The summer months are here, but my Portfolio is anything but hot. Let’s call it lukewarm… especially these past two months.
To be honest, my Portfolio seems to be hanging in there so far in 2022. I believe my Portfolio is faring 2-3 percentage points better than the S&P 500 in 2022.
However, that could change quickly. I’ve got a sense that the stock market has another test of its previous bottom coming up.
The best thing about falling prices is buying more shares with my purchase dollars and my reinvestment dollars. That’s the way to get ahead in the long run.
So, I’ll try to be ready when the time comes and scoop up what look like some undervalued shares at that time.
The plan in this post is to cover the usual Portfolio Thoughts for the month. Here’s what’s on the docket.
- I’ll highlight my biggest stock price movers to the upside and downside for the month.
- I’ll detail my Top 10 holdings and which stocks were moving up and down in those rankings.
- I’ll cover my sector weightings and dividend weightings and let you know if all sector weightings are within my target range.
- I’ll update my watchlist and share several stocks inside and outside of my Portfolio that currently appeal to me.
And of course, I’ll let you know what I think about all of it. Here are my Portfolio Thoughts for August 2022…
Price Movement
Note – my price changes cover closing prices from 7/22/22 to 8/26/22.
There was plenty of price movement in August. Despite a big slide in the last complete week of August, my Portfolio still managed to finish to the upside for the month.
My ratio of stocks with price gains compared to price declines finished slightly better than 6:5. Of my 58 holdings, 32 moved higher in price, while 26 moved lower. That’s one stock better than the results I posted in July.
In August, here were the stocks with the biggest moves to the upside and downside…
Of my 32 stocks that rose in price, none were big movers (20%+). My Portfolio did have 5 stocks post a gain better than 10% (the usual threshold I monitor for). Another 14 recorded a gain of at least 5%. If not for the market decline this past week, my number of stocks to the upside would have looked much better. Regardless, I was happy to finish with positive results for the month.
The top gainers in August were:
- Automatic Data Processing (ADP), surging 13.68%
- Air Products & Chemicals (APD), popping 11.80%
- The Walt Disney Co. (DIS), rising 11.05%
- RPM International (RPM), advancing 10.16%
- Aflac (AFL), climbing 10.11%
ADP posted a strong month, rising over $30/share in the process. I believe this is the first time I’ve had ADP lead my gainers since it’s been in my Portfolio.
A pair of Materials companies graced my top performers in APD and RPM. My other stock from that sector, Eastman Chemical (EMN), recorded a positive month as well (2.12%) – nowhere near as impressive, but still positive.
APD had a nice rebound after being part of my worst decliners in July.
Of my 26 stocks that fell in price, only 2 of them declined more than 10%. This is one more than last month. Another 5 stocks retreated more than 5%. While results were looking much better about a week ago, it could have been worse with all the volatility we’ve had.
My worst decliners this month were…
- Comcast (CMCSA), tanking 13.62%
- VF Corp (VFC), plummeting 13.27%
- Qualcomm (QCOM), retreating 9.97%
- Medical Properties Trust (MPW), dropping 9.55%
- AbbVie (ABBV), pulling back 8.16%
For the 3rd straight month, that’s stocks from 5 different sectors topping my decliners list. Apparently, there are no sectors of mine avoiding the pain.
For the 2nd straight month, a stock from the Communication Services sector was my top decliner. In August it was CMCSA, replacing Verizon (VZ) which led in July.
VFC continues to be in a funk. It’s been a long while since any positive news surrounded VFC. Hopefully, this is the bottom for that stock.
QCOM found its way onto this decliners list after being on the gainers list last month. The big swings continue for QCOM.
Top 10 Review
For the first time in a few months my Top 10 stocks did not change. The ordering of my Top 10 was in flux, but the stocks remained the same.
With no new stocks in the Top 10, one might think movement was minimal, but that was not the case. Over half the Top 10 moved up or down at least 3 spots!
A couple of stocks actually moved at least 5 spots. One up and one down.
Let’s get to the details…
I start with the expected… Qualcomm (QCOM) holding down my #1 spot, and RPM International (RPM) locking down #2.
With QCOM falling almost 10% and RPM rising just over 10%, you’d think RPM might have had a chance at moving into the #1 spot. However, QCOM has had such a tremendous lead over RPM that not even their respective performances in August could change things.
After advancing over 5% this month, Nexstar Media Group (NXST) rose one spot to #3. Two months ago, NXST was clinging to a position in my Top 10. It’s been a nice little run.
One of my big movers in August was Union Pacific (UNP). The stock chugged five spots higher in my rankings to settle at #4. A gain over 8% this month was just the ticket for UNP to rise up in my Portfolio.
A gain over 3% allowed Pepsico (PEP) to advance one spot and lay claim to the #5 position in my Top 10. PEP has ended every month this year in a narrow price range of $165-$175 and finished this month at the top of that range. A steady stock like PEP is nice to have in a volatile market like we’ve had in 2022.
Another nice upside mover this month was Aflac (AFL). The stock rose four spots to finish in my #6 spot thanks to a 10% gain in August.
Climbing one spot to hold down my #7 spot was Lowe’s Companies (LOW). LOW posted nearly a 3% gain this month, but its price is still down roughly 20% for the year.
So far we’ve had 2 stocks hold steady in the rankings and five stocks move up. Where are the stocks moving down?
Well, their time has come. They settled in my #8 to #10 positions after sinking to various degrees.
Tumbling down three spots to #8 was Procter & Gamble (PG). PG once again posted a slightly negative return (-0.51%) for the month, notching its 4th monthly decline in a row.
My biggest mover to the downside in August was AbbVie (ABBV). The stock tanked six spots and finished in the #9 spot. That’s quite a fall. More than an 8% loss this month did ABBV no favors in my Portfolio rankings.
Coming in the last of my Top 10 spots was Visa (V). V dropped three spots due to a 5% decline in stock price.
Still lurking outside my Top 10 is Broadcom (AVGO), followed closely by BlackRock (BLK). Both stocks have been in my Top 10 this year (the last time being the end of March) and I wouldn’t mind seeing them return.
From the table above, my Top 10 holdings now comprise 36.33% of my Portfolio value. This is an decrease of 0.35% compared to last month. Not even good returns from 6 of my Top 10 could offset a significant drop from my largest position (QCOM).
As for the dividend weighting of my Top 10, this ended the month at 30.25%, which is a decrease of 0.32% compared to last month. That’s the same percentage decline as in July. Interesting! All 10 stocks had their dividend weighting slip in August as none of the stocks realized any share gains (due to purchases) or had dividend raises this 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.
I continue to have six sectors outside of my preferred weighting ranges. There are four overweight sectors and two underweight sectors. Unfortunately, I didn’t make much headway in moving my Portfolio weightings in the right direction during August. Only one of the sectors got closer to being in range over the course of the last month – Industrials. Maintaining the same weighting as last month was Consumer Staples, with the other four out-of-weight sectors getting worse.
Perhaps the most disappointing development this month was that my Information Technology holdings became more underweight, despite a purchase I made in August to add to that sector weighting. The negative month from QCOM made it seem like I was swimming upstream.
My two purchases in the Healthcare sector this month only made the overweight status in that sector become worse.
With the Energy sector crushing it in 2022 year-to-date (up over 50%), my lack of holdings in that sector only makes me more underweight as the year progresses.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Plenty of stocks are lighting up my radar as the market gives up some of its recent gains. I know I don’t have the dollars to add everything on my list, so I’ll try to find the best deals that also move the Portfolio in my desired direction.
That could mean building out smaller positions to make them more significant Portfolio stocks, or adding a stock in a particular sector to balance out my Portfolio representation.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Let’s start with some carryovers from last month:
T. Rowe Price Group (TROW) and JPMorgan Chase & Co. (JPM) remain of interest. TROW below $115 and JPM below $112 are my current targets.
Adding another share or two of Microsoft (MSFT) is a possibility should I be able to add below my last purchase price of $256. That level is not too far away again after recent MSFT price drops.
I bought some CMCSA and SWKS recently, so let’s remove them from the watchlist for now, unless their stock prices drop another 10% or so.
Purchases of Medical Properties Trust (MPW) and Verizon (VZ) took place recently, too, but their prices have continued to decline. MPW below $14 and VZ below $42 could motivate me to bite off another share chunk.
Medtronic (MDT) remains high on my watchlist despite a recent share addition. This a position I want to build and the declining stock price (now approaching $87) is providing me with an opportunity to do just that.
VF Corp (VFC) is really screaming at me now that the price is below $42. This stock has fallen much farther than I would have expected over the past 18 months. I think I need to find a way to add a few shares. I haven’t dabbled in a VFC purchase since January 2017. A purchase at the current price would easily drive down my cost basis.
Adding some Walgreens Boots Alliance (WBA) has been in my thoughts for weeks. Now that the price is almost down to $35, adding some shares seems logical. However, my position is pretty full. I’m not sure if I can commit to a WBA purchase when I think I have better places for the investment. The most recent dividend raise for WBA (0.52%) has me questioning further investment as well.
As for non-Portfolio stocks that I’m watching…
Remaining from last month are FedEx (FDX) below $200, Best Buy (BBY) below $70 and McCormick (MKC) below $80. The way the market is trending, I may have at shot at seeing these thresholds crossed.
If I had to add another stock to this list, I’d currently go with Stanley Black & Decker (SWK). This stock has had a tremendous pullback over the past 15 months. Of course, this is not unjustified. Recent earnings have declined, and free cash flow is waning due to higher operating costs. Still, given the history of SWK, I’d hazard to guess current issues will be fairly short-lived. I wouldn’t mind initiating a small position here below $90, but should it reach $80 I’d definitely try to find a way to start a position.
Thoughts?
What stocks have hit your radar as of late? Is there a stock you’ve been eyeballing for a long time, waiting for the price to come down? Is your opportunity near? Please share your thoughts!