As the end of the month is near, it’s time for another Portfolio Thoughts post.

As usual, I’ll go over my purchases & sales from this past month, see what price movement there’s been for my Portfolio holdings, and take a look at the stocks I’ve got on my watchlist.

Mixed in can be changes I’m contemplating to improve the Portfolio.  This might be thoughts about stocks I want to overweight or underweight, or stocks I wish to add or remove.

 

Transactions

I was not as busy this month on the transaction front.  I made one purchase, in the healthcare sector, adding shares to an existing Portfolio holding.

The addition I made was to drug distributor Cardinal Health (CAH).  It’s not been a good year for CAH, but the shares were so beaten down that I wanted to add some shares.

Check out my Recent Buy – CAH (#2) post for my purchase price and thoughts behind the addition.

I don’t foresee a bunch of activity for me in the second half of the year, as a good deal of capital was deployed in the first half.  However, there is always the possibility of a stock swap.  This is where I exit or reduce the position of a Portfolio holding, using the sale proceeds to either add to an existing position or initiate a new one.

Currently, I’m comfortable with the 41 stocks I have in the Portfolio, as well as the sector allocation I have.

 

Price Movement

Once again, I’d say most of my stocks trended up this past month, along with the market.  However, I had 4 companies that truly stood out, with gains topping 10% – RPM International (RPM), Fastenal (FAST), V.F. Corp (VFC), and Gilead Sciences (GILD).

RPM entered into an agreement with Elliott Management to help drive operational improvements in RPM’s business.  Elliott added a couple of directors to the RPM Board as part of the pact.  This was all well-received by the market, as RPM moved from $52 to $63 this past month, despite a less-than-stellar earnings release along the way.  RPM was already one of my larger holdings, but it’s move this month vaulted it to the largest position in my Portfolio.

FAST delivered a nice quarter, and offered up a surprise dividend raise, too.  The good news was flowing, and the stock moved up from $50 to $57.

VFC also had a strong quarter to report, helping move the stock from $82 to $92 over the course of the month.  This continued a strong move up for VFC from about $50, where it bottomed out about 19 months ago.

Finally, there’s GILD, which has had a nice run up from $71 to $79 prior to its earnings release.  The feeling seems to be that the worst may be over for GILD now that HCV sales declines are becoming less important, to the point where sales advances from its other drugs can lead the way.

As for Portfolio stocks on the decline, I had only one fall more than 10%.

That stock was newly named Bank OZK (OZK), formerly Bank of the Ozarks (OZRK).  The stock fell from $46 to $41, with most of it coming this past week in conjunction with the quarterly earnings release.  I didn’t think the quarter looked too bad, but apparently the market didn’t agree.

CVS Health (CVS) was another stock of mine that had a notable drop (from $72 to $66), but it didn’t quite reach the -10% level.

All-in-all, more stocks moved up than down, and those that were down, didn’t fall too much.

 

Watch List

Quite a few stocks seem to be moving onto my watchlist.

Let me start with possible additions to my existing Portfolio positions…

I’m looking to add to some of my smaller positions in order to bring them up to a more desirable Portfolio weighting.  I’ve mentioned Comcast (CMCSA) and Texas Instruments (TXN) in previous months, and have now added Starbucks (SBUX), Hershey (HSY), Abbvie (ABBV) and Illinois Tool Works (ITW) to the watchlist.

I keep writing put options on CMCSA instead of buying the stock outright.  These puts have expired in each of the last 3 months, so no assignment was made.  Maybe this is the month I just directly add to my CMCSA position.  We’ll see.

As for TXN, I’m still looking for it to trade below $100 before I consider adding some.  At this point, a purchase isn’t imminent.

SBUX dropped below $48 earlier in the month, and that’s about the spot I’d look to add.  However, I wasn’t prepared to purchase at the time, so I’ll wait and see if I get another opportunity, and if I’ll have the $$$ lined up to act.

HSY is a tough one, as I’ve contemplated selling my position and investing elsewhere due to its recent growth and outlook.  However, I’ve also considered sticking with it and adding to my position.  For now, I’ll just watch it.  The stock continues to drift around in the lower $90s.  I could see adding some in the $87-$88 range.

I like the combination of growth and yield that ABBV provides.  I’ve done well with my initial purchase of ABBV and would like to add more.  I can’t say I’ve identified a price at which I’ll add more ABBV, but it reaches a point of interest for me in the high $80s.

Finally, there’s ITW, which pulled back after its earnings report earlier this week.  ITW has been on the decline since late January, when market volatility ratcheted up.  No price point has been selected for adding just yet, but it’s on my radar.

Now let me discuss the non-Portfolio stocks that I’m watching…

All of them are large, well-established companies.

The list begins with a couple of holdovers from last month in aerospace and defense company General Dynamics (GD), and engine maker Cummins (CMI).  As noted last time, GD would look interesting in the $180-$185 range, while CMI would look intriguing in the $125-$130 range.  CMI is currently closer to being in my target range.

3M (MMM) is still on my radar as well, but it will have to drop into the $185- $190 range to motivate me to initiate a position.

Shipping & Logistics company FedEx (FDX) has garnered my attention of late.  I’d like to see a dip below $230 before taking a closer look.

I’d like to add toolmaker Stanley Black & Decker (SWK) if it approached its 52-week low around $132 again… not too far away.  The price ran up a bit in the past week with an earnings report that exceeded expectations.

Finally, one last idea is chip equipment maker Lam Research (LRCX).  LRCX is a more volatile pick from the tech sector, as evidenced by their move from $165 to $225 in a matter of one month earlier this year.  The stock has seen a subsequent decline to the low $170s.  This stock declared a monster dividend raise this past May, over 100%.

 

Thoughts?

What changes have you been making to your portfolio?  Are you watching any of the same stocks that I am?  Please share your thoughts!