After a couple of market months in the red to begin 2022, we got a reprieve in March. I was happy to see some green.
Halfway through the month, it looked like the downtrend from January and February would continue in March. However, a turnaround began and we end up higher than where we started.
The best monthly returns in the S&P 500 were once again led by the Energy sector, which posted a return of 18.5%. I’m missing out big time given that I have no Energy stocks in my Portfolio.
Utilities had double-digit returns over the past month as well. The laggard sector for the month was Consumer Staples with a gain of 2.1%. At least it was a gain.
Year-to-date (YTD), only the Energy, Utilities and Financial sectors are in the green, with Energy way out in front – over 40 percentage points better than its closest competitor. Communication Services is the worst YTD performer at -11.3%. It’s the only sector sporting a double-digit YTD loss.
Price movement was less volatile in March for my Portfolio stocks. The number of big movers (+/-10%) was contained to just a handful of stocks… and they were all to the plus side!
With regard to my Top 10 Portfolio stocks… for the first time this year my Top 10 stocks did not change from month-to-month. The top and bottom spots remained static, while all the other spots changed stocks. Which stocks moved up and which moved down? Stick around to find out.
A few of my Portfolio sector weightings still need some work to come into my target weighting ranges. However, I did have one sector come into range via normal market activity. Was it an underweight or overweight sector that was eliminated? You’ll know shortly.
My watchlist is still internally focused. There are plenty of stocks I could find myself purchasing within my Portfolio since they trade at attractive prices. There are also a few that I’m looking to replace. I eliminated W.P. Carey (WPC) earlier in March, and more poor performers or slow/no dividend growers could be next.
Let’s spring into my Portfolio Thoughts for March 2022.
Price Movement
Note – my price changes cover closing prices from 2/25/22 to 3/25/22.
Thanks to more of my Portfolio stocks being in the green in March, my Portfolio saw a nice uptick in value this month. A 3rd consecutive month of prices declines would have been no fun, so I’m happy my Portfolio avoided that.
My ratio of stocks with price gains compared to price declines finished at nearly 3:2 – essentially a reversal from February. Of my 56 holdings, 33 moved higher in price, while 23 moved lower.
Here were the top movers up and down in March…
Of my 33 stocks that rose in price, 4 of them managed gains over 10% (the usual threshold I monitor for), and a healthy 17 more posted gains of at least 5%.
The top gainers in March were:
- Caterpillar (CAT), rocketing 19.41%
- Fastenal (FAST), popping 12.29%
- Union Pacific (UNP), rising 10.95%
- Lockheed Martin (LMT), jumping 10.79%
- Quest Diagnostics (DGX), advancing 9.00%
Jumping out from this list is the fact that my top 4 performers were all Industrial holdings. I can’t say I’ve seen stocks from one sector dominate the list like that before. General Dynamics (GD) also had a nice month (+7.18%) even though it didn’t appear on the top performer list.
LMT is benefiting from additional orders stemming from the turmoil in eastern Europe.
FAST graced my worst performers list in February, so it was nice to see a comeback this month.
Of my 23 stocks that dropped in price, none of them declined more than 10%, which is always nice to see. However, 5 stocks retreated more than 5%. Still, these are good overall numbers compared to a usual month for decliners.
My worst decliners this month were…
- Eastman Chemical (EMN), sinking 8.37%
- Qualcomm (QCOM), dropping 7.58%
- The Walt Disney Co. (DIS), falling 6.95%
- RPM International (RPM), sagging 5.91%
- Starbucks (SBUX), declining 5.54%
After holding up fairly well YTD, EMN finally succumbed to the pressure that my other Materials stocks have felt in 2022. One of those other Materials stocks is RPM, which showed up on this month’s worst decliners list as well.
Unfortunately, my largest Portfolio holding, QCOM, made this list, too. This usually leads to under-performance of my Portfolio as a whole.
DIS went from one of my top performers in February to one of my worst performers in March. Over the past year, DIS is down 25%.
Top 10 Review
For the first time this year my Top 10 contained the same stocks between months. However, that doesn’t mean all movement was missing.
The #1 and #10 spots kept the same stocks, but the other spots got shuffled around. On top of that, most months see stocks move a spot or two from month to month. However, in March the moves were more exaggerated. I think that was primarily due to the tight grouping in weighting that I had to end last month, so it didn’t take much of a move to change position in the rankings.
Let’s start at the top. Despite a poor month performance-wise, QCOM retained the #1 spot. QCOM’s 7.58% decline in March stung a bit, but the stock could easily post a rebound in April.
Interestingly, my #5 through #8 stocks from last month all moved up 3 spots each in unison. Thus, UNP, AbbVie (ABBV), Aflac (AFL) and Broadcom (AVGO) laid claim to the #2 through #5 spots this month. All of these stocks posted at least 5%+ gains in March.
ABBV has had an amazing run of late. Two months ago it wasn’t in my Top 10. However, it debuted at #6 in February and moved all the way up to #3 in March… quite a run.
Falling four spots to #6 was Procter & Gamble (PG). PG experienced some tough sledding in March (-3.42%) as the market moved up and money seemed to leave some of the more defensive names.
Dropping three spots to the #7 ranking was Lowe’s Companies (LOW). LOW (-2.86%) didn’t have a horrible month, but this looked bad compared to the gains posted by several of the other Top 10 stocks.
Bucking the trend and moving up a spot to #8 was Nexstar Media Group (NXST). 2022 has been good to NXST thus far with three consecutive positive months. In March, NXST posted a 6.31% advance.
As noted earlier, one of my biggest decliners in March was RPM. The stock fell nearly 6% and consequently dropped six spots to my #9 spot. That’s quite the drop in my rankings! RPM has slipped in price each month during 2022. Here’s hoping the stock puts an end to that trend in April.
Rounding out my Top 10, and in the same position as last month, was Visa (V). V was practically flat for the month of March. With the pandemic still affecting many businesses worldwide, especially travel-related ones, V probably won’t be making much headway in price anytime soon.
BlackRock (BLK) and Pepsico (PEP) are loitering just outside the Top 10 and are looking to rejoin the group after exiting in February.
From the table above, my Top 10 holdings now comprise 36.26% of my Portfolio value. This is 0.22% lower compared to last month.
As for the dividend weighting of my Top 10, this ended the month at 30.84%, which is an increase of 0.46% compared to last month. Most of this increase was due to the double-digit dividend raise from QCOM during the month.
Weightings
In general, for the Sector Diversification, I target being within +/-3 percentage points of the sector weightings of the S&P 500. For the SuperSector Diversification, I target being within +/-5 percentage points.
The “Weight Diff.” column shows which sectors sit outside my preferred weighting ranges. If I’m overweight a sector, it’s shaded green. If I’m underweight a sector, it’s shaded red. If I’m within my target weighting range, then no shading exists.
My underweight difference in the Energy sector got worse as the sector continues to perform well and I don’t have any holdings to keep up. It remained my 2nd most underweight sector in my Portfolio, but the weighting difference now approaches -4%.
On a bright note, my Communication Services sector has naturally come into range in March (at -2.91% now), eliminating one of my underweight sectors. We’ll see if this can be maintained.
I still have three overweight sectors in Industrials, Consumer Staples and Materials. However, poor recent performance from my three Materials stocks has almost brought my weighting in this sector into range (currently at +3.28%).
Note that the table above shows the number of stocks in my Portfolio at 55, even though I referred to 56 stocks in the Price Movement section. The reason is that this past Friday I exited my Omega Healthcare Investors (OHI) position, and the table reflects that, even though I kept OHI in my price movement section since I essentially owned it the entire month. Anyway, expect another post in a few days detailing my OHI sale.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Even after a decent recovery in March, many stock prices remain at attractive levels. So, the activity on my radar is still buzzing.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
T. Rowe Price Group (TROW) still has my interest. The price has climbed a bit to the upper $140s, but that’s not far away from the $145 level I prefer.
Continuing to add to my Information Technology holdings is something I want. Skyworks Solutions (SWKS) is still in play as it sits in the upper $130s. My last purchase was at $136.75.
JPMorgan Chase & Co. (JPM) is still trading at a decent price in the lower $140s, but I’d prefer to scoop up any new shares at a price below $138, which is the price at which I last added to my holding.
Starbucks (SBUX) remains in my $85-$92 target range, so I’d like to add a few shares. It was trading below $80 in the middle of March and I didn’t make my move due to a lack to cash to invest. Sometimes you have to act quickly.
Still trading below my $48 target is Comcast (CMCSA). Thus, it remains on my radar and I hope to free up some cash to add to my position.
STORE Capital (STOR) has dropped about $1/share since I initiated my position early in March. Thus, I’m keen on averaging down my cost basis by adding more shares at a lower price.
Prices of the Healthcare stocks that I was watching (such as Amgen (AMGN), Merck & Co. (MRK) and Bristol-Myers Squibb (BMY) moved up in March, so my interest in adding to these positions has waned this month.
Current holdings that are on my chopping block due to poor performance or worse-than-expected dividend growth, poor dividend safety or a combination of those include: 3M Co. (MMM) and Gilead Sciences (GILD). Gentex (GNTX) and VF Corp (VFC) are in question as well. I would use any sale proceeds to add to the positions I outlined above.
As for non-Portfolio stocks that I’m watching…
Verizon (VZ) is high on my list at the moment, as I want something with a fairly high yield to help replace the dividend income I lost in the OHI sale I mentioned without requiring me to invest too much cash. VZ appears to be a decent value right now, and it would help bolster my Communication Services holdings, too, a sector that needs an addition in my Portfolio. I’d like to initiate a VZ position at $51/share or lower.
Cummins (CMI) remains a stock that I’m watching. I lowered my CMI target from $210 to $200 to provide a little more margin with regard to a favorable initial price.
Thoughts?
I’ve already eliminated two stocks from my Portfolio this year in WPC and OHI. Have you eliminated any of your portfolio positions in 2022? What stocks do you see trading at a good price despite the market recovery in the 2nd half of March? Please share your thoughts!