Argus is making some key changes to its model portfolios. This firm is truly considered to be an independent researcher, so it is not full of the traditional possible conflicts on interest seen in other Wall Street broker sell-side drive research. The firm has made several key changes to its model Growth and Income portfolios.
The big change is that it suggests adding Apple Inc. (NASDAQ: AAPL), for 6% of the portfolio. It also says to add shares of Weyerhaeuser Co. (NYSE: WY), for 2.4% of the portfolio, and to add United Parcel Service Inc. (NYSE: UPS), for another 2.4% of the portfolio.
As this is a “changes” list, there are some sale suggestions as well. Argus said to sell out 100% of the positions in Monsanto Co. (NYSE: MON), CenturyLink Inc. (NYSE: CTL), and Motorola Solutions Inc. (NYSE: MSI).
The firm’s quotes show the following:
- “Apple retains enormous brand cachet and loyalty; the first attribute helps it cultivate growth in emerging markets, while the second helps it hold share in established markets. The competitive challenges in front of Apple are not to be taken lightly. Currently, however, the shares trade at less than 9-times FY13 earnings and — adjusted to remove balance sheet cash — at about 6-times earnings. The shares also provide a 2.5% annual yield, with prospects for additional return to shareholders.”
- “Weyerhaeuser operates as a real estate investment trust. The company posted better-than-expected 4Q12 earnings, as improvement in the U.S. housing market drove significant gains in the Wood Products division, as well as in the Real Estate and Timberlands segments. We expect these trends to continue in 2013, positioning Weyerhaeuser for another year of solid earnings growth. We also expect a recovery in the Cellulose Fibers segment in the second half of the year, driven by higher selling prices, improved productivity and reduced input costs.”
- “UPS provides a wide range of transportation, distribution and logistics services. In 2012, the company shipped an average of 16.3 million packages per day and had total sales of $54.1 billion.”
- “We see the potential for disappointment (in Monsanto) if farmers impacted by last year’s drought are conservative in acres planted. We prefer to take profits on the Monsanto shares, which since inclusion in January 2011 have appreciated more than 30%.”
- “Although Motorola Solutions has been able to maintain growth in its government business through the multi-year downsizing in the public sphere, the U.S. sequestration program and ongoing budget reduction efforts present new challenges for the company. Since inclusion in February 2012, the MSI shares have appreciated more than 31%.”
- “The Qwest deal doubled CenturyLink’s size, just a few years after prior deals doubled CenturyLink’s size. We believe CenturyLink has major capital spending ahead as it seeks to integrate disparate assets. The company also faces expiration of its net operating loss carry-forwards, which will negatively impact its tax rate.”
Jon C. Ogg