CWS: 1st Quarter 2025 Portfolio Review

During the first quarter of 2025, the stock market appeared to run out of steam. In a sense, we had two stock markets in this period. From New Year’s until February 19, the market did quite well. It was simply extending the run that had started more than two years before.

After February 19, the market finally felt some pain. Share prices started to tick lower.

Interestingly, the market didn’t treat all stocks the same way. Prior to February 19, it was riskier growth stocks that were doing well. Conservative stocks were left behind.

After February 19, the script flipped. For the next month, it was the risky growth stocks that fell. Meanwhile, conservative stocks were barely scratched.

Some folks on Wall Street wondered if this turnabout meant that we should expect a weaker economy in 2025. During the quarter, we saw a divide between “soft” and “hard” economic reports. The former were motion-based reports like consumer confidence, industry surveys or even the stock market itself. The hard reports featured concrete numbers on trends like industrial production and job growth.

During the quarter, the soft reports were getting weaker, but the hard ones were doing just fine. Of course, at some point, sentiment can start to impact reality.

I’m happy to say that the AdvisorShares Focused Equity ETF (CWS) did very well during the first quarter of 2025. While the overall market fell by 4.27%, the AdvisorShares Focused Equity ETF’s (CWS) Net Asset Value (NAV) gained 1.04% during the quarter. The traded shares were up 0.85% (market price).

As of 03.31.2025. Source: StockCharts.com Past performance is no guarantee of future returns.

Since the CWS invests in many high-quality stocks, it tends to outperform the market as investors get nervous. They seek out safe havens, and that includes CWS.

As usual, CWS does no trading during the year. All 25 positions are in set stone as of December 31^st, and we don’t make any changes for the next 12 months

Our Big Winners during Q1

Let’s take a closer look at our portfolio and see what drove some of the outperformance.

Let’s start with Abbott Labs (ABT). In January, the company said it made $1.34 per share for its Q4. That’s up 12.6% over last year, and it was in line with Wall Street’s consensus. The company had previously said to expect earnings to range between $1.31 and $1.37 per share.

The shares initially opened lower but quickly turned around and rallied. That pattern seems to happen often with our stocks.

“We finished the year with very strong momentum. Sales growth and earnings-per-share growth in the fourth quarter were the highest of the year,” said Robert B. Ford, chairman and chief executive officer, Abbott. “We continued our track record for delivering on our commitments by achieving the upper end of our initial guidance ranges for 2024 and are well positioned to deliver another year of strong growth in 2025.”

Abbott had quarterly sales of $11 billion. Organic sales for the underlying business grew by 10.1%. For 2024, Abbott had sales of $42 billion. For this year, Abbott sees organic-sales growth of 7.5% to 8.5%. Frankly, that seems light to me.

Sales of medical devices grew by 14% to $5.05, which was better than expected. Sales for Abbott’s glucose monitors grew by 22.8%. That’s very good.

For this year, Abbott projects its operating margin to be between 23.5% and 24.0%, which, at the midpoint, is an increase of 150 basis points over last year. Abbott sees its earnings for this year ranging between $5.05 and $5.25 per share. Wall Street had been expecting $5.16 per share. Abbott is already one of our best-performing stocks this year.

Amphenol (APH) also closed out a very good year with a record fourth quarter. For the last three months of 2024. Amphenol earned 55 cents per share. That was up 34% over last year, and it beat Wall Street’s estimate of 50 cents per share. It also beat the company’s own estimate of 48 to 50 cents per share.

Amphenol’s quarterly revenue increased 30% to $4.3 billion. The company delivered free-cash flow of $648 million and an operating margin of 22.4%.

During Q4, Amphenol bought back 2.4 million shares worth $169 million. The company also paid dividends of $199 million. Amphenol returned nearly $1.3 billion to shareholders last year.

For 2024, Amphenol made $1.89 per share on sales of $15.2 billion. Sales were up 21% last year, and earnings were up 25%.

Now let’s look at guidance. For Q1, Amphenol expects sales to be between $4 and $4.1 million. That represents an increase of 23% to 26% over last year. Amphenol expects Q1 earnings to range between 49 and 51 cents per share. That represents an increase of 23% to 28% over last year. Amphenol is a very good company.

On January 28, Stryker (SYK) reported very good results for its Q4. The company’s organic sales rose by 10.2%, and its earnings rose 15.9% to $4.01 per share. The company’s guidance had been for $3.82 per share to $3.92 per share.

For the year, Stryker’s earnings grew 15% to $12.19 per share. One year ago, Wall Street was expecting SYK to have earnings of $11.56 for 2024.

Stryker’s business is divided into two parts. The MedSurg and Neurotechnology segment had quarterly organic-sales growth of 10.1%. The Orthopaedics unit had organic-sales growth of 10.2%. Stryker’s adjusted operating-income margin increased by 110 basis points to 25.3%.

The company also announced that it’s selling its U.S. spine business. Earlier in January, Stryker said it’s buying Inari Medical (NARI) for $4.9 billion.

For 2025, Stryker expects organic-sales growth of 8% to 9% and for earnings to range between $13.45 and $13.70 per share.

Silgan Holdings (SLGN) is a good example of a company that hasn’t done terribly well, but I think it’s worth holding on to to give it a chance to improve. Its Q3 of 2024 wasn’t that good, and Silgan knocked 10 cents per share off its guidance, but I’ve been impressed by the steps the firm has taken to broaden its business. For example, Silgan recently bought Weener Packaging.

For its Q4, Silgan made 85 cents per share. That’s pretty good, and it was within the company’s own guidance of 78 to 88 cents per share. For 2024, Silgan made $3.62 per share. That’s up 6% over 2003. Silgan also delivered a 10% increase in free-cash flow.

For 2025, Silgan expects earnings between $4.00 and $4.20 per share. That’s a bold outlook. At the midpoint, that’s an increase of 13%. Silgan also expects a 15% increase in free-cash flow for this year. For Q1, the company sees earnings ranging between 74 and 84 cents per share. At the midpoint, that’s a 14% increase over last year.

Early this year, I told investors to expect Thermo Fisher Scientific (TMO) to report Q4 earnings of more than $6 per share. Wall Street’s consensus was for $5.94 per share. I was right. The life-sciences company said its earnings grew 8% to $6.10 per share.

Thermo’s Q4 revenue was up 5% to $11.4 billion, and its operating margin was 23.9%. That’s up 50 basis points compared with the same quarter one year before. For the year, Thermo made $21.86 per share.

The company only offers guidance on the earnings call. On that, Thermo said it sees 2025 revenues between $43.5 and $44 billion. That would be up 3% to 4% over last year. Thermo also expects earnings to range between $23.10 and $23.50 per share. That represents growth of 6% to 8%.

Mueller Industries (MLI) is one of our new stocks this year. The company is a leading manufacturer of copper, brass, aluminum and plastic products.

Business is rebounding. Last year wasn’t a strong one for Mueller, but its outlook improved during Q4. Mueller said that its net sales increased by 26.1% to $923.5 million. Its operating income rose 26% to $170.3 million, and Mueller’s earnings rose 15.2% to $1.21 per share.

For the whole year, Mueller’s sales rose 10.2% to $3.8 billion, and its EPS rose by one penny to $5.31. I expect to see much better numbers this year. This is another stock that no one follows, so I don’t worry about expectations.

Cencora (COR) is one of our best performers so far this year. On February 5, the company reported fiscal-Q1 earnings of $3.73 per share. That beat the Street by 21 cents per share, and it’s an increase of 13.7% over last year. Quarterly revenues rose 12.8% to $81.5 billion.

Cencora also raised its full-year guidance by 10 cents at both ends. The previous range was $15.15 to $15.45 per share. The new range is $15.25 to $15.55 per share. This is the second time Cencora has increased its guidance this year. After a long period of lagging, healthcare is finally leading the market.

As of 03.31.2025. Source: StockCharts.com. Past performance does not guarantee future results.

Fiserv (FI) has been a great stock for us over the years, so I was happy to see it deliver another exceptional quarter and year. For its Q4, Fiserv’s earnings grew by 15% to $2.51 per share. That was a three-cent beat.

For the whole year, Fiserv’s earnings rose 17% to $8.80 per share. Free-cash flow was $5.23 billion for the full year. This was the company’s 39^th year in a row of double-digit earnings growth.

I think we can expect to see number 40 this year. For 2025, Fiserv expects earnings growth of 15% to 17%, which puts the figures at $10.10 to 10.30 per share. Last year, Fiserv bought back 33.9 million shares for $5.5 billion.

Thanks to the earnings and guidance, the stock popped over 7% after the earnings report came out.  Fiserv is a wonderful business.

On February 6, Intercontinental Exchange (ICE) reported another solid quarter. ICE also wrapped up its 19^th consecutive year of record revenues. For its fourth quarter, ICE earned $1.52 per share. That was three cents better than expected.

For the year, revenues grew by 16% to $9.3 billion, and earnings rose 8% to $6.07 per share. Last year, ICE had a very impressive operating margin of 59%. I also like that a large part of their revenue is recurring.

ICE also said it’s raising its dividend by 7% to 48 cents per share. This is ICE’s 12^th consecutive annual dividend increase.

As of 3.31.2025. Holdings subject to change.

What to Expect for the Rest of 2025

Predicting what will happen on Wall Street is best left to the fortune tellers and their crystal balls. There are, however, some reasonable expectations to hold.

The most important event impacting the markets and the economy is President Trump’s trade war. The president has lifted tariff on countries all over the world. Many have responded with tariffs of their own.

In the short-term, trade wars are not a good idea. Just look at the history of the Smoot-Hawley tariff from the 1930s. These duties made a bad economy much worse.

If the tariffs are a plan to get other countries to agree to better trade deals and to ultimately lower tariffs, then it could be a very good idea.

In the meantime, the U.S. economy may suffer, and that will impact the stock market. As a whole, the stocks in our portfolio are high-quality assets that are poised to ride out the storm better than most. Our performance during Q1 already showed that.

I think you can expect a rocky market for the rest of this year, but the AdvisorShares Focused Equity ETF is set to do well in any environment.

In a first for the ETF industry, the portfolio strategist of CWS has “skin in the game.” The strategist’s compensation is directly tied to portfolio’s performance. Using the trailing 12-month returns of CWS vs. its S&P 500 Index benchmark, stronger outperformance is rewarded with a larger management fee while weaker underperformance is penalized with a smaller management fee.

After the Fund’s March performance, the CWS fulcrum fee will be 0.65% in April 2025.

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4Q 2024 Commentary