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We have reviewed our recommended sector allocations for the calendar first quarter of 2025. Our multi-factor model includes a performance-ranking system, which assigns points for monthly, quarterly, and YTD sector performance vs. the benchmark S&P 500; current sector P/E vs. 5-year P/E; two-year earnings growth; relative performance to the sector group average; sector conviction; and PEG ratio. In this latest review, we have made no changes to our sector recommendations. Within our quantitative, six-part sector-weighting model, the five recommended Over-Weight sectors had the highest scores; the recommended Market-Weight sectors had scores in line with the median; and the recommended Under-Weight sectors had the lowest scores. Of our five recommended Over-Weight sectors, only Healthcare is failing to lead the market. Currently, Healthcare has the strongest forecast earnings-growth rate among all sectors for 2025; and it is the most deeply discounted sector on forward P/E in relation to its historical (5-year) P/E. Our rebalancing process takes place four times a year. Our current Over-Weight sectors are Healthcare, Communication Services, Financial, Utilities, and Information Technology. Our current Market-Weight sectors are Consumer Discretionary, Energy, Industrials and Real Estate. Our Under-Weight sectors are Materials and Consumer Staples. Argus Research suggests that advisors and investors leverage this consistent and comprehensive process to adjust sector weightings within their diversified equity portfolios, with a primary focus on the largest sectors.

American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. About 42% of AEP's of capacity is coal, with the remainder from a mix of natural gas (27%), renewable energy and hydro (21%), nuclear (8%), and demand response (2%). Vertically integrated utilities, transmission and distribution, and generation and marketing support earnings.

FirstEnergy is an investor-owned holding company with 10 regulated distribution utilities across six mid-Atlantic and Midwestern states. FirstEnergy also owns and operates one of the nation's largest electric transmission systems.

New Jersey Resources is an energy services holding company with regulated and nonregulated operations. Its regulated utility, New Jersey Natural Gas, delivers natural gas to nearly 600,000 customers in the state. NJR's nonregulated businesses include solar investments primarily in New Jersey and investments in several large midstream natural gas projects.