We are knee deep in earnings season as we wrap up April. A few of my stocks have had some big moves as a result of their earnings reports. However, I wouldn’t say any single stock moved my Portfolio significantly in either direction. That’s to be expected given a diversified portfolio.
April was a positive month, with my Portfolio moving up in value. I always like to see that. However, my Portfolio is only slightly positive for the year, trailing the S&P 500 by a significant amount already in the 4 months of 2023 that have elapsed. It seems I’ve given up all that relative out-performance I posted in 2022.
Eight of the eleven S&P 500 sectors are trading within +/-4% of where they started the year, but the other 3 have the index trading nicely in the green. Communication Services and Information Technology are both up over 22% in the first third of the year, while Consumer Discretionary is pushing 15% gains. Those 3 sectors are doing the heavy lifting for the index thus far in 2023.
As a result of the GICS changes about a month ago, a couple of my Information Technology stocks got reassigned to new sectors. I had Visa (V) move to the Financials sector and Automatic Data Processing (ADP) move to Industrials. I’ll let you know how that change affected my sector weightings a bit later.
I plan to cover the usual topics 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.
Let’s get to it. Here are my Portfolio Thoughts for April 2023…
Price Movement
Note – my price changes cover closing prices from 3/28/23 to 4/28/23.
The two-month streak of lower prices came to an end in April. The markets and my Portfolio posted a decent rebound.
My ratio of stocks with price gains compared to price declines was an outstanding 4 to 1. Thus, for my 60 holdings, 48 moved higher in price, while 12 moved lower. That’s a good deal of green to look at.
Here were the stocks with the biggest moves to the upside and downside…
Of my 48 stocks that rose in price, six posted at least a 10% increase (the usual threshold I monitor for). Another 16 stocks topped a 5% gain. That was some decent movement to the upside.
The top gainers in April were:
- Medical Properties Trust (MPW), rocketing up 18.35%
- Starbucks (SBUX), bolting higher by 15.77%
- Medtronic (MDT), surging 14.39%
- Comcast (CMCSA), popping 13.50%
- Microsoft (MSFT), advancing 11.64%
The top gainers were from 5 different sectors.
MPW went from my worst decliner in March to my leading gainer in April. This month’s gain barely puts a dent in the stock’s losses over the past year though.
SBUX has reached a 52-week high, achieving a price level it hasn’t seen since the end of 2021. I like seeing the strength from SBUX.
Could MDT finally be on the rise after its steady decline over the past 18 months? This may be the start of something good for MDT, but we’ll need to see more than 1 month of gains.
Most of the gains that CMCSA posted this month were obtained just this past week, on the heels of a good earnings report. CMCSA is finally trading north of $40 again for the first time since last summer.
MSFT made my top gainers list for the second month in a row, topping 10% gains each time. Investors appear to like MSFT’s involvement in the Artificial Intelligence (AI) space.
Note – all my stocks in the following sectors were positive in April: Consumer Discretionary (6), Consumer Staples (6), Financials (6), Communication Services (5), Real Estate (4) and Utilities (3)
Of my 12 stocks that fell in price, all fell by less than 10%. However, 3 stocks dropped more than 5%. I’d have to say losses were well contained in April.
My worst decliners in April were…
- Skyworks Solutions (SWKS), retreating 6.53%
- Cisco Systems (CSCO), dropping 6.23%
- Texas Instruments (TXN), sliding 5.80%
- AbbVie (ABBV), slipping 4.51%
- Amdocs Ltd. (DOX), sagging 3.83%
What sticks out here is that 4 of my 5 biggest decliners are from the Information Technology sector.
After a good price ascent to begin 2023, SWKS pulled back in April. The 6.53% loss didn’t seem too big, but it was enough to lead my decliners.
Last month, after finally closing a month with a price above $50 for the first time in 9 months, CSCO apparently couldn’t stand the success and sank below that level again.
The price of TXN has alternated going up, then down, for 6 consecutive months. All the while, the price has stayed in the $160-$180 range.
My lone top decliner outside of the tech sector was Healthcare stock ABBV. Its 4.51% price slip stemmed from its earnings news, where its newer drugs missed their revenue targets and Humira sales declined again due to more biosimilars becoming available on the market.
DOX made the decliners list despite a modest 3.83% drop in price. The stock has been hovering in the $90-$96 range ever since the start of the year. I don’t expect to see this low Beta stock on the top decliner (or top gainer) list very often.
Top 10 Review
There were several similarities between the Top 10 in April and those in March.
Similarities started with a mixed bag of movement within my Top 10. Three stocks held steady in their spots, while half the stocks moved at least 3 spots in the rankings.
The biggest mover slid 6 spots in the rankings, just like I had in March… but a different stock this time.
Lastly, despite all the shuffling, the same stocks made up the Top 10 again this month… make it two months in a row!
Qualcomm (QCOM) was one of the three stocks to retain its position compared to last month. However, a 3.74% drop in price in April has left QCOM with a weaker grip on my #1 spot.
Climbing up the ranks three spots to grab the #2 position was Aflac (AFL). A solid 9.9% gain, a rebound from March losses, allowed AFL to rise.
Laying claim to the #3 ranking, after rising three spots, was Pepsico (PEP). PEP has risen in price for three straight months and continues its good earnings trend.
Yet another company to climb three spots was Procter & Gamble (PG). An April gain of 6.85% powered PG up the rankings to settle at #4.
Now we come to my first decliner, Broadcom (AVGO). It was a slip of one spot to #5 for AVGO, despite a slight gain of 0.29% during the month.
Visa (V) managed to move up two spots to secure my #6 ranking. V posted a 5.63% gain during April and now flirts with a 52-week high in price.
Next we get to the two stocks that fell significantly in my Top 10 rankings…
First I have RPM International (RPM) which slid four spots down to the #7 position. RPM has fallen in price 5 straight months now. It had a 3.29% retreat this past month.
A bigger decline was experienced by AbbVie (ABBV). This stock posted a loss of 4.51% during April and dropped six spots to the #8 rank. An earnings report this week that instilled some fear in investors was the cause.
Lowe’s Companies (LOW) held steady in the #9 spot this month, despite recording a solid 9.3% price gain in April.
Rounding out the Top 10 was Nexstar Media Group (NXST). NXST was in the #10 spot last month, and claimed it again in April. Its gain of 4.46% was nice, but it wasn’t enough to help it climb in the rankings.
Currently sitting outside my Top 10, but within striking distance of moving in, are Fastenal (FAST), BlackRock (BLK), Union Pacific (UNP) and Nike (NKE). FAST may be gaining some momentum after rising slightly in price in each of the past 4 months.
From the table above, my Top 10 holdings now comprise 35.33% of my Portfolio value. This is a decrease of 0.23 percentage points compared to last month.
As for the dividend weighting of my Top 10, this ended the month at 31.24%, which is an increase of 0.30 percentage points compared to last month. The rising dividend weighting was the result of recent dividend increases from QCOM, PEP and PG.
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.
The March GICS changes that I mentioned at the beginning of this post (which I finally became aware of this month) had a noticeable impact on my sector weightings. Moving two stocks out of my Information Technology sector just made that sector more underweight for my Portfolio. Meanwhile, moving one of those stocks into Financials and the other into Industrials raised my weightings in those sectors. I was able to absorb the addition to Financials while remaining in my preferred weighting range (although I am now near the top end of that range). However, the add in Industrials just made an overweight sector more overweight.
So, I’ve got more work to do now in Information Technology (raise weighting) and Industrials (lower weighting) to get into my preferred weighting ranges. The percentage differences don’t look too large, but they are significant. Given the size of my Portfolio, it will probably take me purging one or more of my Industrials positions and moving all the proceeds into an Information Technology stock just to move the needle in each sector. Thus, I don’t expect I’ll get into my preferred weighting ranges in these two sectors anytime soon.
My dividend weightings were also impacted by the GICS changes. It made it so that the Financials sector now provides the 2nd most dividends to my Portfolio, the Industrials sector now provides the 3rd most dividends, and the Information Technology sector dropped to provide only the 4th most dividends.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
All S&P 500 sectors posted price gains in the past month. I have noticed a few stocks leaving my radar over this time due to those price increases. Still, there seems to be plenty of stocks at fair value or below.
I wasn’t too active with regard to making purchases in April. I did manage a couple of buys in the first week of the month. I bought some shares of Automatic Data Processing (ADP) and Medtronic (MDT), both of which were on my watchlist. My watchlist is always a good place to start when I’m looking to go stock shopping. I’ll find some more shares to scoop up in May, and it won’t surprise me if some watchlist stocks are involved.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Now that I’m more underweight than ever in the Information Technology sector, those stocks will be at the top of my watchlist. A few of my semiconductor names look interesting.
Last month I was targeting Skyworks Solutions (SWKS) below $110. It’s under $106 now, so it’s a strong candidate for a buy. I’ll consider adding another 5 shares.
After an April tumble, Texas Instruments (TXN) is garnering some of my interest, but I think it needs to drop further. I’d consider a buy below $160, but would prefer a price south of $150.
The price of Qualcomm (QCOM) keeps declining. I’ve been reluctant to buy since it’s my #1 holding, but it may not be much longer if its price continues to drop. Eventually, I might buy some QCOM shares due to their low valuation, then wait for a rebound. I could always sell them during any price recovery, to keep the size of my position in check.
Last month I was looking at Healthcare names Medtronic (MDT) and Bristol-Myers Squibb (BMY). I chose to buy 5 shares of MDT below $80 and now the price is over $90 – got lucky there. Meanwhile, BMY has dropped in price. So, BMY seems like a good target for May. I was hoping to buy below $70 and it’s currently trading below $67. I could see adding 6 shares to bring my share total to 100 (opening up the possibility to sell a call option if the desire struck).
Another Healthcare stock where I should add to my position is CVS Health (CVS). Its price is still hovering in the mid-to-low $70s. CVS is like QCOM for me, in that while I don’t necessarily need any more shares, I feel like the value is there.
A couple of smaller positions that I’d like to build out a bit further, and where prices seem reasonable, are Whirlpool (WHR) and American Tower (AMT). I’m targeting WHR below $130, which it’s reached at least twice over the past month. WHR had a goods earning report this past week despite slipping sales. As for AMT, I’d consider adding below $200, but would prefer to buy below $195.
As for non-Portfolio stocks that I’m watching…
After a price recovery with Jack Henry & Associates (JKHY) in April, the stock has left my watchlist. However, I’m still keeping an eye on Charles Schwab (SCHW). This stock trades in the low $50s. It seems to have stabilized after a sharp decline in March in conjunction with all the turmoil in the banking industry.
This coming month, I’ll need to scour the Information Technology sector for some new candidates given that I’m so underweight in that sector.
Thoughts?
What direction do you expect the market to go in the upcoming summer months? Will May provide the last interest rate increase we see from the Federal Reserve this year? Please share your thoughts!