Saturday, March 28, 2020

My way of finding the buying opportunity of a stock during the Bear market


Finding the entry point of buying stock during the Bear market

The market is at the bear market as it fell more than 30% in March. I have created a list that contains all of my stocks in my portfolio and some other stocks which are on my watch list for quite a long time. I have made a price comparison chart of all those stocks which compares how much the price drops from their 52 weeks high. I have also added each stock PE ratio and Current yield although for many of them the PE and current yield will change significantly. I have also calculated the price of each stock at 20%, 30%, and 50% down from their highest price. The 52 weeks high has been extracted from google finance and the PE and current yield are from yahoo finance. The energy sector got hit the most with an average of around -60% from their recent highs. The next sector that got hurt is the financial sector which is down with an average of around -30%. The best sector is so far is the consumer defensive sectors. The table below shows the energy sector performance

Energy Sector:


All the major energy stocks dropped more than 50% except Chevron but very close to 50%. The prices are really attractive but in this situation, it's better to stay away from any energy stocks. In my portfolio, I am holding BP, CVX, and XOM. I am not selling them and holding them for the longer term.

REIT Sector:


The REIT sector was also down big until the recent rally recovered from the low prices. I have started my position in realty income (O) @40.5. I was watching the stock for a long time but the price was really high just a few months ago. I will add more O if the price drops below $40 which will be more than 50% down from its 52 weeks high.

Financial Sector:



The financial sector is also down big. I was so lucky to sell all of my BAC stocks in mid-february @$34.5. I took a good amount of profit from BAC. I am not planning to add any bank stocks now. Although their PE is very low, I am expecting more than 50% drop in JPM and BAC. Their earnings will drop for sure and the PE will increase. I will add JPM if it drops below $60 and BAC below $12.

Industrial Sector:


I was very active to buy stocks in this sector in mid-March. I have added CAT, EMR, HON, and MMM stocks while sold 75% of my DAL position in February @$49.5. The prices were very attractive and I am investing in those stocks for a longer-term. Emmerson (EMR) and 3M (MMM) are the dividend kings who are increasing their dividends for more than 60 years. I have added enough MMM, now I will gradually increase my position in CAT and HON in the next few weeks.

Consumer Cyclical:


This is another sector that I love to invest a lot. GM and LEG are down almost 50%. LEG is a dividend aristocrat. It raised its dividends for the last 47 years. I have added a few LEG @$25.5. I have also added MCD and SBUX in mid-march @$128.66 and @$52.5 respectively. I will add more SBUX if the price drops below $50. I am also watching HD. I will add them @$140. I am also watching Nike for a long time but unfortunately, the stock is always overvalued. I will look for an entry @$52.

Consumer Defensive:


This is the best performing sector so far in the market. Still, I don't see any buying opportunity in this sector as their PE ratio is still high. I may add PEP if the price drops below $100 and KO below $33.

Communication:



In this sector, two of my favorite stock is At&t(T) and Disney (DIS). Disney was down big before the recent rally. I have added a few DIS stocks @$82.5. I will add more DIS if it drops below $78. I have also added T in mid-March when the price dropped below $27.

Healthcare Sector:


In the healthcare sector, I already own too many stocks of ABBV and BMY. The only stock I am adding in this sector is JNJ. recently I have added JNJ @122. I will slowly add more JNJ if the price drops even more.

Technology Sector:


I own AAPL, MSFT, CSCO, and TXN in my portfolio. I am adding any AAPL and MSFT as their PE is still high. I will add more CSCO if the price drops below $30.

Utility Sector:


In this sector, I own D and PPL. I was watching SO and DUK for some time. Recently I have added SO @ $44.5 and DUK @ $70.5. I will add more SO and DUK if the price drops around 40% from their highs.