As August draws to a close, it’s time for another edition of Portfolio Thoughts!  As usual, there’s plenty to discuss.

After a month of climbing prices for most of my Portfolio stocks, I had one stock grow in value so much it’s reached a value weighting greater than a 5%.  I wonder what stock that could be?

As for transactions, I had a couple from late July (after my last Portfolio Thoughts post) that I’ll note here.  I also had a couple purchases in August.  However, the big transaction news for the month was the elimination of a Portfolio position.  This stock had a large dividend weighting in my Portfolio, and so the sale put a nice dent in my forward dividend income.  Keep reading to check out the damage there.

After the past few months were littered with dividend cuts and suspensions, did my Portfolio avoid all negative impacts in August?  Was it back to the good ole days of dividend raises only?  We’ll find out shortly.

We are now at 5 months of gains in a row after the stock market bottomed out in March.  Impressive!  My Portfolio value has been the big beneficiary, but as prices continue to rise, it makes me think that the eventual pull back will be just that much worse.  Oh well,  I plan to stay invested and ride it out.  Time in the market will pay off in the long run.

While there appears to be fewer bargain stocks available, there still seems to be enough to pick through.  I’ll let you know what stocks are garnering my interest as of late, too.

Let’s check out my Portfolio Thoughts for August…

 

Value Movement

During the month of August, I had three new stocks crack my top 10.  Yet, by the time I gathered the info for this post, it was the same top 10 as last month.  Still, there was some shuffling of the deck.  Let’s see which stocks moved up the rankings, and which drifted down.

After months of wrangling with RPM International (RPM) for the top spot in my Portfolio, Qualcomm (QCOM) skyrocketed in August and has now established a firm grip on #1.  QCOM now holds a value weighting of more than 5% in my Portfolio.  I think QCOM could be positioned for further gains thanks to the ramp in 5G, as well as fewer licensing and litigation headwinds in its business.  So, I’m holding tight and hoping there’s “more where that came from”.  In this case, I’m letting my winner run.  Run, QCOM, run.

Despite letting QCOM blow by, RPM remained safely in the #2 spot.  This stock from the Materials sector delivered more price gains in August.

No movement at the #3 and #4 spots, with Procter & Gamble (PG) and Visa (V) settling in there.

Skyworks Solutions (SWKS) managed to move up a spot to #5.  SWKS has cooled its jets a bit after a strong run up to $150/sh.

Rising two spots in the rankings to #6 was Union Pacific (UNP).  UNP rose swiftly to start the month, but has leveled off recently.

Falling a couple of slots to #7 was T. Rowe Price Group (TROW).  Despite climbing in price during the month, the stock’s upward movement was tame by comparison to the other top 10 stocks around it, and that led to some slippage.

Another stock that was able to move up my rankings was Fastenal (FAST).  This industrial rose up one position to #8.

Dropping a couple of spots to #9 was Pepsico (PEP).  This continues the slide from last month.  Again, it was a positive performance in August, just not strong enough to prevent it from being surpassed.

BlackRock (BLK) fought off the advances of three other stocks to hold down the #10 position for a 2nd straight month.  With so many stocks nipping at its heels, can it remain in the top 10 come next month?

Just outside the top 10 are Nike (NKE), Lowe’s Companies (LOW) and Johnson & Johnson (JNJ).  NKE and LOW moved within reach of the top 10 after nice price gains in August.  JNJ slipped a bit, but remains within striking distance of returning to the top 10.

 

 

Looking at the totals in my table above, my top 10 holdings comprise 39.40% of my Portfolio value.  This is a rise of 1.36% compared to last month.  This increase was a combination of solid price gains for most of the stocks, in addition to the departure of one of my stocks from the Portfolio (lifting the weights of all the remaining stocks).

As for the dividend weighting of my top 10, this increased also.  It was a 0.74% increase to 31% even.  Again, a decent move up here for the group thanks to my departing stock, which had a significant dividend weighting.

 

Transactions

In early August I was able to post about some late July transactions (these occurred after my last Portfolio Thoughts post, so I’m including them here).  I purged the smallest stock in my Portfolio, as it never really gained any traction for me.  Meanwhile, I continued to grow a position I started back in February.  Check out the following post for details on these two transactions.

Recent Transactions – KTB & ADP

As for actual transactions in August, the big one was my sale of Exxon Mobil (XOM).  It left me with a big hole in my forward dividend income that I started to fill with a couple of follow-on purchases.  However, it’s going to take a few more purchases to recoup all that lost income from XOM.  You can read about these three transactions in this post from last week.

Recent Transactions – XOM, AFL, MMM

As noted, both of my sales resulted in stocks exiting my Portfolio, while the purchases were to existing positions.  Therefore, the number of Portfolio holdings declined by two to 48.

 

Price Movement

Note – my price changes cover closing prices from 7/24/20 to 8/28/20.

It was another impressive month of price gains for my Portfolio.  This month I recorded better than a 4:1 ratio of stocks with price gains compared to price declines.  While this couldn’t match the 6:1 ratio from July, it’s a ratio I’ll gladly take any month.  Of the 48 holdings, 39 moved higher and only 9 moved lower.  I was impressed by the number to stocks that managed to move up at least 10% for the month.

Of the 39 stocks that rose in price, 1 finished up over 30%, and 1 rose over 20%.  QCOM rose a whopping 32.97% over my reporting period to lay claim to title of my best gainer of the month.  Air Lease (AL) continued its choppy movement over the past few months with a big gain in August of 21.79%.

After that I had large group of stocks that registered gains of 10% or more.  This group was led by Nexstar Media Group (NXST), which rose 16.26%, The Walt Disney Co. (DIS), which gained 15.25%, and an advance of 14.08% from NKE.

No less than 12 other stocks also posted gains over 10% (the usual threshold I monitor), while 6 more managed to move higher by over 5%.

Looking over the August gainers, stocks from the Information Technology, Consumer Discretionary and REIT sectors seemed to perform the best.

Of my 9 stocks that fell in price, only a couple fell more than 10%.  Those two stocks were a couple of Healthcare stocks in Quest Diagnostics (DGX) and Gilead Sciences (GILD), which slumped 11.39% and 11.38%, respectively.

Other notable decliners included Cisco Systems (CSCO), which fell 9.05%.  CSCO provided disappointing guidance in conjunction with their earnings report.  Wells Fargo & Co. (WFC) continued its slump, losing 5.98% this month.  It appears this stock may be stuck in the $24-$26 range for a while.  Lastly, another swooning Financial stock was TCF Financial (TCF), dropping 5.26%.

Financials and Healthcare appeared to the sectors lagging for me in August.  However, it’s hard to complain when the Portfolio as a whole logged good gains.

 

Watch List

As the market marches higher, my watch list has been thinning out.  Plenty of value stocks seem to be congregating in currently unloved sectors.  Maybe I’ll try to pick through the rubble and see if I can unearth a gem.

Through the end of August, five of the eleven GICS sectors are still sporting negative returns for the year.  These include Energy, Financials, Utilities, Real Estate and Industrials.  After cutting XOM loose, I’m not in a rush to get back into the Energy sector.  I’m already overweight in Financials and Industrials, so it’s not my first choice to look there.  My current REIT weighting is just about right.  That leaves Utilities.  I don’t own any Utilities at this point, so I may look there.  I had it as a bonus goal this year to add a Utility stock to my Portfolio.

Within my Portfolio, here are some stocks that I’m watching for possible additions…

I added to Aflac (AFL) this month, so I’ll drop it from my list for now.

Healthcare is a sector I’d like to increase my weighting in.  CVS Health (CVS) is a name I mentioned last month that remains interesting to me.

Another healthcare stock I’d like to have grow within my Portfolio is UnitedHealth Group (UNH).  This stock has been running away from me since the small pair of purchases I made to establish my position.  Something under $300 would be nice as this point.

Shares of Automatic Data Processing (ADP) and General Dynamics (GD) are still high on my watchlist, but I’ll try to hold out for lower prices.  I added to ADP just last month.

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

I’m still watching Waste Management (WM), NextEra Energy (NEE) and Costco Wholesale (COST), but none are near the price I’ve been eyeballing for each.  They’ll have to remain on the outskirts of my radar screen.

The only Utility that has piqued my interest recently is Pinnacle West Capital (PNW).  It’s an electric utility primarily operating in Arizona, but I need to do more research.  If the price drops below $70 I’ll have to expedite that research.

 

Thoughts?

What are you portfolio plans for the remainder of 2020?  Keep building?  Pull the weeds?  Refresh the portfolio with some new additions?  Please share your thoughts!