Well, that’s more like it.  A stock market recovery in October has me feeling a bit easier these days.

Many stocks rose quite nicely the past 3-4 weeks, and my Portfolio is thankful for the turnaround after a rough month of September.

Considering the rebound, I’ve been wishing I’d bought more at the beginning of the month, but I didn’t have much cash on hand to do so.

However, the lack of cash didn’t stop me from re-configuring my holdings to a small degree.  I eliminated one stock from my Portfolio and trimmed another.

The sale proceeds were reinvested into some of my smaller positions in an effort to make them more significant Portfolio contributors.

Still, my bonus goals of raising my Information Technology weighting and lowering my Industrials weighting within my Portfolio this year are in jeopardy with a couple of months to go.  I’m not optimistic I’ll reach these bonus goals.

While my Portfolio remains under construction, I’ll provide my Portfolio Thoughts as I do each month.

This month I’ve got some positive price movement to detail.  There were lots of stocks in the green this month and I’m excited to share my winners.

Strangely, I didn’t have a bunch of movement within my Top 10.  Yet, I did have one stock rise four spots while another slipped as many.  Stay tuned to find out which stocks were involved.

My Gilead Sciences (GILD) sale this month helped bring my Healthcare sector weighting into my target range.  I’ll share my ever-evolving sector weightings once again and let you know where I have more work to do.

My watch list is a bit thinner these days as a result of many stock gains during the month.  However, many favorable stock prices remain and I’ll discuss what I’m perusing.

Here are my Portfolio Thoughts for October 2022…

 

Price Movement

Note – my price changes cover closing prices from 9/26/22 to 10/28/22.

After a horrible September, it was nice to see a bounce back in the market in October, and a subsequent recovery in my Portfolio.  It appears that all of the losses I suffered last month have evaporated.

My ratio of stocks with price gains compared to price declines was a pleasant 3.6 to 1.  Of my 60 holdings (still counting recently eliminated GILD), 47 moved higher in price, while a baker’s dozen of 13 moved lower.

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

 

Of my 47 stocks that rose in price, one posted a gain greater than 30%.  Two stocks climbed more than 20%.  An impressive 16 stocks rose better than 10% (the usual threshold I monitor for) and another 15 stocks rallied at least 5%.  There were solid returns throughout my Portfolio in October.

The top gainers in October were:

• Caterpillar (CAT), rocketing up 34.88%
• Cummins (CMI), surging 20.77%
• Amgen (AMGN), popping 20.69%
• Lockheed Martin (LMT), bolting higher 18.94%
• JPMorgan Chase & Co. (JPM), rising 18.06%

Three Industrials stocks are showcased in my list of top gainers: CAT, CMI & LMT.

CAT blew the doors off in October thanks to an earnings report with record earnings on strong demand.  I can’t recall the last time I had a stock advance almost 35% in a single month.

All my Financials stocks (5) and Materials stocks (3) posted positive results in October.

 

Of my 13 stocks that fell in price, only one of them dropped more than 10%, and only another 2 stocks declined more than 5%.  Thus, losses were fairly well contained.

My worst decliners this month were…

• VF Corp (VFC), plummeting 19.27%
• OGE Energy (OGE), retreating 5.26%
• Skyworks Solutions (SWKS), dropping 5.18%
• CVS Health (CVS), falling 3.63%
• Medical Properties Trust (MPW), slipping 3.58%

 

For the 5th straight month, it has been stocks from 5 different sectors topping my decliners list.  I find this streak rather surprising.

VFC stands out here for its decline relative to the others on the list.  Amazingly, VFC has fallen in price for 11 consecutive months, dropping nearly 62% in the process.

That’s now 3 straight months that MPW has been on my worst decliners list.  Thankfully, the stock just had a decent earnings report and good news regarding its largest tenant.  Thus, I’m banking on MPW not being part of this list next month.

All my Utilities stocks (3) posted negative results in October.

 

Top 10 Review

Change seemed rather minimal within my Top 10 in October.  Four stocks kept the same rank.  One stock fell out of the Top 10, which meant one stock joined.

My big movers for the month were comprised of one stock moving up 4 spots while another fell 4 spots.

Here are the details…

 

 

My top two spots remained unchanged.  While Qualcomm (QCOM) finished the month in my #1 spot once again, it wasn’t that way throughout the month.  RPM International (RPM) actually took over the top spot a few times before drifting down and settling in the #2 spot at month’s end.

Jumping up four spots to land at #3 was Aflac (AFL).  The 14% gain for AFL in October helped launch it up the rankings.

Slipping one spot each, to drop to #4 and #5, respectively, were Pepsico (PEP) and AbbVie (ABBV).  Both stocks had positive months, but neither were double-digit gainers.

Nexstar Media Group (NXST) held steady in the #6 spot, posting a 6.4% gain in October.

Rising one spot to #7 was Lowe’s Companies (LOW), which notched a gain of 6.8% this month.  LOW has finished in the $180-$200 price range for each of the past 7 months.

At #8 I have my newest Top 10 stock, Visa (V).  V has been in my Top 10 before.  After a nearly 16% gain in October, it was no surprise that V wiggled its way in.

Falling four big spots, all the way to #9 was Procter & Gamble (PG).  In a big upside month for most stocks, PG was slightly negative (-0.36%) so you can understand why PG slipped in my rankings.

Rounding out my Top 10 for the 2nd month in a row was Johnson & Johnson (JNJ).  JNJ notched a 5.5% gain in October.  It’s also up year-to-date, which can’t be said for most stocks in 2022.

It was Union Pacific (UNP) which dropped out of my Top 10.  Two months ago it sat at #4.  A -1.1% return this month did the stock no favors in my rankings.

Sitting outside my Top 10 with UNP, in striking distance for a return to the Top 10, is BlackRock (BLK).

 

From the table above, my Top 10 holdings now comprise 36.20% of my Portfolio value.  This is a small decrease of 0.21 percentage points compared to last month.

As for the dividend weighting of my Top 10, this ended the month at 29.95%, which is a significant drop of 2.03 percentage points compared to last month.  This drop is primarily due to V (and its lower yield) replacing UNP (and its higher yield).

 

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 now have one less sector outside of my preferred weighting ranges.  Healthcare is no longer overweight after I eliminated GILD from my Portfolio and reinvested the proceeds in other sectors – mostly Real Estate and Utilities.

There are currently three overweight sectors and two underweight sectors.  All three overweight sectors got a bit further out of range during the past month.  As for the two underweight sectors, those are more out of range as well.  Considering I made a small investment into Information Technology this month, seeing my Portfolio end up with a larger weighting difference in that sector was a bit disappointing.  So, not much progress this month.

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

 

Watch List

While I like the price recovery I saw with many of my Portfolio stocks in October, I now have fewer stocks on my watchlist.

Still, there are plenty of good values to choose from.  My cash situation didn’t change much over the past month though (still don’t have a lot), so I suspect only small purchases might be in order.

Adding to my Information Technology holdings is still high on my list.  Trimming my Industrials weighting is up there, too.

 

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

Let’s start with some Tech names since I’m looking to add within that sector.

Just like last month, Skyworks Solutions (SWKS) below $90 is of interest to me.

Adding a share of Microsoft (MSFT) below $240 is a possibility, too.  The stock dipped below $230 earlier this week, so I hope to see that price again.

Lastly, I’d consider adding some shares of Texas Instruments (TXN) should the stock drop below $160 again.  However, I’d prefer a price below $150.

Still on my radar is T. Rowe Price Group (TROW).  Picking up some shares south of $110 sounds good to me.

Last month I was looking at buying some shares of Comcast (CMCSA) below $31.  Shares are hovering around $32 now, but that would still be fine with me, as adding at that level still lowers my cost basis.

 

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

I can’t say I’m looking outside my Portfolio very much right now.  However, I’ll keep my eyes on a couple of Tech names that I noted last month in Corning (GLW) and Accenture, PLC (ACN).  I’ll be targeting GLW below $30 and ACN below at least $260, preferably $250.

Cell tower REITs American Tower (AMT) and Crown Castle International (CCI) appear undervalued right now.  I’d consider AMT below $200 and CCI below $130.  CCI exited my Portfolio back in March, 2020 at $160 as I sold to invest in new stocks.  Of the two stocks, AMT has recorded stronger dividend growth, while CCI has sported a better yield.

 

Thoughts?

Were you happy to see a recovery in stock prices in October?  Or were you hoping for lower prices for a longer period of time so that you could scoop up more shares?  Please share your thoughts!