Uncertainty in the stock market ratcheted higher in February.  Stock prices trended downward for the most part, but not significantly.  Investors appear to be a bit more cautious given the unknown impact tariffs will have on the economy, the direction of interest rates, and a consumer that’s pulling back in the face of high prices, inflation, and still elevated interest rates, among other things.

It seems that stock market upside from here is probably limited given 2 years of 20%+ gains and the market sitting near all-time highs.  A prominent move to the downside seems much more likely.  Sadly, that would mean my Portfolio value would move in the same direction.  We’ll see how it plays out.

Year-to-Date (YTD), only 2 of the 11 market sectors are in the red: Consumer Discretionary (which had a terrible month) and Information Technology (which increased its losses over the past month).  Healthcare, Consumer Staples and Utilities (all defensive sectors), are 3 of the top 5 sectors thus far in 2025 – very telling.  Each of these top 5 sectors have gains north of 5%.

As a whole, in 2025 the S&P 500 has returned about 1.7% from a price standpoint, and closer to 1.9% with dividends reinvested.

In first two months of the year I’ve executed a handful of Portfolio transactions already.  It has my Portfolio sector weightings a bit worse-off relative to where I started the year.  However, my work isn’t done.  I expect to remain active as I make further adjustments in the months ahead.  When all is done, I plan to have my sector weightings back to at least where I began, and hopefully in even better shape with regard to getting into my target weighting ranges.

As usual, in this month’s Portfolio Thoughts post I’ll be discussing the following 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 February 2025…

 

Price Movement

Note – my price changes cover closing prices from 1/27/25 to 2/25/25.

After a positive start to 2025 was recorded last month, February came up flat… literally.  The ratio of my stock gains to stock declines was about as even as it could get considering that I had an odd number of Portfolio holdings factored in.  Of my 57 holdings (no longer counting OGE or PWN, and not yet counting INTU), 28 gained in price, while 29 declined.  This ratio was slightly less than 1:1.

Here were the stocks with the biggest moves to the upside and downside…

 

Of my 28 stocks that rose in price in February, none managed to pop more than 20%.  However, I did have 5 stocks with at least a 10% advance (the usual threshold I monitor for).  Another dozen stocks gained at least 5%.  This was a decent number of stocks showing solid gains.

My top gainers in February were:

• Hershey Co. (HSY), bolting higher by 16.22%
• AbbVie (ABBV), rocketing up 15.40%
• Starbucks (SBUX), surging 14.57%
• CVS Health (CVS), rising 13.27%
• Amgen (AMGN), popping 11.55%

 

With a beautiful 16.22% advance, HSY led all my gainers.  HSY had declined for 4 consecutive months before its reversal started earlier this month.  This was a nice rebound from January when HSY was my 2nd-worst decliner.

Standing out in the top gainers list is the fact that all five gained by a double-digit percentage.  Also, standing out is the fact that three Healthcare stocks are present: ABBV, CVS & AMGN.

ABBV really jumped in February after trading sideways (in the $170-$180 range) for the last 3 months.  For CVS, it’s the 2nd straight month making my top gainers list.  It felt like CVS had nowhere to go but up after a horrible 2024.  Meanwhile AMGN is off to a terrific start in 2025, with nice gains in each of the first two months.

SBUX has been moving higher in price over the past two months as well, picking up steam in February.  The stock reached a new 52-week high this past month.  Good things seem to be brewing at SBUX!  Yes, I just said that.

Note – 2 sectors in my Portfolio had all their holdings in the green this month: Consumer Staples (5) & Real Estate (4).

 

Of my 29 stocks that fell in price, one stood out like a sore thumb, as it declined more than 25%.  On top of that, a small group of three stocks posted losses over 10%.  Add in another dozen stocks with losses exceeding 5% and there was more than enough negativity for me.

My worst decliners in February were…

• Skyworks Solutions (SWKS), demolished by 26.17%
• UnitedHealth Group (UNH), plunging 13.46%
• Caterpillar (CAT), sinking 13.32%
• Lockheed Martin (LMT), dropping 10.97%
• Lowe’s Companies (LOW), sliding 9.70%

 

There were no carryover stocks from last month in the worst decliners list.

By a wide margin, SWKS was my worst decliner in February.  In its earnings report, the company mentioned that intensified competition for its Apple iPhone business would lead to a significant drop in sales going forward.  SWKS hadn’t been performing well recently anyway, but this just added to the pain.  Given the cloudy outlook for SWKS now, I’m sitting on the sidelines instead of purchasing more shares.

Lots has been going wrong for UNH in the past few months.  One of its executives was murdered, there’s a possible crackdown on pharmacy benefits managers coming (including UNH’s OptumRx), more industry regulation is on the horizon, and even a potential overhaul of some industry practices that could require a change to the business.  All this seemed to catch up with UNH in February.

CAT dropped due to the company missing revenue expectations in its latest quarterly report.  A projected slight revenue decline for 2025 didn’t help either.

LMT reported less than expected revenue in its latest quarterly report.  There were delays in its F-35 fighter jet deliveries, and the company reported substantial losses related to classified defense projects.  Government defense spending may be reduced moving forward, too.  A lot is weighing on the stock at this time.

With no signs of a strong home-improvement market, and weak housing starts due to elevated mortgage rates and a slowdown in demand, LOW is struggling to show enough to move its stock higher.  It seems LOW is managing this period fairly well, although it may be hard to say that this month given that its stock dropped nearly 10%.

 

Top 10 Review

After February came to a close, it’s now been 5 consecutive months since any new stocks have cracked my Top 10.  That’s quite a run.

When it came to my biggest movers up or down in the Top 10, I had two stocks climb two spots each, and one stock fall two spots.  More on this is coming.

The big news for February is that 9 of the 10 stocks in my Top 10 changed position.  It’s been many a month since there’s been so much shuffling.

Of course, the only stock not to change position is my #1 holding, AVGO.  This was despite the fact that I sold some AVGO in February, reducing my position by roughly 9%.  For now, the stock is no longer hovering around a 10% weighting.  AVGO was basically flat for the month (0.2% gain), although you wouldn’t think it based on the price movement it experienced during that time.

Swapping spots at #2 and #3 for a 2nd month in a row were AFL and QCOM.  AFL secured the #2 spot despite slipping 1.31% in February.  QCOM fell back to #3 based on the 5.82% decline it posted this month.

Another pair of stocks switching spots were V and RPM.  V moved up to #4 thanks to a nice 5.25% gain.  However, the 3.78% drop from RPM resulted in the stock retreating to the #5 spot.

ABBV used its massive 15.4% explosion to jump two spots in my rankings to #6.  This was enough to surpass BLK, which slipped one spot to #7… although its 6.98% decline didn’t help.  This is the 2nd consecutive month that BLK has declined after finishing 2024 on an 8-month winning streak.

PG was my other stock to rise two spots in the rankings.  It used a 1.76% gain to pass by LOW and FAST and lay claim to #8.  LOW disappointed with a 9.70% drop that resulted in a two spot slide to #9.  FAST fell a much more modest 2.19% and only pulled back one spot to #10.

 

 

Both Union Pacific (UNP) and JPMorgan Chase & Co. (JPM) are hovering outside the Top 10.  However, they drifted farther back after each declining a bit more than 3% in February.  These are realistically the only two stocks that could probably crack my Top 10 outside of a monster move up from them, or a big tumble from one of my Top 10.

 

From the table above, my Top 10 holdings now comprise 40.64% of my Portfolio value.  This is a decrease of 0.83 percentage points compared to last month.  My trim of AVGO this month contributed significantly to the weighting drop.  Only 4 of my Top 10 stocks finished with gains in February, so it was surprising that my Portfolio value seemed to hold up well.

As for the dividend weighting of my Top 10, it finished the month at 28.57%.  This is a decrease of 0.70 percentage points compared to last month.  Over half that decline was the result of my AVGO trim.  The rest came from my investment dollars going into holdings outside 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.

In February, I unfortunately added one more overweight sector to the group of 3 that I had.  Due to a few of my holdings from this sector showing up on my top gainers list this month, Healthcare has joined the group.  Recall the big February gains I noted earlier from ABBV, CVS and AMGN.  Well, gains from those holdings raised the weighting of my Healthcare sector within my Portfolio and knocked it outside of my preferred weighting range.

On a brighter note, at least my other overweight sectors (Industrials, Materials & Financials) reduced their weighting differences some.  However, all of them are at least 1 percentage point away from getting into my preferred weighting range.  Thus, I don’t expect I’ll have fewer overweight sectors anytime soon – at least not without a decently-sized transaction.

I still have 3 underweight sectors in Information Technology, Consumer Discretionary and Communication Services.  There was a weighting difference reduction of 0.7 percentage points in Consumer Discretionary due to very good gains from Starbucks (SBUX) & Nike (NKE) in February.  However, I lost a small amount of ground (0.1 percentage points) in Communication Services, and a whopping 1.09 percentage points in Information Technology.  The drubbing that Skyworks Solutions (SWKS) took in February was a significant factor for that sector.

My largest sector of Information Technology now comprises just under 20% of my Portfolio weighting, with Financials not too far behind at nearly 18%.  Energy remained my smallest sector despite getting a 0.72 percentage point boost, primarily from the Chevron (CVX) addition I made during the month.  Energy isn’t too far behind the 2.35% weighting that Real Estate has in my Portfolio.

As for the top sectors providing dividend income for my Portfolio, Healthcare and Financials are close to being neck and neck, with Healthcare having a slight edge (16.00% vs. 15.53%).  Information Technology (13.05%) and Industrials (12.40%) still provide over 25% (combined) of my Portfolio’s dividend income.  Every sector provides at least 4% of my total dividend income.

As always, I’ll keep all my sector weightings in mind as I continue to adjust my Portfolio, and my watchlist.

 

Watch List

In February, I added a non-Portfolio stock that was on my radar (after covering the possibility of establishing a new position in last month’s Portfolio Thoughts).  However, I missed out on adding to a current Portfolio holding that dipped below my target price.

In both cases, having a target price was nice, as I already had a price point where I was comfortable adding, allowing for timely decisions.

While the market was close to being flat in February, or trending slightly to the downside, stocks seemed to be rather volatile.  I can think of several of my holdings that spiked up or down significantly during the month.  Of course, it being earnings season contributed to that wild movement.

In any case, those stocks that tumbled during February may have found a place on my watchlist this month.  Let’s see…

 

Within my Portfolio, here are a few stocks that I’m watching for possible additions…

FedEx (FDX) was the stock that dipped below my target price this month.  Unfortunately, I failed to act at the time and the stock has moved above that buying threshold now.  Still, the stock doesn’t trade much above my $255 target, so I’ll keep an eye on the stock and look for another opportunity.  Currently FDX is my smallest holding.  If I’m going to keep it then its position size needs to grow.

I’m still looking to add to REITs NNN REIT (NNN) and American Tower (AMT).  But both rose nicely in February, so it’s a tougher buy.  I’ll maintain my $39 target for NNN and my $180 target for AMT for the time being.

Since I’m always wanting to add in the Tech sector, I continue to watch Microsoft (MSFT) and Amdocs Ltd. (DOX) for additions.  I’ll consider adding another share or two of MSFT around $390, while I’m keeping my DOX target at $85.

I wouldn’t mind adding more NextEra Energy (NEE) should it drop below $69 again.  With NEE continuing to grow its dividend at a 10% clip, which I believe it’s planning for at least one more year, then I’m happy to add.

I’ve thought about paring back my Main Street Capital (MAIN) position by roughly 50% with it looking overvalued these days (trading close to $61).  I’ll need to chew on this idea for longer.

 

As for non-Portfolio stocks that I’m watching…

In February, I initiated a position in Intuit (INTU) with my AVGO trim proceeds.  When INTU dipped below my $600 target price, I was ready to make a move.  Since AVGO looked overvalued and was pushing a 10% weighting in my Portfolio (well above the 5% weighting max I prefer), I decided to make the switch.

Alphabet (GOOG) has been sinking lately and dipped below $170.  Should it get below $165, I could see establishing a small position.  Providing some growth for my Portfolio wouldn’t hurt, and it would add some weight to my Communication Services sector.

Zoetis (ZTS) is still on my radar, with the same $160 price target I’ve had.  The stock crossed below that level during February, but again I failed to make my move… so many stocks, so few dollars!

 

Thoughts?

Has the uncertainty in the stock market got you feeling like a pull back is coming?  Are there any sectors of the market where stock prices look attractive?  Please share your thoughts!