With the six stocks removed from the portfolio the allocation across market capitalization categories is showing an underweight to LargeCap stocks and a corresponding overweight in SmallCap. Portfolio weights across market characteristics shows a slight overweight position to Market stocks and an underweight in Aspirational. Continuing the examination to include sector allocation, we see positions close to sector targets with slight overweight allocations to Information Technology and Materials; underweight appears in Energy. Ideally, the portfolio would benefit from LargeCap, Aspirational Energy or Industrial stocks.
There are 14 stocks that are available for possible consideration which has been narrowed down to three. The first stock that will be added to the portfolio is a LargeCap Energy stock, Range Resources [RRC]. Range is a Texas based independent natural gas and oil company involved in exploration. The stock is currently at 54% Fv with a fair value of $28/share. Current price is $15.10/share. The stock ranks in the middle of the pack in EBITDA/share and is ranked near the top in terms of revenue growth over the past year.
The next stock selected to be added to the portfolio is Arconic, Inc. [ARNC] a manufacturer of engineered products for the aerospace industry. The stock is currently at 78% Fv and also ranked in the middle of the pack in terms of EDIT/share and EDITDA/share. It fills the desire to find an Aspirational stock within the LargeCap classification.
The third stock selected to be added is Illinois Tool Works [ITW] a LargeCap Industrial that manufactures a diversified range of industrial products. It is currently at 73% Fv with a fair value price of $199/share and current price of $144/share. The company ranks high in EBIT/share, EBITDA/share and Free Cash Flow/share.
These actions bring the portfolio closer to targets in asset allocation for market capitalization and improved market characteristics for both Core and Aspirational classifications. Sector weightings also improved to where 8 of the 10 sectors are within 1 percentage point of their targets and the remaining 2 are within 1.5 percentage points.
Several of the recently sold stocks were amongst the top performers in the portfolio, but to the point that the gains carried the price/share into overvaluation range. Within the adjusted portfolio, the top performers for the year include 2 new names, Technology Index SPDR and Analog Devices. For the month, all 5 of the Best Performers for the month are new on the list.
On the other side of the scale, the poorest performers for the year, had 2 new names, Alliance Data Systems and Proctor & Gamble. During the month of May there are 4 new names; Diebold, Flowers Foods, CVS Health and Fifth Third Bank.
A complete report is available at menu: Client Service > Models > USA > Consideration USA Stocks Only