Sentiment in the markets remained negative after three bank failures during the month added to the list of investor worries. While the damage could have been worse, the markets still took a step back, adding to the losses from February.
My Portfolio dipped in value as well, but it seems to have held up rather well overall. Certain stocks were taken to the woodshed during the month, but many others helped steady the Portfolio.
After purging 3M Co. (MMM) from my Portfolio in February, no stocks got the axe in March. However, Medical Properties Trust (MPW) is on watch thanks to my growing concern about the safety of its dividend. I may wish to exit that position before the possibility of a dividend cut becomes reality. V.F. Corp (VFC) has had plenty of trouble in the past year, too, but I’ve already been subjected to its dividend cut.
Only 5 market sectors remain in the green year-to-date, with Information Technology and Communication Services leading the way – both are easily up more than 10%.
Energy, Financials, and Healthcare are the laggards for the year so far, but none of these sectors are down double digits.
I’ll be covering the usual with this Portfolio Thoughts post:
- 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.
- 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.
Wait no longer! Here are my Portfolio Thoughts for March 2023…
Price Movement
Note – my price changes cover closing prices from 2/24/23 to 3/28/23.
The price slide within my Portfolio continued in March. Make that 2 straight months of seeing red.
My ratio of stocks with price declines compared to price gains was a bit more than 2 to 1 in March. Of my 60 holdings, 41 moved lower in price, while 19 moved higher. Surprisingly, these numbers matched the ones from last month!
Here were the stocks with the biggest moves to the upside and downside…
Of my 19 stocks that rose in price, only one posted a 10% increase (the usual threshold I monitor for). Another 5 stocks managed at least a 5% gain. For the 2nd straight month, gains were hard to come by. It’s only been two months like this, but it feels so much longer.
The top gainers in March were:
- Microsoft (MSFT), surging 10.44%
- FedEx (FDX), popping 8.44%
- McCormick & Co. (MKC), advancing 8.27%
- Broadcom (AVGO), climbing 8.13%
- Pinnacle West Capital (PNW), rising 5.71%
A couple of Information Technology stocks stick out in this list for March. Advances were led by my only 10% gainer in MSFT, with a commendable gain north of 8% from AVGO.
FDX has made my top gainers list for 2 months in a row. It’s resisted the market trend during this time. FDX has risen over 43% since I established my position last September.
Managing to find a way in the top gainers on the heels of its solid earnings report was MKC. It’s been a struggle recently for MKC, so this hopefully puts a floor under the stock price.
Seeing Utility stock PNW on the gainers list was wonderful considering all my Utility stocks had declined in price for 3 months running. The string is broken!
Of my 41 stocks that fell in price, 1 plummeted more than 20%, while another 5 sank more than 10%. Another 13 stocks sagged more than 5%. Losses were at the forefront in my Portfolio in March.
My worst decliners in March were…
- Medical Properties Trust (MPW), plunging 29.76%
- CVS Health (CVS), retreating 14.75%
- Nexstar Media Group (NXST), sinking 13.23%
- Hormel Foods (HRL), diving 13.17%
- Best Buy (BBY), dropping 12.53%
Just like last month, this list is comprised of 5 different stocks from 5 different sectors. Plenty of sectors were feeling the pain in March.
This is the 2nd straight month that MPW has made my top decliners list. It’s been a rough go of it for MPW over the last year as tenant issues have persisted. Over that time MPW has dropped from north of $20/share to south of $8 share. Not good!
CVS has now dropped in price in 4 consecutive months, but the losses escalated in March. This stock is certainly looking undervalued.
After some nice gains to start the new year, NXST has given it all up and more. This is one of my more volatile stocks, but the long-term trend has been very good so I intend to stick with it.
BBY managed to close each month above $80/share in each of the past 4 months, but that streak was broken with its appearance on my top decliners list.
Note – All my stocks in the following 5 sectors were negative for March: Consumer Discretionary (6), Communication Services (5), Financials (5), Real Estate (4) and Materials (3). My Portfolio stock losses in the Communication Services sector were by far the most surprising given that this sector was one of the top performers in the S&P 500 during the past month.
Top 10 Review
In March there was an interesting mix of no movement within my Top 10, and big movement.
For the first time in a long time, 4 stocks remained in the same spot compared to last month. Of the other 6 stocks that moved around, 5 of them moved up or down at least 3 spots. My biggest mover saw a change of 6 spots in the rankings!
In addition, despite the movement, I have the same Top 10 stocks as last month… just shuffled around. It’s been a few months since I didn’t have at least one new stock in my Top 10.
If I was going to have one stock that remained in place over the course of the month, I’d guess Qualcomm (QCOM), as it has the largest gap from itself to another stock. As it was, QCOM held its spot at #1, despite a 2.41% decline during the month.
Rising three positions in the rankings to secure the #2 spot was AbbVie (ABBV). A 3.63% gain during the month allowed ABBV to move on up.
Retaining the #3 spot despite its 2.85% drop in price during the month was RPM International (RPM). It’s been 4 straight months of losses for RPM.
Broadcom (AVGO) jumped four spots in the rankings to land at #4. An impressive 8.13% gain during the month led to the rise. It’s been a good run for AVGO since last September.
With its 7.31% decline during March, Aflac (AFL) slipped three notches in my rankings to lay claim to the #5 spot. Over the past two months, AFL has gotten almost a 13% haircut in price.
Another stock holding ground in my rankings was Pepsico (PEP). PEP stayed in the #6 spot after posting a 1.97% gain for the month. Over the past 15 months, PEP has finished each month with a share price in the range of $165 to $185.
Fellow Consumer Staples stock Procter & Gamble (PG) recorded a solid 5.1% gain in March, allowing the stock to rise three spots in the rankings and snatch the #7 spot.
Slipping one spot and grabbing #8 in the rankings was Visa (V). A small 0.36% increase in price during the month couldn’t stop the slight fall in the rankings.
At #9 was my last stock to not finish with a change in its ranking at month’s end – Lowe’s Companies (LOW). Despite a 5.65% decline in March, LOW managed to hold its position.
Lastly, I have the one stock that moved the most in my rankings. Nexstar Media Group (NXST) had a rough month, sinking 13.23% and tumbling six spots to #10. NXST has retreated in price close to 19% over the past two months.
Currently sitting outside my Top 10, but within striking distance, are Fastenal (FAST), Union Pacific (UNP) and BlackRock (BLK).
From the table above, my Top 10 holdings now comprise 35.56% of my Portfolio value. This is a increase of only 0.11 percentage points compared to last month.
As for the dividend weighting of my Top 10, this ended the month at 30.94%, which is a decline of 0.14 percentage points compared to last month. That’s the same percentage decline as in February… quite the coincidence.
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 dropped back down to having only two overweight sectors during the month. Consumer Staples once again came back into my weighting range, but with a slim margin. My two other overweight sectors in Industrials and Materials moved slightly in the wrong direction.
As for the underweight sectors, Energy got more underweight, but I made some good progress (more than two full percentage points) in Information Technology thanks to the performance of my holdings, and my purchase of Accenture (ACN) during the month.
My small purchase of American Tower (AMT) in March pulled me closer to being on par with the S&P 500 in the REIT sector.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Financials and Real Estate were hit the hardest over the past month. Could there be bargains to be had there?
On the other hand, Information Technology and Communication Services stocks posted some good gains in the past 30 days. Is it too late to buy?
Prices are always changing. It pays to have some purchase ideas and target prices in hand to be ready to pounce.
I didn’t buy as much as I was expecting in March, so I’ve still got cash on hand. What will I buy? Who knows, but the following watchlist stocks are usually a good place for me to start.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Last month I said I wanted to focus on adding to my Information Technology holdings. While I did manage to buy some ACN, that was my lone tech purchase in March. Thus, I plan to remain focused on tech once again.
I’d love to add to my Automatic Data Processing (ADP) position. I’d still consider buying below $220 (currently there), but I’m trying to hold out for $200. I may have to compromise at $210 as this stock usually doesn’t go on sale.
Skyworks Solutions (SWKS) has crept up in price over the past month, but it’s still looking like a buy. A price below $110 would be best for me.
Visa (V) dropping below $215 remains of interest, but I’d prefer to see something under $210.
I like the price of Qualcomm (QCOM), but given that it’s my #1 holding, I think I have enough shares. My remaining tech holdings don’t look to have favorable purchase prices at this time.
Just like last month, a pair of Healthcare stocks look interesting to me in Medtronic (MDT) and Bristol-Myers Squibb (BMY). MDT below $80 and BMY below $70 have been reached, so I could see myself adding some shares, but will I do it?
CVS Health (CVS) has fallen much farther than I expected. I liked it in the mid $80s last month, but now it sits in the mid $70s. I should probably convince myself to add a handful of shares even though I feel like I have a full position.
As for non-Portfolio stocks that I’m watching…
Due to the pain in the Financial sector in March, a couple of stocks I started watching last month have become quite interesting.
I continue to watch Jack Henry & Associates (JKHY). I was looking to get in at a price south of $165 last month and the stock of this fintech company is now priced below $150.
Perhaps an even better bargain, if I have the stomach to jump in, is Charles Schwab (SCHW). This stock has some of the same issues that currently weigh on bank stocks, but to a lesser degree. Its stock price will probably remain depressed until there’s more clarity with regard to its uninvested cash balances. I was hoping to start a position below $70 and now the stock trades below $54.
Thoughts?
The risk of dividend cuts seems the greatest it’s been since 2020. Do you agree? Should we take action to reduce our exposure to stocks with riskier dividends, or just ride through these uncertain times while staying on high alert? Please share your thoughts!