In February, the largest sectors in the S&P 500 performed the worst. These sectors included Information Technology, Financials, Communication Services and Consumer Discretionary.
Since I’m underweight in 3 of those 4 sectors relative to the S&P 500 index, my Portfolio ended up performing better than the S&P 500 for the month.
Note – the monthly percentages noted below are through 2/27/26.
In February, the S&P 500 fell a tad over 1%. Consumer Discretionary (-6.1%) and Information Technology (-5.12%) dragged down the index. Meanwhile, Energy (+12.95%) and Utilities (+10.83%) did their best to drive the index higher.
My Portfolio rose in value again in February (nearly 2.5%), making it two positive months to start the year. I’ll always take that.
My calculations show my Portfolio with a gain of 4.6% through the first two months of 2026, while the S&P 500 is at 0.68%. It’s been at least a few years since my Portfolio has outpaced the S&P 500, but there’s 10 months for the index to run me down.
Of my Top 10 holdings, seven of them were in the green, including my 4 largest holdings.
I’ll be covering my standard items in 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 Portfolio 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 for possible purchase or sale in the event I decide to shuffle up my holdings.
Let’s check out my Portfolio Thoughts for February 2026…
Price Movement
Note – my price changes cover closing prices from 1/23/26 to 2/25/26.
February proved to be another good month for stock gainers in my Portfolio. The gainer/decliner ratio nearly reached 2:1 in February. Of my 58 holdings (still counting FDX and CRM for now, but not yet counting NVDA), 37 advanced in price, while 21 retreated. Over two-thirds of my gainers rose more than 5%, while more than half of my decliners fell more than 5%. It was certainly a volatile month with several stocks moving significantly in price (as you’ll see).
Here were the stocks with the biggest moves to the upside and downside…
Of my 37 stocks that climbed in price in February, three moved higher by more than 20%, which is unusual. Another dozen stocks recorded a gain north of 10% (the usual threshold I monitor for). In addition to that, yet another 11 stocks gained at least 5%.
My top gainers in February were:
- Verizon Communications (VZ), vaulting 24.57%
- Caterpillar (CAT), leaping 22.34%
- Hershey Co. (HSY), surging 20.10%
- Pepsico (PEP), popping 17.01%
- Union Pacific (UNP), jumping 15.07%
My top gainer this month was a stock that normally doesn’t move much at all – VZ. The stock moved higher after strong Q4 2025 earnings, which included a large buyback plan and an unexpected dividend raise. The turnaround plan that’s been quarters in the making appears to be coming into effect.
A pair of Industrials graced my top gainers in February. Both CAT and UNP had strong showings.
CAT has been on fire due to surging demand for its power-generation equipment intended to support AI design centers. This could be a long-term growth catalyst for the company. CAT has risen in price for 6 consecutive months.
Despite missing Q4 earnings estimates, the outlook for UNP appears to be looking up, which has its stock price on the rise (reaching a 52-week high). UNP reached an agreement with Wabtec earlier in the month to modernize its rail fleet. This is supposed to lead to improved fuel efficiency and reliability. Optimism for a freight industry recovery and a favorable Supreme Court ruling regarding tariffs are a couple of other factors in UNP’s price rise.
A pair of Consumer Staples stocks also made my top gainers list, which is unusual. HSY and PEP both rose over 17% and established new 52-week highs in the process.
HSY posted stronger-than-expected Q4 2025 earnings and issued positive 2026 guidance. Despite cocoa prices that rose significantly, HSY was able to maintain transaction volume, showcasing a resilient and loyal customer base.
PEP also issued good Q4 2025 earnings. The company reduced its prices on key snack brands to boost volume. PEP is also expanding its ‘Poppi’ soda brand. Early in the month, PEP delivered its 54th consecutive annual dividend raise.
Note – four sectors in my Portfolio had all their holdings in the green this month… Consumer Staples (4), Materials (3), Real Estate (3) and Energy (2). This makes it 2 straight months for each of these sectors achieving the feat.
Of my 21 stocks that retreated in price, there were some big movers. A pair of them sank by more than 30%! Another one dropped more than 20%. Add another 4 that tumbled in excess of 10%. Finally, there were 5 additional stocks that fell by more than 5%. There were plenty of stock declines, with some big percentage drops to be sure.
My worst decliners in February were…
- Intuit (INTU), sinking 32.40%
- Accenture (ACN), freefalling 31.87%
- UnitedHealth Group (UNH), dropping 20.23%
- Amdocs Ltd. (DOX), tumbling 19.61%
- Automatic Data Processing (ADP), retreating 16.92%
Three tech stocks (INTU, ACN, DOX) appeared on my top decliners list in February – after 4 tech stocks did in January.
Information Technology stock INTU repeated as my top decliner again in February. It’s been a rough start to 2026 for this software stock. Potential AI disruption fears have put a serious dent in INTU’s stock price. The stock has seen a steep P/E correction amid cooling growth prospects. INTU has lost over 43% in price in just 2 months.
ACN was a big loser this month as well. Investors appear to fear slowing IT consulting demand. They are worried that AI adoption is causing companies to rethink traditional IT spending, hurting consulting firms. ACN’s loss was confined to just February, but it does extend a long-term downward trend that started at the beginning of 2025.
Weak 2026 revenue guidance doomed the stock price of UNH this month. Throw in high medical costs and Medicare Advantage rates that were lower than expected, and the stock price responded by retreating. UNH is still down more than 50% from the high it had at the end of 2024. Who knows how long it might take to return to those price levels.
A host of issues combined to sink the stock price of DOX in February. First, the company forecasted weak projected earnings causing investors to question the company’s growth trajectory. A CEO change added uncertainty to the mix as well. Lastly, DOX has been part of the recent selloff in telecom software stocks, with investors wondering how AI will impact their legacy business models.
The last company on my top decliners list is ADP. A sluggish labor market has investors feeling that ADP’s payroll processing and human resource services could be negatively impacted. The fear of AI disturbing ADP’s business is a concern as well. Given these worries, it appears that ADP (an often overvalued stock) is experiencing a P/E ratio contraction.
Note – no sector in my Portfolio had all its holdings in the red this month. That’s two months in a row this has happened. Previously, the feat hadn’t been achieved in many months.
Top 10 Review
For a 2nd straight month, Movement in my Top 10 was elevated. Six stocks in my Top 10 changed places, including one stock that moved into the Top 10.
One stock managed to climb up the Top 10 by four spots. This was the largest move I’ve seen in quite some time. On the downside, a couple of stocks fell two spots.
With respect to performance, seven of my Top 10 stocks finished in the green in February. Caterpillar (CAT) led my Top 10 gainers by a wide margin, with Nexstar Media Group (NXST) coming close to notching a double-digit gain. The worst of the Top 10 decliners was Qualcomm (QCOM), making that two bad months and counting for the stock. My 4 largest stocks all gained in February, which helped deliver a positive outcome for my Portfolio overall.
Broadcom (AVGO) easily remained in my #1 spot. It posted a 3.83% gain in February.
Holding in the #2 spot was Aflac (AFL). The stock managed a 5.0% gain for the month, propelling it to its highest monthly closing price in 15 months.
My big mover for the month was Caterpillar (CAT). The stock vaulted four spots up the rankings, to land at #3, on the heels of its huge 22.34% gain.
Maintaining the #4 spot was AbbVie (ABBV). The stock advanced 3.49% during the month, ending two consecutive months of declines.
Tumbling two spots to finish in the #5 spot this month was Qualcomm (QCOM). A 6.42% decline for February had the stock fall in my rankings.
Slipping back to the #6 spot was BlackRock (BLK). The stock lost 3.2% this month, sliding in price like many other Financials in February.
RPM International (RPM) was able to climb one spot in the rankings to lay claim to #7. The stock gained 4.33% in February, and has now advanced in price for three straight months.
Falling two spots in the rankings and settling in the #8 spot was Visa (V). V suffered a 4.04% drop during the month, hitting its lowest monthly close since the end of 2024.
Securing the #9 spot for a second straight month was Fastenal (FAST). The stock advanced only 1.69% this month, but has risen in price for three consecutive months.
My last Top 10 stock is Nexstar Media Group (NXST). It used a 9.18% gain in February to reach the #10 spot, replacing Lowe’s Companies (LOW) which had nearly a 5% decline.
The stocks at #6 through #8 are very close in weighting, so expect more shuffling of these names come next month.
Now lurking outside my Top 10 are LOW, Johnson & Johnson (JNJ) and JPMorgan Chase & Co. (JPM). These stocks are only $1K-$1.5K away from overtaking NXST in value and getting into the Top 10 again.
From the table above, my Top 10 holdings now comprise 41.53% of my Portfolio value. This is a token increase of 0.01 percentage points compared to last month. As has been the case in previous months, all the Top 10 stocks now have a weighting of at least 3%.
As for the dividend weighting of my Top 10, it now stands at 27.93%. This is a big increase of 1.61 percentage points compared to last month. Nearly all of the difference is accounted for by the higher-yielding NXST replacing LOW in the Top 10.
Weightings
In general, for Sector Diversification, I target being within +/-3 percentage points of the sector weightings of the S&P 500. For 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.
At the close of February, I’ve got one fewer sector outside my preferred weighting range. Financials has moved from overweight into my preferred weighting range. Sadly, this was due to under-performance of my Financials relative to those in the S&P 500.
That leaves me with 2 overweight sectors and 3 underweight sectors in my Portfolio. Industrials is still my most overweight sector and Information Technology is still my most underweight sector – both by a wide margin.
The sector in which I made the most progress towards reaching my preferred weighting range was in Communication Services. The S&P 500 sector weighting went down during February, while my Communication Services sector ended with a larger weighting. I went from being 3.50% underweight to being 3.11% underweight (almost there!)… a gain of 0.39 percentage points. The February performance of Verizon Communications (VZ), and to a lesser extent NXST, certainly helped me.
The sector in which I regressed most was in Healthcare. I went from being 3.62% overweight to being 3.96% overweight… a change of 0.34 percentage points. The only good news was that this delta resulted from out-performance of my Healthcare holdings relative to those in the S&P 500 Healthcare sector. Six of my eight Healthcare holdings were positive in February, with four of those posting double-digit gains.
As for dividend weightings, I still have four sectors exceeding a 12%, led by Healthcare at 15.68%. Real Estate continued to be my only sector with a dividend weighting below 4%, settling a bit lower compared to last month, at 3.92%. Energy isn’t too much farther ahead at 4.05%.
My biggest changes in dividend weighting were in the Information Technology sector (-0.10 percentage points) and the Utilities sector (+0.10 percentage points). This was due to my sale of Salesforce (CRM), and the double-digit dividend raise from NextEra Energy (NEE), respectively.
As always, I’ll keep all my sector weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
Since my Portfolio dividends are now used for living expenses (since I’m no longer working), I don’t expect to purchase stocks very often. Yet, I could choose to sell an under-performing stock and invest in a potentially better one. Thus, I plan to keep looking for opportunities and keeping my watchlist up-to-date.
In fact, I made a few Portfolio changes in February, and my watchlist came in handy. I actually outlined one of the moves (sell FDX, buy ADP, and invest some in Info Tech), during last month’s Portfolio Thoughts post.
Within my Portfolio, here are a few stocks that I’m watching for possible additions…
With the continued demise of several stocks I own due to them being software stocks, or IT services stocks with software exposure, some of them are looking quite undervalued if their businesses hold up. These include Intuit (INTU), Amdocs Ltd. (DOX) and Accenture (ACN). INTU was under $383, DOX under $67, and ACN under $192 earlier this week. Purchasing at those levels would easily reduce my per share cost basis in those stocks, especially for INTU.
Microsoft (MSFT) could get thrown into the mix as well. MSFT trades almost 10% lower than last month at $393.
Automatic Data Processing (ADP) continues to drop. It crossed under $206 during the past couple of weeks. I’d look to add some there if it dips that low again.
I’d like to add more shares of recent addition NVIDIA (NVDA). The stock rose shortly after I bought but has since retreated after its earnings release to almost the same level where I initiated my position. I’d look to add more should it go lower than $175.
Considering stocks I might sell…
Eastman Chemical (EMN) posted another good month, gaining over 9.8%. If it continues to climb, I could sell to reduce my Materials weighting (where I’ve been overweight for some time). The recent gains have put me in the green with EMN.
Skyworks Solutions (SWKS) and T. Rowe Price Group (TROW) remain disappointments, and remain on the chopping block. I’m currently in the red with SWKS, but in the green with TROW.
I might trim my most expensive Verizon Communication (VZ) shares if the stock crosses above $51. It’s been a long time since VZ has run up in price like it has. I’m not sure it can maintain the price advance.
As for non-Portfolio stocks that I’m watching…
There aren’t really any at this time.
Thoughts?
Do you like the sector rotation that appears to be taking place in the stock market (out of mega cap tech, and into everything else)? Can the stock market power higher in 2026, or is it due for a pullback? Please share your thoughts!