The Motley Fool

Top stocks for April

We asked our writers to share their top stock picks for the month of April, and this is what they had to say:

Roland Head: Anglo American

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Shares of mining giant Anglo American (LSE: AAL) have risen by 154% over the last year. It would be easy to think about taking profits at this point, but I believe Anglo shares fell too far last year and could rise further.

Anglo’s recent results were impressive, and prices for the firm’s key commodities are generally stable or improving. Broker forecasts for the current year suggest that Anglo could deliver earnings growth of 32% this year, thanks to cost savings.

The stock currently trades on a forecast P/E of 6.8, with a prospective yield of 3.2%. This looks cheap to me and I continue to hold.

Roland owns shares of Anglo American.

Kevin Godbold: B&M European Value Retail SA

Multi-price value retailer B&M European Value Retail SA (LSE: BME) is demonstrating balanced, robust double-digit percentage growth in revenue, earnings and cash inflow.

The firm operates from more than 533 stores in the UK, 73 in Germany, and reported opening more than 40 new stores by the third quarter of its trading year back in January. Profitable expansion is pacey, which looks set to reflect in the firm’s share price chart with another leg up, perhaps during April. I think the firm deserves its chunky price-to-earnings rating running around 20 and that 2017 could be interesting for B&M investors. 

Kevin does not own shares in B&M European Value Retail SA.

Ian Pierce: Card Factory

Card Factory (LSE: CARD) isn’t the most exciting company out there but the growing business, high margins, a steady dividend and low valuation make it an attractive stock. Last year the company reported 4.3% year-on-year sales growth due to both organic growth and the addition of 50 stores to take its total estate to 865 locations in the UK.

And the company’s vertically integrated business model that sees it design and manufacture its own cards kept operating margins high at 21.5% in 2016. This produces significant cash flow that is being directed into opening new stores and paying a 3.4%-yielding dividend. Add in a low valuation of 13.7 times forward earnings and Card Factory is one stock I’d take a closer look at in April.  

Ian Pierce has no position in shares of Card Factory. 

Royston Wild: DS Smith

Market demand for DS Smith (LSE: SMDS) has failed to catch fire despite the release of a cheery trading update last month.

I reckon share pickers are missing a trick here, however, and expect the boxbuilder’s multi-year share price ascent to continue. DS Smith commented in early March that “pan-European customer volumes continue to grow ahead of the group average rate,” and I expect acquisitions to keep driving the top line in the medium-term and beyond.

The City certainly expects earnings at DS Smith to keep rising, a 15% increase expected in the year to April 2017 followed with rises of 6% and 3% in fiscal 2018 and 2019. Such projections leave the packaging play dealing on a forward P/E ratio of just 13.9 times.

Royston Wild has no position in any shares mentioned.

G A Chester: Fresnillo

Shares of Fresnillo (LSE: FRES) are currently trading about 25% below their peak in the aftermath of the EU referendum and I believe are well worth buying today.

As the world’s largest silver producer and a significant producer of gold, Fresnillo could do well in an uncertain and volatile environment. Brexit negotiations and the heightened risk of global political tensions during the Trump presidency are just two factors that could breed such an environment.

But I also see the shares as attractive for the longer term, because the company has an extensive project pipeline and portfolio of exploration projects.

G A Chester has no position in Fresnillo.

Bilaal Mohamed: Go-Ahead Group

My top stock for April is leading British transport operator Go-Ahead Group (LSE: GOG). Shares in the FTSE 250-listed bus and rail operator plunged to three-year lows last month after the company lowered its profit expectations for the current financial year. The Westminster-based transport group reported a 13.2% slump in first-half pre-tax profits to £74.1m as the effects of industrial action on the group’s Southern rail operations took their toll.

However, with both bus divisions and two out of three rail divisions continuing to perform well, I believe there is a contrarian opportunity here for investors looking for a long term recovery play. Go-Ahead trades on a bargain valuation of just eight times earnings for the current year, and is supported by a generous 6% dividend yield, covered two times by forecast earnings.

Bilaal has no position in any shares mentioned.

Rupert Hargreaves: IQE

Mid-cap IQE (LSE: IQE) flies under the radar of most investors, which means it’s the perfect hidden growth stock for me.

IQE is involved in the business of research, development and provision of engineering consultancy services for the semiconductor industry, and business is good. Net profit has grown at a rate of 21.5% per annum for the past six years. Profit before tax and earnings per share have expanded 17% and 15% respectively for 2016.

For 2017 analysts have pencilled in pre-tax profit growth of 17.4% followed by an increase of 12.1% for 2018. However, despite these high double-digit growth rates shares in IQE only trade at a forward P/E 19.2.

Rupert does not own shares in IQE.

Alan Oscroft: Melrose Industries

Melrose Industries (LSE: MRO) is definitely not one for short-term investors, but for those looking to hold for at least 10 years (and preferably longer) I reckon it’s one of the best investments out there.

Melrose acquires under-performing businesses that should be doing better and tries to turn them around, and the nature of that means that a one-year period is nowhere near long enough to assess its value — and so conventional metrics like the P/E ratio are not very meaningful.

But the company has been averaging annual returns of better than 20% since 2003, and it’s turned into one of the best multibaggers of recent years. And I see more to come.

Alan Oscroft has no position in Melrose.

Edward Sheldon: Playtech 

My top stock for April is FTSE 250 listed Playtech (LSE: PTEC).

Playtech designs software platforms for the online, mobile and land-based gaming industry and with the help of an aggressive acquisition strategy, has enjoyed incredible revenue growth in recent years.

The company reported excellent final numbers in late February, with revenue climbing 20% at constant currency, adjusted diluted earnings per share rising 37% and the dividend being hiked 15%. Management stated that it remained “confident of a strong performance in 2017 and beyond.

Despite the impressive numbers, Playtech currently trades on a forward looking P/E ratio of just 12.9 and supports a dividend yield of 2.95%, which makes it a great value growth stock in my opinion.

Edward Sheldon has no position in Playtech

Peter Stephens: Randgold Resources

The FTSE 100 has been volatile recently and this has benefitted gold stocks such as Randgold Resources (LSE: RRS). Further volatility could be ahead, with Brexit talks set to start and Trump’s policies coming under scrutiny. Investors may therefore seek defensive shares, such as gold stocks.

Furthermore, higher inflation is already here and Trump’s spending plans could mean the world economy experiences a new era of higher inflation. Gold miners could prove popular in such a scenario due to their perceived store of wealth. Trading on a PEG ratio of 0.9, Randgold Resources seems to offer good value for money.

Peter Stephens owns shares of Randgold Resources.

Jack Tang: Taylor Wimpey

My top stock pick for April is housebuilder Taylor Wimpey (LSE: TW). With the housing market having quickly stabilised after the Brexit referendum, I reckon the company is a savvy buy at current prices.

Taylor Wimpey has made a strong start to 2017, with the company seeing a significant increase in the weekly private sales rate. As such, it has a robust forward sales position, with a total order book value of £1.98bn.

Off the back of this, City analysts expect Taylor Wimpey to report earnings per share growth of 9% for 2017 and 7% for 2018. And based on these forecasts, the shares are valued at just 9.2 times its expected 2018 earnings.

Jack Tang owns shares in Taylor Wimpey.

Paul Summers: Treatt

Shares in small cap ingredient manufacturer Treatt (LSE: TET) have doubled in the last year. I can see this momentum continuing for some time to come.

Thanks to strong revenue growth and higher product margins, half year results (released 9th May) are expected to show “substantial progress” being made by the company. A predicted reversal of last year’s £500,000 FX loss of should also have a positive impact on figures.

With Treatt’s order book “materially up” on one year ago and management now estimating that profit before tax for the full year will “substantially exceed previous expectations”, I suspect it may be worth buying the shares sooner rather than later.

Paul Summers has no position in Treatt.

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The Motley Fool UK owns shares of Melrose. The Motley Fool UK has recommended DS Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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