After my Portfolio posted a negative return in 2022, I’m looking forward to what is hopefully a positive return in 2023.
All the red we saw last year is now thrown away and we’ve got a new canvas to hopefully paint with green.
While the markets overall moved higher in January, about one week into the trading there seemed to be a switch in which stocks bets were being placed on.
The first week of the year, it appeared to be a continuation of 2022, with value trumping growth. However, the tide then turned, and I’ve noticed more of a risk-on appetite for growth again.
Defensive sectors such as Utilities & Consumer Staples have stumbled out of the gates this year. The Healthcare sector, which contains many value stocks, too, has struggled to begin 2023 as well.
Will this last? We’ll have to wait and find out. It should be an interesting year.
My first Portfolio Thoughts post of they year will cover the usual items:
- Price Movement – I’ll look at my top advancers and decliners in my Portfolio during the past month.
- Top 10 Review – I’ll update my Top 10 Portfolios stocks and how they changed rank this past month. There is plenty of movement to discuss.
- Weightings – I’ll examine the sector weightings within my Portfolio and let you know where I’ve made progress with regard to getting into my preferred weighting ranges.
- Watch List – I’ll share which stocks I’m looking at as I prepare to invest my capital in the coming months.
Here we go… my Portfolio Thoughts for January 2023…
Price Movement
Note – my price changes cover closing prices from 12/30/22 to 1/27/23.
Many of my Portfolio stocks made significant moves either up or down in January. Thankfully though, more moved up in price than down. It’s a good way to start the year overall… a positive spin.
My ratio of stocks with price gains compared to price declines was roughly 3 to 2 in January. Of my 59 holdings (not counting WHR yet), 36 moved higher in price, while 23 moved lower.
Here were the stocks with the biggest moves to the upside and downside…
Of my 36 stocks that rose in price, 3 bolted higher by more than 20%. Another 7 rose by better than 10% (the usual threshold I monitor for), and another 13 stocks advanced at least 5%. So, about 65% of my gainers managed to rise by at least 5%. That’s some nice upward movement.
The top gainers in January were:
- The Walt Disney Co. (DIS), surging 26.08%
- Skyworks Solutions (SWKS), rocketing up 21.98%
- Qualcomm (QCOM), popping 21.34%
- Medical Properties Trust (MPW), gaining 17.24%
- Nexstar Media Group (NXST), advancing 16.75%
A pair of Information Technology stocks made my top gainers list in Skyworks Solutions (SWKS) and Qualcomm (QCOM) – both semiconductor names. SWKS had been sitting in the low $90s for 4 months, so it was nice to see what’s hopefully the beginning of a breakout. As for QCOM, it approached a 52-week low in December, so it seemed due for a bounce.
A pair of Communication Services stocks also made my top gainers list in January. The Walt Disney Co. (DIS) was the best of the bunch. After dropping nearly 44% in 2022, perhaps the new year (or the return of its former CEO) brought in a few buyers for DIS. Nexstar Media Group (NXST) (up nearly 16% in 2022) fared much better than DIS last year, and that momentum seems to have carried over into 2023 with NXST eclipsing all of its 2022 gain in just January alone.
Medical Properties Trust (MPW) rounds out my top gainers for the month. After close to a 53% haircut in 2022, MPW seems to have gotten a little love from investors to start the year. The outlook for MPW seems to have gotten better after some of its rent payments were in question for most of 2022.
MPW, DIS and QCOM were all on my top decliners list in December, so I’m glad to see their comebacks.
Note – All of my stocks in the following 4 sectors were positive for January: Communication Services (5), Consumer Discretionary (5), Financials (5) and Real Estate (4).
Of my 23 stocks that fell in price, only 1 dropped more than 10%, but another 12 declined more than 5%.
My worst decliners in January were…
- McCormick & Co. (MKC), sinking 10.19%
- RPM International (RPM), dropping 9.71%
- NextEra Energy (NEE), sinking 9.59%
- AbbVie (ABBV), wilting 9.49%
- UnitedHealth Group (UNH), retreating 8.32%
McCormick & Co. (MKC) sat atop my decliners list in January. The price reduction led to me adding a few shares this past week… Recent Buy – MKC.
RPM International (RPM) declined significantly in January, despite my other two Materials stocks posting a positive return for the month.
The dip in NextEra Energy (NEE) has me keeping an eye on the stock price. A further move to the downside in February could lead to me finally adding some shares to my position.
A couple of Healthcare stocks completed my worst decliners list for the month. Most of my Healthcare stocks (7 of 9) posted a negative return for January, but the losses from AbbVie (ABBV) and UnitedHealth Group (UNH) were the worst. After 4 straight months of higher highs, ABBV finally pulled back. As for UNH, its price is now as low as it’s been in nearly 7 months after peaking about 3 months ago.
Note – All my stocks in the following 2 sectors were negative for January: Consumer Staples (6) and Utilities (3). That’s two months in a row for all my Utilities stocks being in the red!
Top 10 Review
January brought plenty of movement within my Top 10 Portfolio stock rankings. All but one stock changed rankings. However, what really stood out were the big moves up and down.
One stock fell 6 spots, resulting in it exiting the Top 10. Other downside movement saw another stock drop 4 spots and two more stocks retreat 3 spots.
Meanwhile, a pair of stocks at the bottom of the Top 10 last month were big movers to the upside in January. One moved up 6 spots while the other rose 5 spots, each solidifying their place in the Top 10.
Reclaiming the #1 spot after a 2-month hiatus was Qualcomm (QCOM). QCOM climbed two spots to get there. Posting one of my best returns of the month certainly aided QCOM in doing so.
My lone stock to hold steady in the rankings was Aflac (AFL). AFL remained at #2 by posting a slight 1.35% gain in January.
Rising the greatest number of Top 10 spots during the month was Nexstar Media Group (NXST), which climbed six spots in the rankings to settle at #3. NXST notched a healthy 16.75% gain this month which propelled it up the rankings.
Tumbling down from the top spot to #4 was RPM International (RPM). RPM managed to hold onto the top spot for only two months. A nearly 10% decline in price during January led to its fall in the rankings.
My 2nd best mover to the upside this month was Visa (V). V rose five spots in the rankings to lay claim to the #5 spot. V used its 11.4% gain during the month to surpass several of my other holdings.
Also rising in the rankings, but not as significantly, was Broadcom (AVGO). AVGO managed a solid 5.7% gain during January to rise a couple of spots to #6.
Dropping three spots to settle at #7 was AbbVie (ABBV). On the heels of its nearly 9.5% price decline for the month, ABBV couldn’t help but fall in the rankings.
Slipping just a single spot to finish in the #8 spot was Lowe’s Companies (LOW). LOW posted a slight gain for the month (1.63%), but despite the rise in price, it moved down in the rankings.
My one newcomer to the rankings this month managed to grab the #9 spot. BlackRock (BLK) moved into the Top 10 again by recording a 7.13% gain in January. BLK is no stranger to my Top 10, but it hasn’t managed to make a permanent home there.
Rounding out my Top 10 was Pepsico (PEP). PEP barely clung to the #10 spot after a price decline of 6.11% during the month. Consumer Staples have had a tough go of it to start 2023, and PEP did not buck that trend.
Falling out of my Top 10 this month was Procter & Gamble (PG). PG was my biggest decliner in the rankings this month, tanking six spots after posting a 7.25% loss in January.
Now sitting just outside my Top 10 is PG. It seems to be the only stock within striking distance of the Top 10. Farther down the list and requiring a fairly big upside move to crack the Top 10 are: Union Pacific (UNP), Nike (NKE) and Johnson & Johnson (JNJ).
From the table above, my Top 10 holdings now comprise 35.47% of my Portfolio value. This is a decrease of just 0.09 percentage points compared to last month.
As for the dividend weighting of my Top 10, this ended the month at 31.22%, which is a gain of 0.61 percentage points compared to last month. This rise is essentially due to the monster 50% dividend raise announced by NXST this week. However, BLK replacing PG in my Top 10 helped a small amount, too.
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.
It was a good month with regard to improving my weighting differences in my most of my overweight and underweight sectors.
By the end of January I ended up closer to my target range in both of my underweight sectors: Energy and Information Technology. I got closer in Energy simply because the S&P 500 weighting for Energy declined a bit in January. As for Information Technology, the strong month from both QCOM and SWKS worked in my favor.
I made progress in 2 of my 3 overweight sectors: Materials and Consumer Staples. The bad January return from RPM helped reduce my weighting in the Materials sector. The unwanted declines from PEP and PG reduced my weighting in Consumer Staples, despite me adding some shares of MKC.
The one sector where I got further away from my target range was Industrials. In this case, many of my Industrials holdings fared better than the S&P 500 sector. So, my out-performance in this sector in January worked against me.
Despite my purchase of Whirlpool (WHR) this month, I got about 0.3 percentage points more underweight in Consumer Discretionary, as none of my 5 other holdings in that sector kept up with the performance of Consumer Discretionary within the S&P 500.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
A decent January in the stock market had the majority of my Portfolio stocks moving up in price. While this is great from a portfolio value perspective, a few of the stocks I’ve been watching became a little less attractive due to their price increases.
Still, there are plenty of stocks to pick through. Also, a new month may bring those stocks right back down in price again. So, I’ll remain on the lookout.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Many of the stocks I noted here last month ran up and away from me in price. This included QCOM, SWKS, V, CMCSA & DIS, all of which gained at least 10%.
TXN, TROW and MDT moved up, too, but not as significantly (6%+). MSFT gained over 3%. Of the stocks I mentioned last month, only CVS Health (CVS) moved lower in price by the end of January.
So, let’s start with CVS then. I was looking for a dip under $90, and it’s there. The question for me is, do I want to add some CVS, or keep my capital available for other stocks? Decisions, decisions!
Adding some MDT should it drop below the $80 level would be a higher priority than CVS for me… mainly since I’m trying to grow my smaller MDT position while I’m basically happy with my CVS position size.
Another Healthcare stock I’m watching is Bristol-Myers Squibb (BMY). BMY crossing below $70 might get me to add a few shares of the stock.
Despite its recent run-up, I still like SWKS around $110… just not as much as I liked it below $100.
Automatic Data Processing (ADP) has been dropping to start the year. Should the stock continue to drop, I’d be interested in adding some shares. I don’t know if it will get there, but a dip to around $200 would intrigue me. The stock seems to have some support at that level, bouncing off of it 3 times in the past 16 months or so.
Although I added some McCormick & Co. (MKC) this past week, if the stock dropped further, say below $70, then I’d probably figure out a way to add another 5 shares.
Should NextEra Energy (NEE) continue to slide and fall below $73, I’d like to increase the size of my position to a small degree. A drop below $67 might result in a more substantial purchase.
As for non-Portfolio stocks that I’m watching…
It was more of the same regarding the non-Portfolio stocks I was watching… they moved up in price, resulting in less interest from me.
This included tech names Corning (GLW) & Apple (AAPL), as well as cell tower REITs American Tower (AMT) and Crown Castle International (CCI). Thus, I’ll quit watching them for now.
I still have Dominion Energy (D) hovering a little above my target price of $60, so it’s probably the one I’ll watch most closely. I could afford to add another Utility stock to my Portfolio, as I’m drifting towards being underweight there.
Since one of my bonus goals this year is to find an Energy stock for my Portfolio, I’ve done some initial looking and am now watching Pembina Pipeline (PBA). This company is a midstream service provider located primarily in western Canada. It has a network of oil and natural gas pipelines, storage facilities and processing plants as part of its energy infrastructure. Ideally, I’d like to initiate a position around $30, but the stock would need a 15% drop from current levels to get there.
Thoughts?
Do you think the gains we saw in January portend a market snapback in 2023? Please share your thoughts!