The stock market started off 2021 by continuing to climb higher, but by the end of the month, gains turned to losses. Still, it wasn’t a horrible month. Despite all the ups and downs, the S&P 500 only finished down a little more than 1 percent.
Following the markets, my Portfolio also declined a bit in January. However, taking a bit of a breather after reaching new highs is probably warranted.
I had quite a bit of movement within my top 10 holdings this month. Only 3 of the 10 stocks managed to maintain their position compared to last month. In addition, one stock fell out of my top 10, which means another moved in. Stay tuned to find out which stocks those are.
I didn’t wait long in 2021 to execute my first trades of the year. There were two groups of three transactions. One cluster in the first week of the month, and the other in the last. In the latter case, a new stock was introduced into my Portfolio.
My watchlist continues to evolve as stock prices change. I’ll get you up-to-date on what’s piquing my interest these days, as well.
Let’s get to it… here are my Portfolio Thoughts for January… the first set of thoughts for 2021!
Value Movement
There was some decent movement in my top 10 during the month of January. Three stocks managed to stay put month over month.
Those stocks were at #1, #2 and #6. So, it was Qualcomm (QCOM), RPM International (RPM) and BlackRock (BLK) which finished where they started.
QCOM and RPM have held down the top 2 spots for months now, however RPM just barely held on to #2 this month. Skyworks Solutions (SWKS) was one of my better performers in January and nearly surged into that #2 spot.
As we wrapped up January, here’s what my top 10 looked like…
So, SWKS settled in at #3 after a good month for the stock, and a bad month for RPM. I suspect SWKS will grab that #2 spot by next month. If that happens, it would make a couple of semiconductor stocks my two largest positions…. hmmm.
Another stock with a nice gain in January was T. Rowe Price Group (TROW). TROW moved up three spots to #4. Strong Q4 revenue and earnings gains helped TROW move higher.
Falling a couple of spots to #5 was Nike (NKE). NKE has been on a tear since the market lows last March, and it appears that the market has decided to pump the brakes on NKE after the strong price run up, as no negative news was bringing down the stock.
BLK was slightly negative for the month (roughly matching the market), and thus it held steady at #6. BLK did announce a nice double-digit dividend raise during the month, so that boosted its dividend weighting this month – my only top 10 stock to have an increase in that category.
Tumbling three spots in the rankings to #7 was Procter & Gamble (PG). PG was one of my price laggards in January. The steady drift lower in its stock price came despite a good earnings report during the month. Analysts see growth decelerating in 2021 after a boost to PG’s business during the pandemic.
Creeping up one spot to #8 was Union Pacific (UNP). UNP also recorded positive earnings numbers in January, but it wasn’t enough to help the stock price finish higher by month’s end. UNP managed to move up my top 10 despite its falling stock price.
Visa (V) fell one spot to #9 in January. As the pandemic lingers, travel around the world remains restricted and thus limits the quantity of financial transactions that drive revenue for V.
Lastly, it’s at the #10 spot that we see my new top 10 stock. Falling out of my top 10 was Pepsico (PEP), and replacing it was Lowe’s Companies (LOW). LOW cracked my top 10 in 2020 as well. We’ll see if it can retain its spot in my top 10 this time around.
Lurking just outside my top 10 are a few familiar names: Johnson & Johnson (JNJ), PEP, Broadcom (AVGO) and Fastenal (FAST). AVGO has been on a strong run, but it may run out of steam after climbing quite a bit over the past few months.
From the table above, my top 10 holdings now comprise 38.12% of my Portfolio value. This is an decrease of 0.37% compared to last month. I expect to see this number inch lower over the course of 2021, as my new capital investment should occur outside my top 10.
As for the dividend weighting of my top 10, this ended the month at 26.04%, a decline of 1.96%. Nearly the entire difference was due to PEP’s higher dividend yield being replaced by the lower dividend yield of LOW. The dividend raise from BLK was the only thing driving my top 10 dividend weighting higher in January.
Transactions
I had 6 transactions in January. Three were made in the first trading week of the month, while the other three were made during the last trading week – bookend moves, if you will.
With the first group of 3 transactions, I made a capital investment into my Portfolio… I made 3 small buys to kick off the new year.
With the second group of 3 transactions, I didn’t really invest much in the way of new capital. Instead, I shuffled my Portfolio a bit, trimming a position by nearly 25%, then splitting the proceeds between an existing Portfolio stock, and a new Portfolio stock.
All the details can be found in the following pair of posts…
Recent Transactions – AL, MRK, LMT
With the Lockheed Martin (LMT) purchase resulting in a new stock for my Portfolio, the number of positions in my Portfolio has grown to 51.
Price Movement
Note – my price changes cover closing prices from 12/24/20 to 1/29/21.
As I mentioned in the introduction, my Portfolio retreated a bit in January. A monthly gain was actually in the cards until the last trading day of the month put overall performance in the red.
It seems like there was plenty of volatility during the past month, however I didn’t see many big movers once the month actually came to a close.
This month I posted a 14:11 ratio of stocks with price declines compared to price gains. So, things were slightly to the negative – not bad though. Of the 50 holdings (not counting LMT yet), 28 moved lower, while 22 moved higher.
Of the 22 stocks that rose in price, I had one increase over 20%, while 3 others managed to move up over 10% (the usual threshold I monitor). Another eight stocks gained over 5%.
Leading the pack were these 10%+ gainers:
- Walgreens Boots Alliance (WBA), posting a hefty 26.83% gain
- Gilead Sciences (GILD), jumping 14.95%
- Iron Mountain (IRM), rising 13.98%
- Skyworks Solutions (SWKS), climbing 11.93%
GILD made a nice recovery after leading to the downside last month.
Also, IRM and SWKS have made this top performers list a couple months in a row now.
Of the 28 stocks that dropped in price, not a single one fell over 10% – that’s 2 months in a row that I’ve avoided any stocks moving significantly to the downside. Unfortunately, 11 stocks moved down at least 5%. Still, overall, it was not too much action to the downside… I’ll take it.
Here were my worst performers since my last Portfolio Thoughts post:
- RPM International (RPM), retreating 8.43%
- VF Corp (VFC), falling 8.38%
- Air Lease (AL), declining 8.24%
- Fastenal (FAST), dropping 7.94%
- Visa (V), dipping 7.40%
I had plenty of companies with similar levels of poor performance. You’ll see I had a couple of Industrial names in this group.
Watch List
Despite adding LMT to my Portfolio recently, I’ve been trimming my Industrials overall, as it’s my most overweight sector. There’s more work to do here as the year progresses.
During 2021, I’m looking to increase my weighting in Information Technology and Communication Services. Only my single-share purchase of Microsoft (MSFT) in January has helped in this regard so far.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Merck & Co. (MRK) and LMT lead my watchlist. These are two of my smaller positions that I’d like to see grow within my Portfolio, and I find the current prices agreeable.
General Dynamics (GD) remains on my watchlist. Its price has fallen compared to last month, making it more attractive in my eyes. If this stock wasn’t in the Industrials sector, I might be more inclined to add here. As it is, I’ll probably focus on LMT first as long as the price there looks favorable.
While I can’t say I’m looking to add to my REITs (especially after trimming them last year), I’ll consider adding to Realty Income below $60.
As for non-Portfolio stocks that I’m watching…
During 2021, I’ll be looking to find a Utility or Energy stock for my Portfolio. I’ll be focused on prospects with above average dividend growth in these sectors.
I don’t have any Energy names I’m looking at just yet, but when it comes to Utilities, I’m watching Pinnacle West Capital (PNW) for a possible addition. The stock has drifted lower in recent weeks and it looks interesting below $75, and enticing in the low $70s.
If I see Bristol Myers Squibb (BMY) dip below $60, that could be another Healthcare name I might add to my Portfolio.
With Cogent Communications (CCOI) dropping to $57 again, it’s becoming more interesting to me. A drop below $55 might be enough for me to initiate a very small position in this Communication Services name.
I missed my chance to buy Flowers Foods (FLO) below $22 during the past month. However, I’ll keep my eye on the stock and look for another opportunity to open a position.
Thoughts?
What do you have planned for your portfolio in 2021? Have you already started adding to your portfolio for the year? Please share your thoughts!