Small- and mid-cap stocks (SMID), despite bursts of outperformance, have underperformed large-caps year to date - as they have over the past five years. But they 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 unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but despite those risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20% of the U.S. stock market's capitalization is comprised of SMID stocks.

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 United Therapeutics Corp (UTHR); Broadcom Inc (AVGO); Palo Alto Networks Inc (PANW); Costco Wholesale Corp (COST) and the Focus List deletions are Walmart Inc (WMT); Itron Inc. (ITRI); Micron Technology Inc. (MU); Intuitive Surgical Inc (ISRG).

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.

Itron is a technology provider serving the global energy and water industries. Since its founding in 1977, the company has provided handheld computer systems for collecting data from meters. Itron also offers hardware, software, and services that integrate the creation, collection, measurement, management, and forecasting of data, thus allowing utilities to share critical knowledge with other market participants, including end users. More than 8,000 customers in more than 100 countries use the company's technology to optimize their delivery and use of energy and water. Headquartered in Liberty Lake, Washington, Itron employs about 5,000 people. ITRI shares are a component of the S&P 600 Small-Cap Index.