.

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.

Two important inflation reports recently indicated that overall pricing pressures have retreated from peaks in 2022. But both also confirmed that inflation remains above the Fed's target of 2.0% and indicated progress to that level may be hard to achieve. Let's take a deeper dive into the Consumer Price Index (CPI). According to the latest report, the overall inflation rate in May of 3.3% was lower than the prior month's 3.4%. That good news was supported by a decline in the core CPI rate. The core CPI excludes the impact of food and energy and rose at an annual pace of 3.4% over the past year, lower by 20 basis points compared to the prior month. What's propping up core CPI? Transportation Services (+10.5% year over year) and Shelter (5.4%). These elements of the index have prices that don't typically fall sharply. Meanwhile, pricing pressures for automobiles and food eased somewhat. The other inflation report was the Producer Price Index (PPI). The PPI measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a modest decline in the rate of inflation. The PPI final demand annual rate through May was 2.2%, compared to 2.3% in April, and the prices for both processed and unprocessed goods for intermediate demand outright declined. Looking ahead, the June 2022 CPI rate marked the peak reading for the index this cycle, and we expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Federal Reserve lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the rate hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as concern shifts toward economic growth.

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 Merck & Co Inc (MRK); Crowdstrike Holdings Inc (CRWD); Mondelez International Inc. (MDLZ); Hewlett Packard Enterprise Co (HPE) and the Focus List deletions are CIENA Corp. (CIEN); General Mills, Inc. (GIS); ServiceNow Inc (NOW); Vertex Pharmaceuticals, Inc. (VRTX).