What a difference a month makes!  After a strong start for the stock market in 2019, rising trade tensions have put into question any sort of agreement between the U.S. and China, and subsequently rattled investors.  A decent pullback in the market has arrived, especially in specific sectors.  This is certainly not the best news for my Portfolio value, but it presents me with more potential buying opportunities, a chance to bolster some positions at reduced prices, or perhaps even add a new stock to my Portfolio.

My march towards $10K in annual forward dividends continues.  I currently stand at $9,790.60.  It’s seems like a crawl instead of a march recently due to minimal purchasing and moderate dividend raises compared to last year, but reinvesting my dividends has kept me moving towards the milestone.  Slow and steady wins the race!

Last month I mentioned how Qualcomm (QCOM) rocketed to the top of my Portfolio value list, and with good margin.  Well, one month later QCOM has lost its grip on #1, in fact falling all the way to the #6 spot.  QCOM was hit with a double whammy.  The first punch was due to select tech names with high percentages of sales into China getting hit as U.S. / China trade tensions escalated.  A second punch followed shortly thereafter when a U.S. District Court judge ruled that QCOM violated U.S. anti-trust law.

Union Pacific (UNP) holds the #1 spot now, followed closely by a couple of my more defensive names in Procter & Gamble (PG) and Pepsico (PEP).  The top 7 are rather closely bunched now, so I expect there to be a lot of jockeying for position over the coming months unless one stock can pull away from the pack.

As usual, here’s what am I planning to cover in my Portfolio Thoughts post…  I’ll discuss any Portfolio transactions, price movement for my Portfolio stocks, and what might be on my watchlist.

Here we go…

 

Transactions

While I didn’t make any purchases or sales this month, I still have some transaction activity to discuss.  How’s that, you ask?  Well, that’s because there were a couple of automatic transactions that didn’t involve me having to initiate anything.

First, I had Fastenal (FAST) undergo a 2-for-1 stock split.  After the split, I now have just over 300 shares of FAST.  This will mean a smaller portion of my position will be at risk if I choose to write a covered call option.  It will also mean less money to reserve if I choose to write a FAST put option.

Second, VF Corp (VFC) spun off its jeanswear business as shares of Kontoor Brands (KTB), One share of KTB for every 7 shares of VFC that I owned.  I ended up with 11 shares of KTB.  I haven’t seen yet how the cost basis is supposed to be allocated, so I’ve got that work in front of me.  Also, I believe I read that KTB plans on initiating a dividend sometime in the near future (one with a fairly high yield), but don’t quote me on that.  Anyway, I’ll be standing by to see if KTB delivers on that dividend, so that KTB can remain in my dividend Portfolio.

Assuming KTB does initiate that dividend, it would bring the number of stocks in my Portfolio to 44.

 

Price Movement

Note – my price changes cover closing prices from 4/26 to 5/24.

In terms of price movement this month, things turned a bit ugly for the first time this year.  While I did have a decent amount of stocks deliver gains this month, none were significant gains compared to the losses to the downside.  It was just over a 2-to-1 ratio of stocks with price declines compared to price gains.  29 of my 43 holdings posted a loss.

Last month, QCOM stood head and shoulders above the rest with a 52.24% gain.  This month, QCOM led again… but to the downside – a loss of 30.86%.  Easy come, easy go, as the saying goes.  I don’t think the volatility in QCOM is going to end anytime soon.

Close behind QCOM with respect to racking up losses was Skyworks Solutions (SWKS) with a decline of 25.15%.  Like QCOM, SWKS suffered due to high sales exposure to China.  Should a U.S. / China trade agreement come to fruition anytime soon, I’d imagine QCOM and SWKS could quickly recover some of those losses.

Also, moving down in price this past month were a couple of stocks posting disappointing earnings reports.  Cognizant Technology Solutions (CTSH) swooned 18.59% after lowering guidance for the quarter and year, while Lowe’s Companies (LOW) stumbled 17.94% thanks in part to gross margin concerns.

The last two Portfolio stock decliners I’ll mention were FAST which dropped 15.49% on growth concerns, and 3M Co. (MMM) which sank another 15.40% as investors continued to digest last month’s earnings report and the company’s suspect near-term growth prospects.

That’s 6 different stocks with a loss of over 15% this past month.  Three others notched pullbacks of more than 10%, too.  Technology and Industrial stocks seem to have been hit the hardest.

On the bright side, I had 14 stocks post gains this month.  Unfortunately, none of them sniffed the 10% gain mark that I usually highlight.  In fact, the top gainer this month in my Portfolio was REIT W.P. Carey (WPC), with a gain of 5.62%.  Coming in a close second was Target (TGT), rising 5.46%.  TGT erased what would have been a monthly loss mid last week with an encouraging earnings report.

Insurer Aflac (AFL) and BDC Main Street Capital (MAIN) were able to secure gains of over 4%, at 4.77% and 4.18%, respectively.  REIT Crown Castle International (CCI) rounded out the top 5, with a gain of 2.99%.

In general, my REITs performed well, as did several of my Healthcare names, and some of my Consumer Staples.  It seems Utilities fared well this past month, too.  However, since I don’t have any utility stocks in my Portfolio, I failed to benefit.

 

Watch List

So with the market decline this past month, I should have a few more stocks piquing my interest this month, right?  Yes, I would say that’s the case.

Let’s look internally first.  Here are some of my Portfolio stocks that I’m watching for possible additions…

Last month I said I might be inclined to add some MMM below $175.  Well, it’s dropped more than 5% below that threshold and I haven’t added yet.  What’s the deal?  Well, I have so many stock choices these days, and so little cash, I’m undecided on what I want to do.  Besides, the longer I wait, the lower prices seem to go.  So, I’m trying to remain patient.

Speaking of stocks falling below my target price, Exxon Mobil (XOM) crossed my $78/sh. level and is now hovering in the $72/sh. range.  Needless to say, XOM is still on my watchlist.

SWKS has definitely dropped to a level that interests me.  It now sits below $70/sh., thanks to a possible sales decline in China.  I think SWKS can figure out how to transition their business to diversify away from the Chinese customers, but it will take some time.

Another tech name on my radar is Cognizant Technology Solutions (CTSH).  CTSH got punished after a poor earnings report.  Last month I liked it below $72/sh.  This month it’s trading around $62 after a short stint below $60 in the weeks following their earnings.

Lastly, LOW is now on my watchlist after a hefty decline to the low $90s following lackluster earnings and lowering their full-year guidance.  This is a position I’d like to build up, so it may be near the top of my list at this moment.

A couple of honorable mentions go to Altria (MO) and General Dynamics (GD).  MO recently fell below $50 again, and GD is offering me a chance to lower my cost basis should I choose to add to the position I initiated just 2 months ago.

That’s quite a few stocks on my radar… and that’s INSIDE my Portfolio!

As for non-Portfolio stocks that I’m watching…

I continue to watch Boeing (BA) and FedEx (FDX).  I’m still thinking both BA and FDX can be had at lower prices.  Some negative new continues to swirl around each, so I hold off for now.

A new addition to my watchlist is Chemical Financial Corp. (CHFC), a small regional bank in the upper midwest.  Revenues and earnings have been on a nice upswing since 2014.  The stock sports nearly a 3.5% yield and has a P/E ratio around 10.  The company has a pending merger with TCF Bank which is expected to close this fall, and will roughly double the company size.  I’d like to establish a position in the stock below $40, and it’s trading slightly below that level now.

 

Thoughts?

Are you worried this is the start of long downtrend?  Do current stock prices have you itching to make a purchase?  Or are you standing by waiting for an even lower purchase price?  Please share your thoughts!