Would you look at that… another month of recovery in the stock market. For the 2nd month in a row I find plenty of green in my Portfolio.
After a tough beginning to 2022, things aren’t looking so bad in the midst of this holiday season.
October provided some nice returns, but it appears that November was even better for my Portfolio, at least from a stock up/down ratio perspective. I can’t wait to share the results.
In the past two months it appears that value has benefited more than growth, and that’s suited my Portfolio quite well. I’ve noticed my Portfolio has been outperforming the S&P 500 rather significantly during this time.
At the end of September, I had my Portfolio’s Year-To-Date total return being about 2.7 percentage points better than the S&P 500. At the end of November, that out-performance has grown to nearly 7.5 percentage points. I just don’t normally see that kind of change over such a short period of time.
Considering that I don’t have any Energy stocks in my Portfolio, and that Energy has been the best-performing and only positive S&P 500 sector in 2022, I’m surprised at my Portfolio’s out-performance relative to the S&P 500. What’s benefited me has been that my Portfolio is underweight some of the worst performing S&P 500 sectors, including Communication Services, Consumer Discretionary, Information Technology and Real Estate.
So what will I be covering in this month’s Portfolio Thoughts?
As previously mentioned, I’ve got lots of monthly winners. I won’t cover them all, but I’ll share the top gainers. I’ll of course mention the worst of the few laggards, too.
My Top 10 Portfolio rankings didn’t have a lot of movement in November, but I finally had a change at the top spot. There was one new member in the Top 10 as well.
The buying and selling I’ve done in my Portfolio this month has led to some sector weighting changes in my Communication Services, Consumer Discretionary and Real Estate sectors. I’ll highlight whether any of the moves helped bring those sector weightings into my target range.
The number of stocks on my watch list has continued to dwindle as the market has moved higher. Still, there’s plenty to like, especially in some of the worst-performing sectors of 2022. I’ll let you know what’s piquing my interest these days.
Here are my Portfolio Thoughts for November 2022…
Price Movement
Note – my price changes cover closing prices from 10/28/22 to 11/25/22.
I like it! Back-to-back months with a lot of green in my Portfolio. If October turned things around, November just kept it going. I’m honestly surprised by the gains in my Portfolio over the past couple of months.
My ratio of stocks with price gains compared to price declines was a stunning 8.7 to 1 in November. Of my 58 holdings, 52 moved higher in price, while only 6 moved lower.
Here were the stocks with the biggest moves to the upside and downside…
Of my 52 stocks that rose in price, 2 surged more than 20%. Another 13 stocks managed to climb better than 10% (the usual threshold I monitor for) and yet another 21 stocks rallied at least 5%. That’s 62% of my Portfolio stocks with better than 5% gains in November.
The top gainers in November were:
- Air Products & Chemicals (APD), surging 21.80%
- VF Corp (VFC), popping 21.47%
- Best Buy (BBY), rising 18.84%
- T. Rowe Price Group (TROW), advancing 15.10%
- Starbucks (SBUX), climbing 14.31%
APD has been on a run the past two months, but it put its foot on the accelerator in November.
A trio of Consumer Discretionary stocks made my top gainers list in VFC, BBY and SBUX. I could argue that this isn’t a surprise considering Consumer Discretionary stocks have been hammered in 2022 and they are due for a bit of a rebound.
Speaking of rebounds, TROW had a nice month, even though it gave back some of its gains from its peak in November.
The gain for VFC was nice after it led my decliners list in October. It also snapped a streak of 11 straight months where its price declined.
All my stocks in the following 6 sectors posted gains in November: Information Technology (9), Consumer Discretionary (5), Financials (5), Real Estate (4), Materials (3) and Utilities (3).
Of my 6 stocks that fell in price, none of them dropped more than 10%, and only 2 stocks declined more than 5%. All losses were under control this month.
My worst decliners this month were…
- Medtronic (MDT), pulling back 8.87%
- The Walt Disney Co. (DIS), falling 6.68%
- Altria Group (MO), retreating 3.39%
- Nexstar Media Group (NXST), dropping 3.32%
- UnitedHealth Group (UNH), declining 2.47%
My string of 5 straight months with stocks from 5 different sectors topping my decliners list is over after both MDT and UNH (Healthcare) made the list, and both DIS and NXST (Communication Services) made the list.
I added to MDT this past month and hope to add again given its recent price decline.
Having ‘Group’ in the stock name seemed to be a negative in November as MO, NXST and UNH all made my decliners list. However, my other ‘Group’ stocks, TROW and Omnicom Group (OMC) managed to stay off the list.
Top 10 Review
Most of the Top 10 changes were contained to a move of a single spot in the rankings, but one stock rose two spots, while another fell three spots.
Only two stocks held onto the same ranking as last month. However, that didn’t include the stock at the #1 spot… for the first time in months!
There’s one new member of the Top 10, too. Which of course means one stock also left the group. I’ll identify this pair of stocks shortly.
Here are the details…
For the first time since July 2020 I have a new stock holding down the #1 spot in my Top 10 rankings: RPM International (RPM). Qualcomm (QCOM) claimed that #1 spot for over 2 years before finally relinquishing it at the end of November.
It was RPM that was at #1 back in July 2020. It took a while, but it’s back on top again after a better than 9.2% gain in November. QCOM was positive in November as well, but its 3.6% gain this month wasn’t good enough to avoid being overtaken and falling to #2.
One of the stocks to not move in the rankings this month was Alfac (AFL), which continued to sit at #3. AFL gained 11.9% in November, so it drew closer to both RPM and QCOM. That’s now double-digit gains for AFL in back-to-back months.
Switching spots at #4 and #5 were AbbVie (ABBV) and Pepsico (PEP), respectively. ABBV gained a healthy 8.1% during the month, while PEP gained a meager 1.0%.
Moving up one spot for the 2nd straight month, to secure the #6 ranking this time, was Lowe’s Companies (LOW). A 6.2% gain in November helped LOW rise in my rankings, as well as break out of the $180-$200 range it had been in for 7 months.
One of my stocks to move more than a single spot in the rankings was Procter & Gamble (PG), which rose two spots to settle at #7. PG managed an 8.5% gain in November after basically trading flat during October.
My other stock to not move in the rankings was Visa (V). V held steady at the #8 spot in my rankings on the back of a 2.1% gain this month. Call this a breather for V after a 16% gain last month.
The stock to fall the most in my rankings this month was Nexstar Media Group (NXST), which dropped three spots to land at #9. This drop is explained by the stock’s 3.2% decline during the month while almost everything other stock was posting gains.
My lone newcomer to the Top 10 was BlackRock (BLK). BLK laid claim to the #10 spot on the strength of a 11.2% gain during the month. This kicked Johnson & Johnson (JNJ) out of my Top 10, despite its 1.4% gain in November.
Now sitting just outside my Top 10 are the following stocks: Union Pacific (UNP), Broadcom (AVGO) and JNJ. All of these stocks have been part of my Top 10 in months past.
From the table above, my Top 10 holdings now comprise 35.70% of my Portfolio value. This is a decrease of 0.50 percentage points compared to last month.
As for the dividend weighting of my Top 10, this ended the month at 30.21%, which is a small gain of 0.26 percentage points compared to last month. This rise is primarily due to BLK replacing JNJ in the Top 10, but also by the recent dividend hike from AFL.
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 two sales in November were to REITs – STORE Capital (STOR) and National Retail Properties (NNN). This has made my weighting difference in this sector slightly negative, but still well within my preferred range.
Two of my largest buys this month were of Verizon Communications (VZ) and Comcast (CMCSA). This still leaves me with a slightly negative weighting difference in the Communication Services sector, but closer to nominal.
With regard to my overweight sectors, I had some progress in getting the Consumer Staples and Industrials sectors into my preferred weighting range. However, I got even farther outside my preferred weighting range in the Materials sector. This was no doubt hindered by the strong returns from all three of my Materials stocks, especially APD (my top performer in November).
As for my two underweight sectors, I noted minor progress in the Energy sector, despite not owning any stocks there. However, I lost quite a bit of ground when trying to bring Information Technology into my preferred weighting range. I blame this on comparatively small returns from QCOM and V during the month.
As you know, my bonus goals for 2022 involve making progress in reducing my Industrials weighting and increasing my Information Technology weighting. I’m still looking for a time to exit my 3M Co. (MMM) position, which would go a long way in lowering my Industrials weighting. Finding good Tech stocks to add will be much more of an effort, but if I could use 3M sale proceeds to add some Tech, that would be ideal.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
After two months of solid gains, I have fewer stocks on my watchlist. Plenty of stocks still exist on the list though. So, I should be able to add if I can drum up the cash.
While I’d like to add to my Information Technology holdings, I won’t force it. I’ll plan to add where I see value first and foremost.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Medtronic (MDT) is probably at the top of my list right now, mainly because I like the price where it’s trading, and it’s a position I want to be larger in my Portfolio. My last buy was at $76.80, so anything south of that level is very attractive to me.
Skyworks Solutions (SWKS) below $90 remains of interest to me. I kept putting off this buy and now SWKS is trading above that threshold. I may end up making a purchase regardless of that.
Adding a share or two of Microsoft (MSFT) below $230 is something I’d like to do as well. I was able to do this twice in early November and would like to do this again.
One more Tech name I could see adding is Qualcomm (QCOM), even though I probably don’t need this position to be any larger. I sold 10 shares last November at $187 and I could see buying those shares back should the stock dip below the $120 level.
I missed a chance at adding some T. Rowe Price Group (TROW) below $110 earlier this month, however, a purchase below $120 would still be noticeably lower than the last addition I made at $128.50.
As for non-Portfolio stocks that I’m watching…
Corning (GLW) and Accenture (ACN) have been running up and away from me over the past couple of months, but are still on the edges of my radar. If either stock can drop about 10%, below $30 for GLW or $260 for ACN, then I could see adding a new Tech name to my Portfolio.
Cell tower REITs American Tower (AMT) and Crown Castle International (CCI) also moved higher compared to last month and are less attractive now. I’m holding out for AMT below $200 and CCI below $130.
Looking at Utilities, I would consider Dominion Energy (D) should it fall below the $60 level again. The share price seems to have lagged ever since the company divested its midstream energy business back in 2020 and subsequently cut its dividend. Then it recently took a noticeable dip with the latest earnings release that mentioned a “business review”. This seems to have spooked investors.
Thoughts?
Do you think the market can put together one more positive month to wrap up 2022? Have you noticed value outperforming growth recently? Please share your thoughts!