June delivered a nice bounceback after the drubbing my Portfolio took in May. My stocks in 5 of the 10 sectors I invest in were all green in June. Yet, the positive vibes were ultimately even stronger than that, as you’ll soon learn.
All S&P 500 sectors provided positive returns in June, with Consumer Discretionary, Industrials and Materials leading the way.
Unfortunately, I think my Portfolio lost further ground this month as far as Year-to-Date performance relative to the S&P 500 goes. Still, I’ll take the positive results.
Even excess cash is earning a solid return these days, with 5% being achievable in many money market accounts and over 4% in high-yield savings accounts. It’s been a long while since returns on “safe” money have been so high.
Let’s see if both stocks and cash can continue to provide solid returns during the summer months.
The usual topics are coming up for my 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 see my Portfolio Thoughts for June 2023…
Price Movement
Note – my price changes cover closing prices from 5/26/23 to 6/27/23.
As I noted earlier, there was plenty of green in my Portfolio this month. What stood out to me wasn’t the large swath of stocks that were strongly positive, but rather the quantity of stocks that failed to go negative. Those few that did decline in price barely did so, too.
In June, my ratio of stocks with price gains compared to price declines was better than 7.5 to 1. This meant that for my 60 holdings, 53 moved higher in price, while only 7 moved lower. That’s a nice reversal compared to last month, and it’s certainly welcomed.
Here were the stocks with the biggest moves to the upside and downside…
Of my 53 stocks that rose in price, there were no big movers providing 20%+ gains. However, there was a nice collection of 8 stocks that delivered at least a 10% increase (the usual threshold I monitor for). Another group of 17 stocks brought home at least a 5% gain.
The top gainers in June were:
- Medical Properties Trust (MPW), surging 16.54%
- Caterpillar (CAT), jumping 13.64%
- Cummins (CMI), popping 12.69%
- Best Buy (BBY), climbing 11.54%
- Illinois Tool Works (ITW), rising 10.91%
No stranger to big percentage moves in the past year (mostly negative though), MPW topped my gainers list in June. It was a nice respite from the recent pullbacks.
After tech stocks dominated the gainers list last month, there’s a bit more diversity this time around. However, there were still 3 stocks from one sector… Industrials. CAT, CMI and ITW all managed double-digit gains during the month. I like it!
Lastly there was BBY. After drifting around in the low-to-mid $70s for the better part of the last quarter, the stock broke out a bit during June, which was good to see.
Note – 5 of the 10 sectors from my Portfolio had all their holdings in the green in June. Here’s the list of sectors that saw nothing but positive returns (along with the number of stocks I own in that sector): Industrials (9), Consumer Discretionary (6), Communication Services (5), Real Estate (4) & Materials (3).
Of my 7 stocks that fell in price, none declined more than 10%. In fact, none of them even dropped 5%. Losses were well contained in June. I love it when the downside is limited.
My worst decliners in June were…
- Walgreens Boots Alliance (WBA), retreating 4.57%
- AbbVie (ABBV), dropping 3.61%
- Main Street Capital (MAIN), sliding 2.14%
- Accenture (ACN), slipping 0.92%
- Altria Group (MO), drifting down 0.61%
Making a return appearance on my decliners list was WBA. While #3 on the list in May, WBA moved to #1 on the decliners list in June. Sadly, that’s the wrong direction to go. An earnings report that forecasted lower guidance was the reason behind the decline.
ABBV fell in price for a 3rd consecutive month. Year-to-Date losses have approached 20%… a personal bear market for ABBV as the company struggles to replace its declining Humira sales.
Drifting lower over the past couple of months has been MAIN. The stock had only a minor price drop in June, but enough to land the stock in the middle of my top decliners list.
ACN went from my top gainers list in May to my top decliners list in June. Still, it’s hard to get worried about a drop of less than 1% for the month.
Rounding out the group was MO. A slightly negative month was enough to make my decliners list in June. That just goes to show the limited number of stocks that saw red this month, and how minimal the overall losses were.
Top 10 Review
Four stocks managed to hold their spots in the Top 10 this month. A total that high hasn’t happened for a while.
Big movers inside the Top 10 didn’t really exist in June. One stock did move 3 spots in the rankings, but that’s not much compared to earlier months this year.
There was one new stock cracking the Top 10… a stock that’s been part of the group before. Did it move in due to stellar performance, or did the stock it replace fail to maintain its grip on a Top 10 position? We’ll know soon enough.
Holding down the #1 spot for a second month in a row was Broadcom (AVGO). The stock posted a 4.39% gain during June after a stellar month of May.
Maintaining its #2 spot from last month was Qualcomm (QCOM). After four straight months of price declines, QCOM managed an 8.55% gain in June, breaking that losing streak, and preventing it from sliding any further in my rankings.
Climbing one spot to secure the #3 ranking in the Top 10 was Aflac (AFL). A 6.22% rise in price was enough to allow AFL to move a little higher.
My biggest riser in June was Lowe’s Companies (LOW). A gain of 8.25% allowed LOW to jump three positions in the rankings and claim the #4 spot.
Falling two spots and settling at #5 was Pepsico (PEP). It was a slim gain of 1.44% for PEP in June. Such a small gain when so many other Portfolio stocks were surging led to PEP’s slide in the rankings.
Another stock that didn’t move in the rankings was RPM International (RPM). A 5.59% gain in June meant RPM didn’t have to relinquish the #6 spot.
In the #7 spot in the rankings this month was Visa (V). Its price gain was a meager 1.04% in June, and this led to a tumble down the rankings of two spots. Both V and PEP had to endure the same fate for a less-than-average gain this month.
My fourth and last stock to hold steady in its ranking this month was Procter & Gamble (PG). A 3.18% gain was enough for PG to retain the #8 spot.
After re-entering the Top 10 last month, Fastenal (FAST) continued to move up the rankings in June. FAST rose one spot to #9 due to a 5.98% gain this month.
At the #10 spot is newcomer (at least for this month) Nexstar Media Group (NXST), posting a gain of 10.07%. This was the largest gain for any of my Top 10 stocks in June. NXST pushed AbbVie (ABBV) outside the Top 10. ABBV didn’t do itself any favors being my second worst decliner for June, down 3.61%.
Just outside my Top 10 are ABBV, BlackRock (BLK) & Union Pacific (UNP). Both BLK (+1.84%) and UNP (+5.12%) posted gains in June, but neither gained enough to crack the Top 10.
From the table above, my Top 10 holdings now comprise 36.07% of my Portfolio value. This is an increase of just 0.05 percentage points compared to last month. Most of my good June gains came from stocks outside my Top 10.
As for the dividend weighting of my Top 10, this finished the month at 29.13%, a sharp decrease of 1.41 percentage points compared to last month. NXST replacing ABBV in my Top 10 accounted for nearly all of this delta, as ABBV is my largest dividend payer.
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.
After finishing June, I still have the same 3 sectors where I’m overweight: Industrials, Materials, and Consumer Staples. I got slightly closer to my preferred weighting range in Consumer Staples, but drifted farther away in Materials. Unfortunately, the weighting difference got noticeably worse in Industrials after all my stocks in that sector performed well in June.
The good performance from my Industrials also made that sector my most valuable, just inching past Information Technology. Healthcare and Financials aren’t too far behind either.
My lone underweight sectors continue to be Information Technology and Energy. The chasm to get Tech into my preferred weighting range won’t be narrowing too much anytime soon. It’s probably going to require a prolonged effort. I continue to look for ways to add to Tech, but valuations always appear expensive. I’m not worried about being underweight in Energy, as it’s not one of my favorite sectors. First I just need to find an Energy stock that I like enough to put into my Portfolio. Currently, I don’t have any Energy holdings.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Despite the run-up in prices during June, there still appear to be plenty of stocks at prices where I’d buy.
I did add slightly to one stock from my watchlist in June, and that was REIT American Tower (AMT). A few other of my Portfolio REITs also look to be trading at decent valuations. Perhaps I’ll figure out a way to add to them in July.
Of course, I’ll remain on the lookout for any possible additions to my Information Technology sector given that I wish to bring that sector into my preferred weighting range.
Within my Portfolio, here are a few stocks that I’m watching for possible additions…
REIT Realty Income (O) is trading below $60, but I’d like to see it drop below the $58 level before I add some shares. I’d need to buy 13 shares to cross the 100 share total.
I wouldn’t mind adding to REIT National Retail Properties (NNN) should the price trade below $40. It’s currently hovering in the $42 range.
NextEra Energy (NEE) is high on my list right now as it sits in the low $70s. Boosting my Utility holdings would be nice, as would adding to one of my smallest Portfolio holdings.
A few Healthcare stocks that I’m eyeing for purchase at current prices are Bristol-Myers Squibb (BMY), Amgen (AMGN) and Medtronic (MDT). Unfortunately, adding in this sector might push me outside of my preferred weighting range, so I’ll need to give this idea some extra thought.
As for non-Portfolio stocks that I’m watching…
In my quest to obtain an Energy stock by the end of 2023, I’ve been watching Cactus (WHD). When this mid-cap stock was briefly trading below $32 earlier this month, I was ready to initiate a position. However, I didn’t act quickly enough and the stock has since risen into the low $40s. I’ll hope for a pullback to the $35 level and see if I can enter there.
I’m watching insurer Allstate (ALL) after a more than 20% decline in 2023. However, I think I need to hold out for earnings improvement before establishing a position. A big earnings rebound is projected in FY24. If I decide to buy before earnings turn around it would probably be a very small position, in the bottom 5 of my Portfolio. ALL currently sports a dividend yield around 3.2%.
Thoughts?
What direction do you see the stock market going over the summer months? Do you think it will take until next year before companies become more generous with their dividend raises again? Please share your thoughts!