It hasn’t been pretty in my Portfolio this past month.  My holdings swooned along with the stock market.

On the bright side, there’s plenty to purchase as many stocks not only trade at 52-week lows, but at prices we haven’t seen since the depths of the pandemic.

Recently I’ve been figuring out how to round up as much cash as I can so that I can put it to work in my Portfolio.

Unfortunately, that’s easier said than done.  I haven’t been too successful in building any sort of cash hoard, especially given that everything seems to cost more these days.

In an effort to find something positive to dwell on… I know I’m outperforming the market, despite all the red in my Portfolio.

However, that’s expected given my Portfolio construction.  I’ll outperform some in down markets, but underperform when the market is surging higher.

My Portfolio Thoughts will start with a negative tilt this month as I cover all the price movement for my stocks.

However, that won’t impact my discussion of the movement within my Top 10, or my thoughts on my sector weightings.

By the end, expect things to finish with a positive vibe as I get to tell you about the stocks that I’d be happy to purchase right now considering their lowest valuations in quite some time.

Let’s get to my Portfolio Thoughts for September 2022…

 

Price Movement

Note – my price changes cover closing prices from 8/26/22 to 9/26/22.

Stock prices started the month to the downside and accelerated down from there.  It was a sea of red to be sure.  Can it get any worse?  Absolutely… but hopefully it won’t.

My ratio of stocks with price declines compared to price gains was a painful 13.5 to 1. Ouch!  Of my 58 holdings (still counting recently eliminated GNTX, but not new holdings BBY, FDX or MKC yet), 54 moved lower in price, while a paltry 4 moved higher.

In September, here were the stocks with the biggest moves to the upside and downside…

 

Of my 4 stocks that rose in price, only one stood out.  My Portfolio had 1 stock post a gain better than 10% (the usual threshold I monitor for).  Sadly, only 3 other stocks were positive, and barely so.  You know it’s been a bad month when your 5th best stock posted a negative return.

The top gainers in September were:

• STORE Capital (STOR), surging 15.17%
• AbbVie (ABBV), advancing 3.56%
• Starbucks (SBUX), creeping up 0.89%
• Johnson & Johnson (JNJ), ticking up 0.87%
• Gilead Sciences (GILD), declining 0.05%

The pop from STOR was due to a buyout.  The company is being taken private by the investors, so a cash payout will be coming.  There’s one more dividend to collect before STOR goes away, too.  The buyout should close in early 2023.

My Healthcare stocks fared well in September.  Three of them made my top gainers list for the month: ABBV, JNJ & GILD.  My other holdings in that sector did comparatively well despite their negative returns for the month.

 

Of my whopping 54 stocks that fell in price, one of them dropped more than 20% and a depressing 21 of them sank more than 10%.  Yet another 24 stocks declined more than 5%.  Wow, 46 of the 54 stocks had more than a 5% retreat.  I’ll be happy to see September go.

My worst decliners this month were…

• Eastman Chemical (EMN), freefalling 24.87%
• Medical Properties Trust (MPW), getting scorched 19.71%
• Main Street Capital (MAIN), sinking 18.28%
• Comcast (CMCSA), dropping 16.06%
• Caterpillar (CAT), sliding 15.27%

For the 4th straight month, that’s stocks from 5 different sectors topping my decliners list.  No doubt, the destruction is widespread.

Sadly, this is the 2nd straight month that CMCSA and MPW have been on this list.  Not a good trend for those two stocks.

 

Top 10 Review

I had fairly normal Top 10 activity in September.  One stock fell out of the Top 10, which meant one newcomer to the ranks.

Two stocks held steady in their usual position, while the majority of the other stocks shuffled themselves up.

My big movers for the month included one stock that rose 5 spots while another fell 5 spots.  Surprisingly, these two stocks happened to switch positions in the rankings.

Let’s get to the details…

 

 

Once again, Qualcomm (QCOM) laid claim to the #1 spot, with RPM International (RPM) locking down #2.  Their large percentage difference to adjacent positions makes a ranking change unlikely unless something abnormal happens.

As one might expect in a down month, my defensive stocks managed to move up in my rankings.  Pepsico (PEP) climbed two spots to settle in the #3 ranking.  That was followed by AbbVie (ABBV) rising a magnificent five spots to grab the #4 ranking and Procter & Gamble (PG) moving up three spots to finish in the #5 position.

Of course, for some stocks to move up, others have to move down, and that’s where I am in this list now.

Falling three spots to land in the #6 ranking is Nexstar Media Group (NXST).  NXST declined more than 11% during the month.

Slipping one spot each, to #7 and #8, respectively, were Aflac (AFL) and Lowe’s Companies (LOW).  AFL retreated over 6% in September, with LOW sinking over 7%.

After a big move up last month, Union Pacific (UNP) couldn’t maintain its spot, falling five spots down my rankings to end at #9.  UNP pulled back more than 13% for the month.

At the #10 spot is this month’s newcomer.  It was JNJ cracking the Top 10 on the heels of a small, positive return for the month.  Visa (V) was pushed out of the Top 10 due to its nearly 11% monthly loss.

Sitting outside my Top 10 with V are Broadcom (AVGO), Fastenal (FAST) and BlackRock (BLK).  With all the big price movement these days, don’t be surprised to see one of these stocks make their return to my Top10.  It’s somewhere they’ve all been before.

I like my Top 10 and even the handful of stocks just outside that group.  Thus, I don’t anticipate any big changes here over time.

 

From the table above, my Top 10 holdings now comprise 36.41% of my Portfolio value.  This is a slight increase of 0.08% compared to last month.

As for the dividend weighting of my Top 10, this ended the month at 31.98%, which is a decent addition of 1.73% compared to last month.  This increase is essentially due to JNJ (and its higher yield) replacing V (and its lower yield) in the #10 spot.

I’m pleased that no Portfolio stock has a weighting over 5% or a dividend weighting over 5% (diversification is key).  QCOM with a weighting of 4.69% and ABBV with a dividend weighting of 4.84% are the closest I get to that 5% threshold.

 

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.  It seems to take a fairly big investment or Portfolio change to move these percentages much.  I didn’t do myself any favors in the Consumer Staples sector when I added McCormick & Co. (MKC) to my Portfolio this month.  While I did add some shares to my Information Technology holdings this month, it was just a single share of Microsoft (MSFT) so it didn’t increase my weighting there to any significant degree.

As for the other sectors outside of my preferred weighting ranges, I had organic progress in bringing Energy and Materials into line.  However, the weighting differences in Healthcare and Industrials got a little worse.

Finally, my Gentex (GNTX) sale in September has me close to getting underweight in Consumer Discretionary, despite reinvesting some of those proceeds back into that sector with Best Buy Co. (BBY).

As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.

 

Watch List

With so many stock prices dropping this summer, plenty of stocks continue to light up my radar.

The problem now is finding all the cash to make all the purchases that I want.  There’s never enough money for that, so I’ll have to remain selective and put the money where I not only see value but where it allows me to transition my Portfolio in the direction I desire.

I remain on the lookout for Information Technology stocks that can help me boost my weighting in that sector.

And, paring back my holdings in my most overweight sector, Industrials, is on my mind as well.  Trimming/Eliminating 3M Co. (MMM) is something that’s been on my mind the past few months and it would certainly help in this regard.

 

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

I’m liking the price of Visa (V) currently.  Below $180 would be terrific and would boost my Information Technology holdings.  Skyworks Solutions (SWKS) below $90 is a price I can handle and it would also bump up my Tech weighting.

After adding a share of Microsoft (MSFT) at $240 this month, I’ll see if I can manage another MSFT addition below that level.

Two stocks that remain on my radar are T. Rowe Price Group (TROW) and JPMorgan Chase & Co. (JPM).  Both are well below the target levels I mentioned last month.  I’d probably lean toward adding JPM first, as it’s the smaller position in my Portfolio and I’m pushing toward raising my JPM share total to 100 shares.

Despite buying some Comcast (CMCSA) a couple of months ago and subsequently removing it from my watchlist, the price has dropped so significantly that I’m adding it back.  Picking up some shares below $31 would be tremendous.

While I don’t need any more Healthcare stocks, I’m still looking to boost my Medtronic (MDT) position.  Perhaps I can swap some of my Gilead Sciences (GILD) shares for ones of MDT.  Adding some MDT shares below $82 sounds good to me.

I’ve been watching a few stocks in my Portfolio that have just been crushed in recent months.  These include Medical Properties Trust (MPW), Verizon (VZ), Eastman Chemical (EMN) and VF Corp (VFC).  I’d have thought the bottom would have been in long ago on these names, but that has not been the case.  I may dabble in some shares of one of these stocks. The question is, which is the lesser of all the evils?

 

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

I managed to add 3 of the 4 non-Portfolio stocks that I highlighted from last month’s Portfolio Thoughts: FedEx (FDX), Best Buy Co. (BBY) and McCormick (MKC).  The one I missed was Stanley Black & Decker (SWK), so it remains on my list.  I was hoping for a price below $80 and it’s dipped below that level.  Can I dig up the cash?  Do I need another Industrials stock?  The answers are probably ‘No’ and ‘No’.

A couple of other non-Portfolio stocks on my radar are both from the Information Technology sector…

One is Corning (GLW), which I mentioned a few months ago.  I was looking for a price drop to $30 and it’s there.  The current yield is around 3.6%.

The other candidate is completely new in Accenture, PLC (ACN), which is a professional services and consulting company.  I’m looking for a price south of $250.  There’s a lot to like about ACN, including steady earnings growth and consistent 10% dividend growth.

 

Thoughts?

What do you think of the accelerated stock declines this past month?  Are you swooping in on stock bargains or waiting until the dust settles before making any moves?  Please share your thoughts!