Conservative · Stocks to Consider and Updates

Conservative Portfolio – Allocation Update

Following second quarter earnings and guidance from the companies comprising the conservative portfolio along with macro-economic issues regarding trade and global growth, I am making the following changes to the allocation model. ABB is taking longer to restructure under new management and growth in key markets is weak. ABB is taken down from 9% of the pie to 7%. Likewise, oil services giant Schlumberger’s outlook for the near term is nothing to write home about as oil prices remain volatile and expenditures from oil companies wane in light of slow growth for crude oil demand.  SLB is shaved by one percentage point to 6%. The near-term outlook for 3M has weakened over the past two quarters and, here too, international exposure and a strong dollar are making things tough for the multinational conglomerate. 3M moves down from 9% of the pie to 7%. Trade issues are hurting Deere & Co. with agricultural products to China slowing and purchases for farm equipment are peaking along with the company’s construction business overseas. Deere moves down a notch to 8%.

       Making up for the reductions, I remain positive on Danaher and boost the allocation to 10% from 8%. Danaher shares have made a nice move over the past year and its continuing emphasis on managing its portfolio of product offerings remains intact. DHR is spinning off its dental business and concentrating on other health areas, including its purchase of GE’s biopharma business.  United Parcel Service had a great quarter and things are looking up for the world’s largest package delivery provider. UPS adds three percentage points to the allocation model to 12%. Verizon is also firing on all cylinders and is suitable for both conservative and income accounts and moves up a notch from 7% of the pie to 8%. All other names on the list remain unchanged from the last update.

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