3 Stocks to Buy April 2021 for a Second Chance at Returns

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3 Stocks to Buy April 2021 Before Everything Goes Up

The stock market is giving us a second chance on the best stocks of 2021 and we’re loading up. In this video, we’ll review our 2021 stock market portfolio already beating the market by 23%, then I’ll reveal the three stocks I’m buying in April.

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Nation, I gotta say, I’m excited for these April stocks. Stocks we added from the Energy and Financials sectors back in October have been some of our top performers. Shares of Diamondback Energy are up 150%, shares of Citigroup up 66%…I still like the two sectors for the best themes of the year but last month they were looking a little expensive. I wish we had added more before that surge in prices!

Mr. Market must have heard my prayers and we’re getting a second chance on these stocks. Shares of energy stocks are down 8.5% since mid-March and the financials are down four percent.

The Time is “NOW” to Buy These 3 Stocks

It’s a temporary pause in the run for these sectors and I’m taking advantage of it to buy three stocks for our portfolio. In this video, we’ll review the 2021 Bow Tie Nation portfolio, the winners, the losers and where it’s going. I’ll then reveal those three stocks I’m buying this month for that second chance.

All three of these stocks are going into our 2021 Bow Tie Nation portfolio.  The portfolio on Stockcard.io has jumped over the last few months, up 29% and beating the market by 22% over the period.

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Comeback of Energy Stocks

Our best returns so far have been those stocks in the Energy and Financials sectors. Late last year I highlighted how the economic recovery would mean a rebound in oil prices and how rising interest rates would make the banks more profitable. I took profits a little too early in Devon Energy but we’re still holding Diamondback, Citigroup and Wells Fargo.

I added shares of EMCOR Group, ticker EME, ahead of plans for an infrastructure bill this year and the shares have jumped 53%. Lyft was another one were I took profits way too soon but it’s hard arguing with a 42% return in just a few weeks.

Shares of Anthem, ticker ANTM, and CVS Health, ticker CVS, have done well. They haven’t beaten the market by as much as I hoped but I still like the healthcare theme for the year.

We added Weight Watchers and Dick’s Sporting Goods on the reopening theme. Weight Watchers is 30% higher. We added DKS last month so I’m still hopeful that can regain the momentum.

Despite weakness in stocks of the Utilities sector, our picks in Renewable Energy Group, ticker REGI, and FirstEnergy, ticker FE, have done well with returns of thirty- and 22% since adding them late last year. FirstEnergy still has some good value left and I think REGI can benefit from any renewable plans over the next few years. Our semiconductor stock, United Microelectronics, ticker UMC, hasn’t done as well but I think this one, really that whole semiconductor story, just needs time to run.

Then there’s the underperformers. Madison Square Garden, ticker MSGS, and Cinemark, ticker CNK, were part of that reopening trade added last month and got caught in the recent selloff but I still think these can do really well over the summer. Zoetis, ticker ZTS, was up as much as 10% before falling recently and this might be more of a long-term story rather than the shorter-term bump I had hoped for but it’s a solid business in a growing market. Clorox has fallen with the rest of the Consumer Staples plays but it pays a 2.3% dividend while we wait.

3 Promising Stocks to Buy April 2021

For the three stocks I’m buying in April, I’m going back to those themes in Energy and Financials. The price of crude was down 15% last week on renewed lockdowns in Europe and fears that oil demand would weaken with another wave of the virus. That took shares of energy stocks down more than 10% from their peak. The selloff in banks and other Financial stocks wasn’t as bad but a drop in interest rates over the last week has taken some momentum out of the sector.

But the narrative for both these sectors, that economic recovery, is still very much intact. The U.S. is vaccinating upwards of three million people a day and could hit 50% of the population by the end of April. Along with about a quarter of the population that has some level of immunity from a prior infection, that’s going to mean the daily new cases plunge and people start getting out of the house for more things.

Trillions in stimulus money and all that pent-up demand from consumers, that’s going to continue to push interest rates higher. Bank profitability is going to surge, especially as they move more of those loan reserves back into earnings like we’ve talked about on the channel.

Nation, it is not going to be long before ‘reopening’ is the word on everyone’s lips again. Summer driving season is coming, travelers through TSA checkpoints are making new highs…all this is going to drive oil prices back up and I’m getting the portfolio ready with new positions in energy stocks and financials.

First in our April stock buys is the world’s largest independent refiner, Valero Energy, ticker VLO.

Valero has more than 2.6 million barrels a day of refining capacity along with its own terminals and pipelines in key centers. The company also has a strong business in renewables as the world’s second largest renewable diesel producer and corn ethanol producer.

Valero’s focus around the Gulf coast and mid-continent gives it a supply advantage with lower feedstock costs and the entire refining industry has some great headwinds going into the summer.

Gas prices hit an average of $2.88 last week, up nearly a third from last year and it’s lifting profits for the refiners. The profit margin between the price of gasoline and crude oil recently hit its highest in three years at $24 a barrel. Since gas prices tend to rise into the summer, that could mean even higher profits to come.

Gasoline inventories are lower than normal after February’s deep freeze in Texas so refiners like Valero should be ramping up production and could report blowout numbers for this year.

Shares here pay a 5.6% yield, the highest among refiners, and as we see cash flow improve this year, I’m expecting a return of the billion-plus share buyback program later in the year. Earnings are expected to jump to $1.37 per share this year and 250% higher next year from a loss of $3.12 last year so this is definitely a turnaround story.

Our next April stock is also in the energy theme with independent oil producer Marathon Oil Corporation, ticker MRO.

Marathon has sold all its conventional oil plays and focused on shale plays over the last five years, mostly in the Bakken and Eagle Ford basins. It produces about 383,000 barrels a day and reports proved reserves of 972 million barrels.

Now that focus on shale means its extraction costs are higher than traditional fields but it also means the stock should rebound stronger with higher oil prices. Management delivered a 20% cut to production costs last year and says the company is break-even with oil as low as $35 a barrel. They’re targeting a total 30% cost reduction so still have a little to go this year.

Marathon is guiding to a billion dollars in free cash flow this year, four-times the cash flow produced last year. That should help meet the target of $500 million in debt reduction and shore up the balance sheet, which actually isn’t too bad already. The debt-to-equity ratio is a little high at 0.51-times but still lower than the industry average.

The company is expected to report earnings of $0.13 per share this year after a loss of $1.16 a share in 2020 and produce 60% annual earnings growth through 2024. The dividend was cut from $0.05 a share to three cents a share last year so with the return of cash flow and earnings, I think they can bump it back up later in the year for about a 2% yield and a strong boost to investor sentiment.

This next April stock pick is in the financials, Citizens Financial Group, ticker CFG.

Now Citizens is really a ‘regional’ bank in name only with more than 1,000 branches; $183 billion in assets and customers in every state. It’s evenly split between consumer lending and commercial banking, both of which should do well this year.

Now all you out there in the Bow Tie Nation, you know how important the loan loss reserves are for banks this year. All that money banks took off their profits to protect against the recession that never came…that could mean big profits this year.

Citizens took a $1.73 per share hit to earnings last year on its reserves increase, so imagine just bringing most of that back. Earnings are expected at $3.82 per share this year, an increase of 72% from last year and I think it gets above $4 a share earnings on the loan loss reserves.

Revenue and loan growth increased 6% last year while deposits were up 13%…not only is that solid revenue growth but the fact that deposits jumped twice the amount as loans tells me the bank was being super conservative with lending and has an opportunity this year to make more loans on higher profitability.

Shares pay a 3.7% dividend yield and even through last year, Citizens was able to increase the dividend, producing a 34% annualized increase over the last three years. Shares trade for just 0.87 times book value making this one of the least expensive banks I follow.

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