Stocks ticked higher again in March, marking the one-year anniversary of pandemic-era lows last March 23.
A year later, with vaccine distribution in the U.S. finally ramping up, the S&P 500 is up more than 60% compared to this time last year and closed March with a 4.2% gain.
But what are the best stocks to buy for April?
As the month begins, investors are excited about a new $2 trillion infrastructure plan from President Joe Biden. Although there are ways to play the infrastructure spending, the initiative has been widely expected for some time, so April’s picks are more focused on existing, established trends in the U.S. economy, as well as a couple of attractively priced growth stocks.
Here are five of the best stocks to buy for April:
— Facebook (ticker: FB)
— EBay (EBAY)
— FedEx Corp. (FDX)
— Walgreens Boots Alliance (WBA)
— IAC (IAC)
Named one of U.S. News’ 10 best stocks to buy for 2021, Facebook starts off the list of April’s five best stocks to buy, with shares only up around 11% year to date, at the time of this writing. In today’s age of cheap money and inflated valuations, Facebook’s price-earnings ratio of 29 makes it a cheap portfolio addition compared with fellow large-cap peers like Apple ( AAPL) (P/E of 33), Microsoft Corp. ( MSFT) (P/E of 35) and Alphabet ( GOOG, GOOGL) (P/E of 34).
More importantly, Facebook’s price-earnings growth (PEG) ratio, which compares its P/E to its expected earnings growth, sits at a relatively tame 1.12. Even as a market rotation from growth to value stocks began in the first quarter, FB shares managed to hold their value and tick higher.
Investors should take advantage of preconceptions around Big Tech antitrust regulation that investors might be anxious about — even if a “nightmare” scenario developed where Facebook was forced to spin off Instagram or WhatsApp, shareholders would still be rewarded with shares in those massive companies.
EBay is an old-school name that’s a new-school play on the rise of e-commerce and digital retail. And frankly, it currently looks more attractive from a valuation standpoint than even Facebook does. EBAY stock trades for just 17 times earnings, a fraction of the S&P 500’s P/E ratio of 44. A PEG ratio of less than 1 confirms that its rock-bottom multiple isn’t a result of low expected growth either.
Unlike many large-cap growth stocks, EBAY also pays a 1.2% dividend, offering some modest income for patient shareholders. Analysts expect 16% revenue growth this year from the online auctioneer, which grew sales at a 28% clip last quarter. The company also boosted its share buyback authorization by $4 billion in February, which equates to about 10% of the $40 billion company’s market capitalization.
FedEx Corp. (FDX)
Another beneficiary of the boom in e-commerce demand from the pandemic has been shipping giant FedEx, which has used its scale as an established logistics company to further cement its competitive advantage. Although growth will almost certainly decelerate as the surging demand from stay-at-home shoppers fades with the pandemic, analysts still expect sales growth of nearly 20% in 2021 and around 5% in 2022.
The company is coming off what chief financial officer Michael C. Lenz called an “unprecedented peak season” for the holiday quarter. Net income nearly tripled year over year last quarter, surging from $315 million to $892 million.
The company sees buoyant e-commerce trends remaining high for the indefinite future, although admittedly the era of legendary earnings growth may be short-lived. FDX trades for less than 15 times forward earnings and pays a 0.9% dividend.
Walgreens Boots Alliance (WBA)
Another company with newfound relevance in the age of the pandemic is Walgreens, one of the two major U.S. pharmacies playing a vital role in COVID-19 testing and vaccine distribution. Walgreens alone has already administered 8 million vaccine doses, at the time of this writing, and recently raised its 2021 profit guidance.
Foot traffic is an important factor for pharmacies, and the company’s same-store sales rose 4.5% last quarter. WBA is never going to be an all-out growth stock — it’s firmly in the “value play” column, with a low forward P/E ratio of 10 and an extremely attractive 3.5% dividend.
The best dividend stocks don’t just have high yields, they also have sustainable payouts. If earnings per share come in at the $4.89 figure analysts expect this year, Walgreens’ payout ratio, or the percentage of profits used in paying its dividend, will be only 38%, indicating plenty of room for dividend growth.
Last among the best stocks to buy for April is internet and media holding company IAC, which has made long-term shareholders a fortune over the years by cultivating and growing successful small companies until they’re large enough to spin off.
Although the list of successful spinoffs is too lengthy to applaud in full here, some of IAC’s more notable corporate descendants include online travel booking company Expedia ( EXPE) and online dating leader Match Group ( MTCH).
Chairman Barry Diller is a true media legend, and under his helm, the stock has grown at rates Warren Buffett himself would envy. Next to be spun off is its digital video platform Vimeo, which was most recently valued at $6 billion.
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