April is typically one of the strongest months of the year when it comes to stock market performance. The bulls love to run through Wall Street in the springtime looking for stocks to buy for April.
This year it looks like April could be especially strong in terms of market performance.
After a six-week stretch of volatility, the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite look like they are ready to resume their climb, propelled by strong economic data, a new round of stimulus checks and the accelerating roll out of Covid-19 vaccines.
With momentum building, investors will want to position their portfolios for growth in the coming month and beyond. In this article, we look at seven stocks to buy for April.
- Caterpillar (NYSE:CAT)
- Chargepoint Holdings (NYSE:CHPT)
- Facebook (NASDAQ:FB)
- Disney (NYSE:DIS)
- Simon Property Group (NYSE:SPG)
- State Street (NYSE:STT)
- Darden Restaurants (NYSE:DRI)
Stocks to Buy for April: Caterpillar (CAT)
Machinery, engine and heavy equipment manufacturer Caterpillar was already performing well this year as the economy began to reopen and a number of delayed infrastructure projects finally start to see picks and shovels in the ground.
News that President Biden plans to spend $2.25 trillion bolstering U.S. infrastructure and competitiveness only adds to the positive long-term outlook for suburban Chicago-based Caterpillar, whose bulldozers, asphalt pavers and backhoes can help build and repair bridges, roads, waterways and airports throughout America.
After struggling for most of 2020, CAT stock has been a winner so far this year, up nearly 28% since January at $233 a share.
A classic cyclical stock, Caterpillar and its stock do best when the economy is firing on all cylinders and governments are investing in road repairs and new infrastructure builds. And the U.S. economy is expected to go into overdrive this year. Bank of America forecasts economic growth of 10% in the current second quarter, while the Conference Board forecasts economic growth of 5.5% for all of 2021. Anyway you look at it, Caterpillar has strong tailwinds behind it.
Chargepoint Holdings (CHPT)
Speaking of Biden’s infrastructure bill, one of the legislation’s centerpieces is a focus on expanding the network of charging stations needed to accelerate the switch to electric vehicles. And that’s great news for shareholders of Chargepoint, the Campbell, California-based company that operates the largest network of independently owned electric vehicle charging stations in the world, with a presence in 14 countries. CHPT stock rose 30% following the unveiling of Biden’s infrastructure plan.
The rally was welcomed by shareholders of CHPT stock. After going public via a special purpose acquisition company (SPAC) on March 1, Chargepoint’s stock fell 33% to a low of $20.21 a share. The decline was largely due to growing concerns about the SPAC frenzy that has gripped Wall Street.
News that electric vehicles and the infrastructure needed to power them figure prominently in Biden’s massive infrastructure plan has revived Chargepoint’s stock in time for the start of the second quarter. At just under $30, the shares remain affordable.
If there’s a big tech growth stock worth buying in April, it is social media juggernaut Facebook. At its current valuation, Facebook looks undervalued, according to analysts.
FB stock has been depressed since the presidential election last year when it was again blamed for spreading political disinformation across its social network. Threats from lawmakers on Capital Hill that they might move to break-up large technology companies, including Facebook, has also hurt the stock, which declined nearly 20% throughout the fall and reached a bottom of $245 in mid-January.
Now, FB stock looks to be on an upswing. Since late January, the stock has steadily marched 22% higher and is now flirting with $300 per share.
Most analysts forecast that Facebook stock will continue climbing as advertising on its social media platform recovers strongly this year and as the company diversifies into new areas such as wearable technology and virtual reality. The median price target of 45 analysts who cover the company is for FB stock to reach $350 a share in the next 12 months. The high estimate on the stock is $418.
Few companies pivoted as well during the pandemic as Disney, and fewer still are as well-positioned to recover along with the U.S. economy this year. With the weather warming in April, Disney will be looking to reopen its theme parks and attractions that were mostly shutdown in 2020.
Later this year, the company will restart its popular cruise line business. And these sides of the Disney empire nicely complement the roaring success of the Disney+ streaming service that has attracted more than 100 million subscribers in the 18 months since it launched. Add in the film and television production sides of the business, and Disney is poised for a big year in 2021.
After rallying for most of the past year, DIS stock has pulled back a bit from a 52-week high of $203.02 on March 8. The share price has fallen 6% since then to $188. However, the dip looks to be temporary as investors rally around the reopening of the company’s world famous theme parks, resorts and cruise lines. And the Disney+ streaming service shows no signs of peaking any time soon.
Other areas of the Disney company, such as ESPN, also stand to benefit from the resumption of live sporting events this year, including the March Madness basketball tournament, a full season of Major League Baseball and the summer Olympics. Anyway you look at it, Disney is a winner.
Simon Property Group (SPG)
Simon Property is the largest shopping mall operator in the United States. It’s also one of the biggest real estate investment trusts (REITs) in the country with more than 200 properties across the country that, combined, have 241 million square feet of retail space.
Now, with the economy starting to surge and the latest $1,400.00 stimulus checks reaching consumers, is a good time to invest in retail stocks. Retail sales across America soared 7.6% in January of this year, according to the U.S. Commerce Department. That’s especially impressive as January is typically one of the slowest months of the year for retail sales, coming as it does after December and the holiday shopping season.
While retail sales fell 3% in February, the decline was attributed to several harsh winter storms that battered the country during the month and kept people housebound.
Moving forward, the National Retail Federation forecasts that retail sales will grow as much as 8.2% this year to more than $4.30 trillion as more the economy opens and consumer spending returns with a vengeance. SPG stock is up 40% year-to-date at $115.20 a share.
State Street (STT)
If you’re looking for a bank stock that still has some room to run, why not invest in Boston-based State Street? The second-oldest continually operating bank in the U.S., State Street is often overshadowed by much larger competing financial institutions such as JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C).
However, there is a lot to like about State Street and STT stock has been performing admirably during the recent market turmoil.
State Street’s fourth quarter 2020 results handily beat the expectations of analysts who cover the bank due to a 23% year-over-year increase in trading services, a 6% rise in the management fees it charges, and a 2% rise in its servicing fees.
Like all banks, STT stock has gotten a lift in recent weeks as interest rates have begun creeping higher. Year-to-date, the stock is up 21% at $84.95 a share. However, since its March 2020 low, the stock has risen 89%. Higher interest rates and robust consumer spending should keep State Street’s stock marching forward in April and beyond.
Darden Restaurants (DRI)
If there’s one thing people are clamoring to do this spring, it’s eat in a restaurant. And Orlando, Florida-based Darden Restaurants operates some of the most popular restaurant chains in the country, including Olive Garden, LongHorn Steakhouse and Bahama Breeze, among others.
DRI stock popped 12% at the end of March after it issued stronger-than-expected fiscal third quarter earnings and provided positive forward guidance.
Darden’s earnings per share for its third quarter came in at 98 cents compared to 69 cents expected by analysts. The company’s quarterly revenue was $1.73 billion versus $1.63 billion expected by analysts.
Looking ahead, Darden Restaurants said it anticipates fiscal fourth quarter sales of $2.1 billion and earnings per share from continuing operations of $1.60 to $1.70. The company said it expects to be fully recovered from the impacts of the pandemic this spring. Investors clearly loved what they heard from the company. DRI stock is now up 29% year-to-date at $144.28 per share.
On the date of publication, Joel Baglole held long positions in CHPT, FB, DIS, STT and C.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.