During the last two days of May I made a pair of Portfolio transactions. With a new month already upon us, I figured I better take care of sharing the details for them sooner rather than later.
Both transactions were buys of existing holdings, and both stocks are part of the Information Technology sector. As you probably know, I’m always on the lookout to add to my technology holdings. This is primarily due to the fact that my Portfolio is significantly underweight this sector relative to the S&P 500.
The two purchases weren’t significant ones, to be sure. However, it did help get my Portfolio’s weighting in the tech sector up, and it also pushed up the weighting of those stocks within my Portfolio as I move them toward the 1% weighting that I hope to get all my holdings to.
Of course, with the net investment into my Portfolio, my forward dividend income increased, too, but you’ll have to stick around to find out by how much.
Let’s see the details on my latest Portfolio transactions…
Accenture (ACN)
ACN was a Bottom 10 holding for me before this purchase (just barely). A big contributor to ACN falling into my Bottom 10 was its poor stock price performance.
After a nice 1-year run up between March 2023 and March 2024, peaking at ~$380, ACN has slogged lower… by almost $100/share now. The company’s earnings growth has certainly slowed this past year (still remaining positive), but analysts have earnings rebounding to mid-to-upper single digits in FY24 and to low double-digits in FY25.
The position ACN had in my Portfolio was too small, under the minimum 1% weighting I desire. Given its strong track record, it’s a stock that needs a larger weighting in my Portfolio. The fact that it’s in the Information Technology sector is a bonus.
I wouldn’t call ACN undervalued at my purchase price, but this stock has traded at a premium for well over 5 years (except for very short periods), and the current price offers one of its better price points in recent times.
I added an ACN share just a month ago at just under $303, so with the price dipping further, it wasn’t a tall task for me to commit some additional capital to the position.
On 5/30/24, I bought another single share of ACN at $285/share. The stock yielded 1.81% at my purchase price, which is 0.9 percentage points below my overall Portfolio yield of 2.71%.
The purchase boosted my ACN share total by 6.12%. I now own a total of 17.333 shares of ACN. The single-share purchase added $5.16 to my annual forward dividend income.
As a result of the addition, my ACN cost basis rose by $1.55/share and now stands at $259.70/share.
ACN is no longer a Bottom 10 holding in my Portfolio… it’s the 12th smallest now. In my value rankings, the stock now sits in between Pinnacle West Capital (PNW) and Cummins (CMI).
I anticipate adding more ACN shares as I can, especially if the value proposition trends upward. I’m targeting another share addition in the $270-$275 range.
Amdocs Ltd. (DOX)
If I thought my ACN position was too small, you can imagine what I thought of DOX as my 5th smallest holding… too small!
Again, here’s a stock under the minimum 1% weighting I desire for my Portfolio holdings, and it’s an Information Technology stock that’s been trending down since March.
Unlike ACN however, DOX looks undervalued at this time. Additionally, the shares I scooped up with this purchase were at my lowest valuation yet for any of my DOX buys.
Back on the last day of February I added 10 shares at $90.69. I thought that was a fair value at the time, but with the recent price drop the valuation has become even better.
Earnings growth projections for the each of the next two years are roughly 10%. Dividend growth will most likely be in the same percentage ballpark.
On 5/31/24, I bought 5 shares of DOX at $78.60/share, for a total of $393.00. The stock yielded 2.44% at my purchase price, which is 0.27 percentage points below that of my overall Portfolio yield.
The purchase raised my DOX share total by exactly 10%. I now own a total of 55 shares of DOX. The purchase added $9.58 to my annual forward dividend income.
As a result of the addition, my DOX cost basis rose by a tad more than $0.25/share, to an even $76/share.
Despite the addition, DOX remained a Bottom 10 holding in my Portfolio. However, it moved up, and is now my 8th smallest Portfolio holding. It sits a decent amount behind UGI Corp. (UGI), but just slightly ahead of Bristol-Myers Squibb (BMY).
Adding more DOX is in the cards. As long as the share price remains in the $70s, I’ll look to add. Should the price drop below $72 (which is where I first entered the position back in late 2021), then I’d consider buying a larger quantity of shares.
Summary
With May coming to a close, I managed to add a couple more purchases to my transaction list. In this case, I added to two existing Portfolio stocks (ACN & DOX), both of which reside in the Information Technology sector.
Both stocks had been dropping in price over the past couple of months, to the point where I didn’t mind adding to them. DOX appears to provide the best value of the two at this time.
Neither purchase was too significant. While both holdings grew in size, neither has yet to reach the minimum 1% Portfolio weighting I’m seeking. Thus, I’ll be on the lookout for additional purchase opportunities for these two stocks.
The two buys resulted in an investment of $678 into my Portfolio. My annual forward dividend income increased by only $14.74 though, as the yield on each stock is fairly low and my purchase amount was rather small. My cost basis in each stock rose slightly.
With both ACN & DOX already being a part of my Portfolio, the number of stocks in my Portfolio held steady at 57.
Are you aware of any Tech stocks that might be trading at a fair value… or better? Do you own ACN or DOX in your portfolio? I look forward to your comments!