It was good to see the stock market continue to rally in December, and to see my Portfolio finish out the year on a strong note. Thankfully, it’s been more than just mega-cap tech that’s rallied in the past couple of months and so my Portfolio has managed to move up nicely.
I think I managed to achieve the majority of my annual Portfolio goals, but I won’t know for sure until I take a closer look in the first half of next month. Of course, I’ll have a post early in the new year with an update.
I purged another stock laggard from my Portfolio this month. I sold V.F. Corp. (VFC) after suffering through two dividend cuts and a plummeting stock price this year. I pulled several weeds from my Portfolio garden this year, including 3M Co. (MMM), Medical Properties Trust (MPW) and Walgreens Boots Alliance (WBA). Hopefully, my Portfolio is better for it.
On a brighter note, Broadcom (AVGO) has essentially doubled this year and has moved to the top of my Portfolio rankings, where it’s been for several months. Last year at this time, AVGO was my 8th largest position. Let’s hope the new year doesn’t lead to a price reversion.
I put most of my new capital investment into several of my smaller holdings this year. NextEra Energy (NEE) stands out in that regard. However, I also added more than twice to both Whirlpool (WHR) and American Tower (AMT) after initiating positions early in the year. Ideally, I’d like each Portfolio position to have at least a 1% weighting (currently about $6.8K), but 24 of my 59 holdings don’t meet that threshold. I should consider consolidating some of these smaller positions into my best small holdings, as I don’t think I can get all 24 holdings to my threshold anytime soon via new capital investment alone.
As usual, I’ll be covering my standard topics for this month’s 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.
Here are my Portfolio Thoughts for December 2023…
Price Movement
Note – my price changes cover closing prices from 11/27/23 to 12/29/23.
I see lots of green in my Portfolio for December. That’s now back-to-back months with good performance. However, it will be hard to top last month’s 9:1 ratio of gainer to decliners. Let’s see how I fared…
My ratio of stocks with price gains compared to price declines was roughly 5.5 to 1. This meant that for my 60 holdings (still counting VFC), 50 moved higher in price, while 9 moved lower, and 1 was flat – that stock being OGE Energy (OGE).
Here were the stocks with the biggest moves to the upside and downside…
Of my 50 stocks that rose in price, none of them provided a 20% gain. Yet, 17 stocks managed to exceed a 10% gain (the usual threshold I monitor for). In addition, another 19 stocks recorded at least a 5% gain. All totaled, that’s 36 of the 50 gainers climbing more than 5%. Solid gains to be certain!
My top gainers in December were:
- Caterpillar (CAT), roaring higher 19.52%
- Skyworks Solutions (SWKS), surging 18.84%
- Broadcom (AVGO), popping 17.47%
- CVS Health (CVS), rising 14.87%
- Best Buy (BBY), climbing 12.86%
All my semiconductor stocks had an excellent month in terms of price gains, and that’s reflected in my top gainers list with stellar showings from SWKS and AVGO.
The other three stocks in the top gainers list came from three different sectors: Industrials, Healthcare & Consumer Discretionary.
Note – 2 sectors in my Portfolio had all their holdings in the green: Real Estate (4) and Materials (3). Technically, my Energy holdings were all in the green, too, but since I only hold one Energy stock, I’m not counting it. The number in parenthesis is the number of stocks I own in that sector.
Of my 9 stocks that fell in price, none sank more than 20% and none fell more than 10%. That’s two months running for that… impressive. There were only two stocks that managed to decline at least 5%. It’s easy to get ahead when losses are contained like that.
My worst decliners in December were…
- Starbucks (SBUX), falling 6.20%
- The Walt Disney Co. (DIS), sliding 5.13%
- UnitedHealth Group (UNH), dropping 3.15%
- Procter & Gamble (PG), giving up 3.11%
- Altria Group (MO), declining 2.65%
SBUX has had a lackluster year. It’s barely participated in the stock market rally of the past two months as well.
After claiming a spot in my top gainers list last month by rising close to 20%, DIS has flipped the script and joined my top decliners list this month. At least is was a net positive over the 2-month period.
All my Healthcare stocks posted a positive return in December, expect UNH. This month’s decline from UNH broke a 3-month winning streak.
Only one sector in my Portfolio had more than one declining stock, and that was Consumer Staples. Both PG and MO slipped enough in December to make my top decliners list.
Top 10 Review
There proved to be quite a bit of Top 10 movement in December. Not only did 8 of the 10 stocks change ranking, but 2 of those 8 stocks were new entrants to the Top 10.
The only stocks that managed to hold the same ranking as last month were Broadcom (AVGO) at #1, and Visa (V) at #5.
My biggest mover to the upside was one of the new entrants: Union Pacific (UNP). UNP launched itself upward 4 spots to settle at #7 by gaining 11.72% during December.
Other stocks that moved up more than one spot included Lowe’s Companies (LOW), AbbVie (ABBV) and the other new entrant, BlackRock (BLK), which each rose two spots in the rankings.
My two stocks slipping the most in the rankings each found themselves outside of the Top 10 after their falls. Procter & Gamble (PG) tumbled five spots from #6 after a mere 3.11% decline on the month. Unfortunately, many other stocks were moving up significantly, so its small decline was magnified. Fellow Consumer Staples stock Pepsico (PEP) eked out a 0.90% gain in December, but still found itself sliding three spots from #9 and out of the Top 10.
Other stocks that slid down more than one spot included Aflac (AFL) and Fastenal (FAST). Each fell two spots in the rankings. The fall for AFL made sense given its small decline of 0.57% in December, however, FAST managed to slide despite gaining 6.27% for the month.
After AVGO exceeded a 5% weighting threshold in my Portfolio last month, it’s an even larger weighting now thanks to another banner month. I’m still not looking to trim the position yet.
The stocks at #6 through #10 are now tightly bunched in terms of Portfolio weighting, so expect more shake up in the bottom half of the Top 10 next month.
Lurking outside my Top 10 now are the two stocks that just fell out – PG and PEP. No other stocks are really in striking distance of the Top 10 unless something unexpected takes place.
From the table above, my Top 10 holdings now comprise 38.28% of my Portfolio value. This was an increase of 0.62 percentage points compared to last month. Plentiful double-digit December gains from AVGO (17.47%), QCOM (12.82%), LOW (11.38%), UNP (11.72%), ABBV (11.42%) and BLK (11.10%) accounted for a good chunk of this larger Top 10 weighting.
As for the dividend weighting of my Top 10, this finished the month at 29.88%. This was an decrease of 0.42 percentage points compared to last month. Despite recent dividend raises from AVGO and ABBV, the two new Top 10 entrants (UNP & BLK) brought lower dividend weights with them than the stocks they replaced (PG & PEP), more than offsetting this.
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.
As it’s been the case over the past few months, I still have 3 overweight sectors and 2 underweight sectors. The sectors closest to getting into my preferred weighting range are Energy and Financials. This month I made the most headway in the Energy sector, with my lone Energy holding, Enbridge (ENB), gaining 6.13% over the past month, while Energy was the only negative sector in the S&P 500.
My Consumer Discretionary weighting is getting close to being underweight after I sold V.F. Corp (VFC) earlier this month. An addition to Whirlpool (WHR) would help bolster my weighting in this sector, as well as make what’s currently my smallest holding (by a decent margin) a little bit bigger.
After a strong month from my Information Technology holdings (namely my semiconductor stocks), Information Technology is now the sector with the largest weighting in my Portfolio. Industrials and Financials aren’t too far behind though. Healthcare could surge into the lead, too, if it manages a good 2024. I’m looking for a bounce back in Healthcare after a 2023 in which this S&P 500 sector barely finished in the green.
As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
While I effectively didn’t have any cash left to invest in 2023, I still managed to make a handful of moves in December. I basically purged VFC and used the sales proceeds to invest in a few of my smaller holdings that I wanted to see grow. This led to adding some shares of NextEra Energy (NEE), and to a lesser degree, Cummins (CMI) and McCormick & Co. (MKC).
All three of these stocks were mentioned in last month’s watchlist. While I didn’t get to buy at the prices I preferred (except in the case of NEE), I didn’t mind adding a few shares to keep the positions growing.
Now that we’ve had two months of rising stock prices, bargains may be harder to find. Still, there are stocks that have yet to join the market rally. I’ve just got to find them.
With the new year will come new cash to invest. So, I’ve got to be ready to buy as low prices often don’t stick around for very long. In that case, it will be prudent to have my watchlist ready to go.
Within my Portfolio, here are a few stocks that I’m watching for possible additions…
Those NEE shares I purchased this month were at $59.90. If I can continue to add below that level then I suspect I will. I’d like to add around 13 shares, which should put me at 100 shares and boost my position value to ~$6K.
The Walt Disney Co. (DIS) is still on my radar, especially since it was one of the few stocks I highlighted last month that declined in price in December. DIS currently trades just above $90. My lowest-priced addition was at $88.38, but the current price is acceptable to me.
I mentioned earlier the possibility of adding to my Whirlpool (WHR) position. It would add to my Consumer Discretionary weighting and make my smallest position a bit more respectable in size. I suspect lower interest rates in 2024 might eventually spur some new home sales and remodeling, which could benefit WHR. The current price near $122 is markedly lower than my lowest-priced purchase of $144, so I could lower my cost basis substantially. If the recovery for WHR takes longer than expected, at least I’d benefit from its yield of 5.75% while I wait.
Starbucks (SBUX) is garnering some interest from me. It’s trading just above $96. I’d consider adding some shares below $95, but would ideally like to get them south of $90.
Despite adding some shares this month, I’d like Cummins (CMI) to become a bigger part of my Portfolio. I just added at $237, so I’ll be targeting something lower than that. Below $220 would be terrific for me.
As for non-Portfolio stocks that I’m watching…
I’ve still got my eyes on Cactus Inc. (WHD). This stock from the Energy sector would be a good addition for my Portfolio. It currently trades just above $45, but I’m still targeting a price below $40.
A managed healthcare stock that I’ve been watching is Elevance Health (ELV). I like its growth history over the past decade… both earnings and dividends. Its low payout ratio and very safe dividend are attractive as well, even though its yield is on the low side at 1.26%. I don’t necessarily need another Healthcare stock, so if I did initiate a position here, I might do it by replacing one of my existing Healthcare holdings that hasn’t performed well… I suspect one of the pharma stocks I have (probably Bristol-Myers Squibb (BMY)). I’d consider starting a small ELV position below $470, but would prefer to start below $450.
Thoughts?
What are you expecting from the stock market in 2024? Does this impact how you plan to approach your portfolio investments? Please share your thoughts!