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 navigate the challenges. At Argus, a 90-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.

In April, the S&P 500 delivered its first monthly loss in 2024 (about 4.1%, before dividends). But if the historical track record holds, stocks could return to a positive performance in May. The stock market typically rises in May, on average 0.9% and with a 71% winning percentage. We note that market returns in May have exceeded 5% on six occasions since 1980, including a 9.2% gain in 2000. Last year was at least positive, with a 0.8% advance. So the bullish market trend since October 2022 could continue. Still, there have been some clunkers in May, including 2022 (a whopping -8.4%), 2010 (-8.2%), 2012 (-6.0%), and 1984 (-5.9%). May starts as a busy month on Wall Street, as companies report first-quarter earnings, the Federal Reserve meets, and the nonfarm payrolls report is released. But once the retailers wrap up their results, investors will be left to ponder inflation trends, future Federal Reserve activity, the risk of recession, and the long Memorial Day weekend. Looking ahead, we are bullish on stocks for 2024, as interest rates eventually head lower, the consumer sector of the economy remains in growth mode, and earnings continue to grow into the second half of the year. To be safe, we recommend a continued focus on the stocks of quality companies with strong earnings trends.

Alphabet, formerly called Google, maintains the largest online index of websites accessible through automated search technology. It generates revenue through online advertising, cloud services, and hardware. Google is now an operating segment of Alphabet. The company was founded in 1998 by Sergey Brin and Larry Page and went public in 2004. Google's AdWords is an auction-based program that lets businesses display ads along with particular search results. Google's AdSense program enables websites in the company's network to serve targeted ads, based on search terms or web content, from AdWords advertisers. Most of the revenue generated through AdSense is shared with network partners. In addition, Alphabet owns YouTube.com, the web-based video site. It has also expanded into mobile telephony with its Android smartphone operating system and into public cloud services. About 54% of Alphabet's revenue is generated outside the U.S. On April 3, 2014, Alphabet's new nonvoting class C shares began trading under the ticker GOOG. Alphabet's publicly held class A shares switched to the ticker GOOGL. The effect of the new class C share issuance was a non-economic 2-for-1 stock split. On July 15, 2022, Alphabet executed a 20-for-1 stock split on its Class A, Class B and Class C stock. The stock split had no impact on the economic value of GOOGL shares.

With earnings season in full swing, the volume of insider transactions has fallen to seasonal lows, with only 615 transactions meeting the criteria for inclusion in Vickers Weekly Insider Report. While that is down from the recent weekly high of 2,284 transactions, there is still noteworthy data to consider.