Friday, June 24, 2016

My post-Brexit watchlist

The UK has done it. They voted to leave the EU. This creates uncertainty in the market and the market hates uncertainty.

S&P futures are looking bleak at -5%
The pound has crashed by 10% relative to the dollar.

Pound to USD:



This is the perfect type of catalyst to cause the market to plunge and for us to pickup high quality companies that are not significantly effected by this outcome. Below are a list of companies I am eyeing as possible buys. I feel that there will a drop in US share prices and it will stabilize at some lower point. However some of these companies are so high quality they have been like rocket ships, so for now I am not sure if any of these will hit buyable levels but it's a good idea to list what your highest wanted stocks are:

Healthcare:
I need to increase my healthcare allocation. I want Stryker (SYK), Medtronics (MDT), Bristol-Meyers (BMY), and more Becton Dickinson (BDX). My JNJ and ABT are kind of full at the moment but if JNJ falls to below $110 that gets interesting. One can never have enough JNJ!

Utilities:
US based utilities have little or nothing to do with Brexit. They serve the US states. I want to increase my utility holdings but they just keep running up so I never added. I want utilities to be my top three sector holdings along with Staples and Healthcare.

Utility stocks I like to add are NEE (favorite), ED (high quality, I treat this guy like a bond since it's a slower grower), AWR or WTR (this guy never comes down !), and maybe some XEL. I'm already very heavy in SO and D. Looking to add more to SO if possible but D I probably won't be adding more to since I'm heavy in it and I consider it a bit riskier of a utility.

Industrials:
3M (MMM) and United Technologies (UTX) are companies I want to add more to. I do not have enough industrials and these two need to drop to 3% yield range for me to be happy. Danaher (DHR) is a conglomerate that I also really like but it's not a consistent dividend hiker. Sometimes it keeps it flat but their earnings and cashflow are growing very consistently.
I also like Honeywell (HON) but it tends to be more cyclical in earnings and I don't like it as much due to the lower yield.

Energy:
Always want to add more to XOM when the yield is high. I hope the gas price falls and XOM can reach a 3.8-4% yield again.

Staples:
I'm way too heavy in consumer staples but I have a few companies that I always want to add to. These few names are some that I am light in weighting and would like to add if they dip: CL, HRL, CLX, PG, SJM, CHD (this thing never drops ever). I also would be interested in considering larger core holdings in KO, PEP, KMB, MKC, MO, PM if possible.

Discret:
Home Depot (HD) and Nike (NKE) are my favorite. Will also consider Lowe's (LOW). However, these few yield less and I want to boost yield so they will likely be deprioritized.

Telco:
Not on my target if the others above can be bought at good value. Am quite heavy in telcos to my liking. I've been hitting up T and VZ to get more yield and they have recently run up a lot too.

REIT:
The only REIT I want to own really is O. And I doubt it will drop from here from the news. If it does hit a 4.3-4.6% yield that may get interesting. I want to prioritize the other categories since I"m too heavy in O.


When things look choppy and unstable, hit for quality. All the names above are what I consider high quality. Speculative plays aren't for me in this environment.

2 comments:

  1. looks like quite a few stocks will be on sale today.

    ReplyDelete
  2. Utilities and REIT's seemed to go up after brexit as a flight to safety.

    ReplyDelete