Market volatility continues to reign supreme. Needless to say, it’s been a wild month of May. However, after the strong rally this past week the damage doesn’t look too bad.
It seems my Portfolio value finished the month roughly around the same place I started since my last Portfolio Thoughts post. I can certainly live with that.
While the market was down early in May I did manage to make a few purchases. I’ll keep buying in both up and down markets. Slowly but surely I’ll continue to grow my Portfolio.
Despite the volatility, when all was said and done in May, I didn’t have many big price moves among the stocks in my Portfolio. Still, I’ll detail my 5 best and worst percentage movers from my Portfolio as I usually do.
I’ll take a look at my Top 10 Portfolio stocks as well. One new stock fought its way into my Top 10. I’ll cover which stock that was and which stock it booted out.
As for my Portfolio sector weightings, I had one sector lose its ‘overweight’ designation by the conclusion of May. I’ll share that sector and also let you know where I have more work to do to get my sector weightings into my preferred balance.
With regard to my watchlist, a couple of my purchases in May were mentioned in last month’s Portfolio Thoughts post. My watchlist continues to be a good source for my purchases. This hasn’t always been the case. I’ll discuss those two stocks that went from my watchlist to my Portfolio, and of course update my watchlist after another month of stock price changes.
Let’s not wait any longer… here are my Portfolio Thoughts for May 2022.
Price Movement
Note – my price changes cover closing prices from 4/22/22 to 5/27/22.
My ratio of stocks with price declines compared to price gains finished at essentially 6:5. Of my 57 holdings, 31 moved lower in price, while 26 moved higher.
Here were the top movers, in both directions, in May…
Of my 26 stocks that rose in price, only one posted a gain over 10% (the usual threshold I monitor for), and another 5 notched gains of at least 5%.
The top gainers in May were:
- Merck & Co. (MRK), popping 10.04%
- RPM International (RPM), rallying 6.49%
- Amdocs Ltd. (DOX), advancing 6.31%
- Quest Diagnostics (DGX), rising 5.98%
- Gentex (GNTX), climbing 5.71%
After REITs dominated this list last month, it was more of a mixed bag in May. However, a couple of Healthcare stocks appear in my top performers, with MRK topping the list and managing to be my only 10%+ gainer.
For the 2nd month in a row RPM was among the top gainers. That has been nice to see after a rough Q1 for RPM.
Of my 31 stocks that dropped in price, only 2 of them declined more than 10%. I can handle that. Unfortunately, another dozen stocks retreated more than 5%. This put a rather negative tilt on my overall Portfolio performance in May since I didn’t have many strong gainers to offset this.
My worst decliners this month were…
- Cisco Systems (CSCO), sinking 11.18%
- Nike (NKE), dropping 10.13%
- Hormel Foods (HRL), retreating 9.24%
- Main Street Capital (MAIN), sagging 8.91%
- STORE Capital (STOR), pulling back 8.18%
There were no repeats from last month…. whew! Also, HRL went from my best performers list last month to my worst performers this month.
Five different sectors were represented above. So, the market did not discriminate in my Portfolio when it came to declines.
CSCO topped the list after releasing poor earnings and guidance around the middle of the month, even though it has recovered some from the price depths it reached then.
Top 10 Review
I wouldn’t say there was a lot of movement in my Top 10 this month. Only one stock moved more than 2 spots up or down the rankings.
As for shuffling within my Top 10, two stocks managed to hold the same position as last month.
There was one stock replaced in the Top 10, too, which seems to be the average for my Portfolio.
Let’s get some details…
Of course, Qualcomm (QCOM) still holds the #1 spot by a decent margin. Its position was strengthened by a 5%+ return this month. It’s one of the two stocks I mentioned that stayed put in my rankings.
RPM had a good month (the 2nd best in my Portfolio in May) and jumped up one spot to reclaim #2. RPM jockeyed for the #1 ranking with QCOM for many a month about 1-2 years ago.
Procter & Gamble (PG) slipped one spot to #3 after dropping 7.77% last month (three 7s wasn’t too lucky in this case). Consumer Staples as a group took it on the chin in that 3rd week of May.
The other stock that held steady at its same position as last month was AbbVie (ABBV), which held down the #4 spot. ABBV was down a bit over 3% in May, which prevented it from surpassing PG in my rankings.
Rising a couple of spots to #5 was Broadcom (AVGO). AVGO was a little worse than flat in May, but nonetheless, that allowed it to gain two spots in the rankings.
Also moving up two spots in the rankings, to settle in the #6 spot was Pepsico (PEP). This stock was also slightly negative for the month, but like AVGO forged higher in my Top 10.
As a result of dropping in price close to 5% over the course of May, Aflac (AFL) slipped two spots in the rankings to #7.
After falling for 4 straight months to begin 2022, Lowe’s Companies (LOW) stabilized in price and actually recorded a small gain in May. This was enough to have LOW advance one spot and land at #8 in the rankings.
At #9 we have the newcomer to the Top 10. That stock is Nexstar Media Group (NXST), which posted approximately a 4.5% gain this month. NXST had been part of my Top 10 before (just a couple of months ago), but it couldn’t maintain that status. NXST is one of the more volatile stocks in my Portfolio with a beta of ~0.93, even though that’s slightly below the volatility of the broader market.
The Top 10 stock falling the largest number of spots this month was Union Pacific (UNP). UNP fell 4 spots again… just like last month. It held on to the #10 spot in my rankings after posting a 5% price drop. The two-month fall has been fairly steep, with over $50/share shaved from the stock price… close to 20%, with most of that coming last month.
Fastenal (FAST) was the stock that fell out of my Top 10 this month. This came after it rejoined the Top 10 just last month.
The stock lying just outside my Top 10 with the best chance to join the club next month is Visa (V).
Lastly, notice the small difference in weightings between positions #3 and #10, and especially #5 and #10. Due to this tight grouping, expect plenty of shuffling within my Top 10 by next month.
From the table above, my Top 10 holdings now comprise 35.63% of my Portfolio value. This is only 0.10% higher compared to last month. Decent gains from QCOM and RPM during May were negated by noticeable losses from PG, AFL and UNP.
As for the dividend weighting of my Top 10, this ended the month at 33.64%, which is an increase of 0.36% compared to last month. Nice dividend raises from LOW and UNP were enough to give the Top 10 dividend weighting a decent increase, despite small decreases from the other Top 10 holdings and a negative impact from NXST replacing FAST.
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.
With the Energy sector still piling on gains each month, my underweight difference there continues to get worse. The weighting difference is getting close to -5%. Meanwhile, Information Technology remains my most underweight sector. While I did purchase some V during the month, it wasn’t enough to really put a dent in the magnitude of my Tech under-weighting.
After Healthcare became an overweight sector for me (just barely) last month, it fell back to neutral status in May. This reduced the number of overweight sectors in my Portfolio to three.
Industrials, Materials and Consumer Staples are the overweight sectors, with Industrials still needing the biggest trim. I expect to let the Consumer Staples and Materials weighting come into my desired weighting ranges naturally by putting new investment dollars into the other sectors.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Although the market rally this past week helped many stocks off their 52-week lows, many attractive values continue to exist.
I added to a few positions early in the month, but have been rather quiet since. I need to build up more cash to ready for the next purchase.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
After nabbing some T. Rowe Price Group (TROW) shares late last month at $128.50, the share price hasn’t moved much higher (just below $130 now). Thus, TROW remains on my radar and I expect to purchase a few more shares, especially should it trade below my last purchase price.
Skyworks Solutions (SWKS) continues to drop, falling through each of the last few targets I set. The stock briefly fell below $100, but I failed to act. I’m still looking to add 5 shares.
After dropping below $120, JPMorgan Chase & Co. (JPM) has recovered to north of $131. My last purchase was at the $126 level. I’ll look to add more below that level.
I finally managed to pull the trigger on adding a few Starbucks (SBUX) shares (5) earlier this month at $74.75. I got them well below the target price I’d set months ago, so I like that. SBUX remains on my radar despite the recent addition. Adding shares at a yield north of 2.5% is my preference.
I wish I’d snatched up some Comcast (CMCSA) shares when the price dipped below $40 during the first two weeks of May. Unfortunately, I was focused on purchasing other stocks. CMCSA has since recovered to a little over $44. While I don’t like the price as much at that level, adding some CMCSA shares is still a possibility.
Some of my smaller positions that I want to add to include NextEra Energy (NEE), Cummins (CMI), The Walt Disney Co. (DIS) and Microsoft (MSFT). Each touched price levels where I considered buying more, but those prices didn’t last long. Let’s see if I get another chance at those. Those levels were below $70 for NEE, below $190 for CMI, below $100 for DIS, and south of $250 for MSFT. Purchases at those levels would mean a lowering of my cost basis for NEE and CMI, but a rise in my cost basis with DIS and MSFT.
Trimming/Sale of my 3M Co. (MMM) and GNTX positions are still at the forefront of my mind, but I’d like to do so at higher prices. Both have offered little to no dividend growth over the past couple of years and that’s something I don’t like to see in my Portfolio – currently, I’ve made an exception for DIS.
As for non-Portfolio stocks that I’m watching…
Both FedEx (FDX) and NVIDIA (NVDA) hit my price targets over the past month, but I refrained from adding any new stocks to my Portfolio with so many internal purchase opportunities present.
Still, I’ll keep an eye on both. I’ll keep my FDX target below $200, but I’m lowering my NVDA price target to $170 or below.
After missing revenue and earnings targets and providing a disappointing forecast this past week, the price of Medtronic (MDT) has dipped below $100 and garnered my interest. While I don’t necessarily need another Healthcare name in my Portfolio, I don’t necessarily have any healthcare stocks dedicated to the medical device industry either. If I do open a position in MDT it will start rather small, with further additions should the price get into the $92-$95 range.
Thoughts?
How do you view the stock market at this point? Have we hit a bottom? Do we have more downside ahead despite this recent bounce? Please share your thoughts!