It was a nice run. However, the market broke its 5-month winning streak and retreated some in April.
Unfortunately, the stock market decline put a dent in my Portfolio value, but certainly not enough to wipe out 5 months of gains. I’d say the gains from March were given back in April, but in the grand scheme of things that’s not enough to get disturbed about.
Real Estate stocks had another bad month and remain the only market sector in the red for the year… down over 9% in price for the year. Utilities and Energy stocks performed the best in April (up just a few percent), but since I don’t have many stocks in those sectors, my Portfolio didn’t benefit to any significant degree. Communication Services and Consumer Staples managed to stay in the green as well in April, but just barely so.
The S&P 500 is hovering around a 7% gain Year-to-Date (YTD). That’s a decent return for just one-third of the year.
After a down April, I’ve got a few more stocks that are currently below a 0.5% weighting in my Portfolio. Ultimately, I’m working to get each stock to have a least a 1% weighting, but I’m starting with the worst offenders for now. Last month, The Walt Disney Co. (DIS), McCormick & Co. (MKC) and Whirlpool (WHR) were my only stocks with less than a 0.5% weighting, but a couple more stocks have joined them, namely American Tower (AMT) and NNN REIT (NNN), after many of my holdings declined in April. Thus, I’ve now got more stocks that need a weighting increase. I suspect I’ll add to most of these positions over time, but WHR is on my chopping block after another bad month.
Anyway, let’s get to my normal Portfolio Thoughts. I’ll 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.
- 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 April 2024…
Price Movement
Note – my price changes cover closing prices from 3/25/24 to 4/26/24.
The 5-month winning streak is over. As a result, my Portfolio suffered a bit in April, but not too much. My ratio of stock declines to stock gains came in just slightly worse than 2 to 1.
Of my 58 holdings, 39 dropped in price, while 19 managed to move higher.
Here were the stocks with the biggest moves to the upside and downside…
Of my 19 stocks that rose in price, none provided a 20% gain – not even close. In fact, none posted a 10% gain either (the usual threshold I monitor for). As it was, I only had 4 stocks that recorded even a 5% gain. It was definitely slim pickings with regard to stock gains… and I’d call many of the gains marginal at best.
My top gainers in April were:
- McCormick & Co. (MKC), popping 8.28%
- Main Street Capital (MAIN), rising 6.50%
- UGI Corp. (UGI), climbing 5.88%
- NextEra Energy (NEE), advancing 5.40%
- Merck & Co. (MRK), gaining 4.70%
An earnings report from MKC late last month detailed better margins, and the stock responded with a nice pop. MKC has managed to hold most of those gains since then.
MAIN doesn’t usually make appearances on my top gainers list, so it’s a nice surprise when it does. It’s been a nice 6-month run for MAIN, steadily advancing ~30% over that time.
UGI jumped a little on recent news that it may get an investment in its AmeriGas propane business. The company has had an ongoing strategic review of this business, focused on divesting it.
Making its 2nd straight appearance on my top gainers list is NEE. It’s my 4th best monthly gainer once again. The stock needs to climb a bit more to exceed my $67.04 cost basis and put my position in the green.
Lastly there’s MRK, which rebounded from a lackluster month of March and now sits near a 52-week high again. MRK has risen over 20% in price thus far in 2024… well done!
Note – one sector in my Portfolio had all its holdings in the green this month (bucking the trend): Utilities (4).
Of my 39 stocks that fell in price, none retreated more than 20% (thankfully!), but 6 did sink more than 10%. In addition, another 10 stocks declined at least 5%.
My worst decliners in April were…
- Whirlpool (WHR), plummeting 16.60%
- CVS Health (CVS), diving 14.94%
- Bristol-Myers Squibb (BMY), tanking 14.16%
- American Tower (AMT), dropping 12.21%
- Fastenal (FAST), retreating 11.48%
While WHR earnings met expectations, the company announced that it would be cutting jobs in an effort to lower costs and expand margins. The share price dipped to a 4-year low in the aftermath. Not a pretty picture.
A Medicare rate decision early in April that impacted managed care stocks seemed to be a catalyst for the downward move by CVS. It’s been a swift decline and now CVS is about 5% away from a 52-week low.
BMY slashed its full-year guidance during its earnings release – an impact resulting from two acquisitions in the first quarter. BMY is another company cutting jobs to seek cost savings in their business. The company had been treading water from a share price perspective over the past few months before taking another leg down with these earnings.
It was a rough month for AMT, as it was for other REITs. However, it seems AMT could be oversold here. This stock is a candidate to show up on my watchlist.
FAST was looking overvalued to me when I trimmed some shares at the beginning of February. The stock continued to run up after I sold (obtaining a 6-month winning streak through March), but has since dropped a little below my sale price. I’ll be interested to see how well the stock holds up in the coming months.
Note – somewhat surprisingly, only one sector in my Portfolio had all its holdings in the red this month: Materials (3). Five other sectors had just one stock in the green, otherwise this could have been a much longer list.
Top 10 Review
After little movement last month, stocks were on the move inside the Top 10 in April. Only 3 of the 10 stocks managed to finish with the same rank as they started with.
Only 1 of the Top 10 stocks managed to post a gain in April. It was a small gain at that… less than 1% from Procter & Gamble (PG).
BlackRock (BLK) slipped out of the Top 10 after losing 6.53% in April. BLK was replaced by Union Pacific (UNP), which actually declined 0.43% during the month, but still managed to climb in the rankings and land in the #9 spot.
Rising the most number of spots this month were PG and UNP. Each stock gained two spots in the rankings. Falling the most were AbbVie (ABBV) and FAST, which each slipped two spots.
FAST, ABBV, Lowe’s Companies (LOW) and RPM International (RPM) all performed poorly during the month with losses of nearly 9% or worse. LOW only managed to climb in the rankings since ABBV (which was just ahead of it in the rankings at the start of the month) performed worse.
Both Broadcom (AVGO) and Qualcomm (QCOM) have exceeded a 5% weighting within my Portfolio. Thus, they are being monitored for a possible trim.
Pepsico (PEP), BLK and Nexstar Media Group (NXST) are sitting outside the Top 10, but have a chance to move in over the course of May.
From the table above, my Top 10 holdings now comprise 39.20% of my Portfolio value. This is a decrease of 0.68 percentage points compared to last month. No surprise here, as some of my biggest positions had poor returns in April.
As for the dividend weighting of my Top 10, it finished the month at 29.27%. This was a decrease of 0.49 percentage points compared to last month. Despite the recent dividend raise from PG, the resulting dividend weighting increase from that raise was more than offset by UNP replacing BLK in the Top 10 .
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 still have 3 overweight sectors and 3 underweight sectors that I’m working to get into my preferred weighting range.
With regard to the overweight sectors (Financials, Industrials and Materials), their weighting differences all got closer to being in range, primarily due to the poor performance of my holdings in these sectors relative the corresponding S&P 500 sectors.
As for the underweight sectors (Consumer Discretionary, Energy and Information Technology), my weighting difference got worse with Consumer Discretionary and Energy, but I made up some serious ground in Information Technology thanks to my 4 semiconductor holdings performing relatively well in April. I closed the gap by more than 1 percentage point (from -11.95% to -10.71%).
Information Technology became a larger percentage of my Portfolio in April, tacking on about 0.5%. Financials became my 2nd largest sector after switching places with Industrials. Healthcare is still my 4th largest sector, despite falling further behind the top three sectors over the course of April.
Healthcare still holds my top spot with respect to dividend weighting though. Also, the dividend weighting of my Consumer Staples sector has now topped 10% after the recent dividend raise from PG.
As always, I’ll keep all my sector weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
As I outlined earlier, many of my Portfolio stocks got a price haircut in April. The one positive there is that their valuations are more favorable this month.
I’ve got some cash to invest. I just need to find the right investment. Whether that’s inside or outside my Portfolio doesn’t matter too much.
Within my Portfolio, here are a few stocks that I’m watching for possible additions…
Of the five stocks currently smaller than a 0.5% weighting in my Portfolio, American Tower (AMT) is the likeliest candidate for a purchase (given how REITs haven’t fared very well this year). I’d love to add below $170, but a price south of $175 might do.
Both Amdocs Ltd. (DOX) and Accenture (ACN) dipped below the price targets I set for them last month, $86 and $325, respectively. In fact, they still trade below those levels. Thus, don’t be surprised if I add to either stock soon. Bumping the weighting of my Tech holdings is always of interest to me.
I had a chance to add Nike (NKE) below $90 and Starbucks (SBUX) below $85, but didn’t pull the trigger. Both are now back above those levels, but are still close enough that I might get another chance to buy at those levels. An add to either could bring my Consumer Discretionary sector weighting into my preferred weighting range.
As for non-Portfolio stocks that I’m watching…
Chevron (CVX) has been pulling away from my $145 entry point. Thus, I’ll probably drop CVX from my watchlist for now.
Last month I mentioned a new stock piquing my interest – Zoetis (ZTS), which is in the Healthcare sector. I set a $150 price target, a target that had an additional margin of safety in it. During April, ZTS crossed this buy threshold, but I hesitated to act. Now the stock is back over $150 and approaching $160 again. Saving my capital for deployment in the Information Technology sector was more important than adding another Healthcare stock to my Portfolio.
Now that Meta Platforms (META) and Alphabet (GOOG) are paying dividends, they are candidates for my Portfolio. Either could add an infusion of growth to my Portfolio. Both stocks are in the Communication Services sector, in which I’m close to being underweight. Each stock yields a bit less than 0.5%, but I’d expect the dividend growth to average on the order of 10% in the years to come.
Thoughts?
Where does the stock market go from here? Is a larger pullback in order, or is the stock market set to tack on some additional gains before the usual summer slowdown occurs? Please share your thoughts!