We are just starting the second quarter and it has already been a crazy year for investors.
the S&P500 started the new year at historic highs, but by March the broad market index had plunged into a correction as concerns such as the war in Ukraine, record inflation and rising interest rates rattled markets. investors. But since the March 8 low, the index has rebounded more than 10% and is approaching all-time highs again.
At times like these, the only thing certain in the market seems to be uncertainty. However, this is no reason to panic.
Keep reading to see why our reviewers recommend Real estate income ( O -1.05% ), Assets received ( UPST -4.42% ), Roku ( ROKU -3.60% ), posh mark (CHIC -5.24% )and Okta (OKTA -1.07% ) as the best stocks to buy in April.
A true creator of wealth
Matt DiLallo (Property income): Few companies embody their name like Realty Income. The real estate investment company (REITs) aims to pay reliable monthly dividends that increase steadily over time. This is exactly what it has done throughout its history.
Realty Income recently announced its 115th dividend increase since its initial public offering (IPO) in 1994, and its 98th consecutive quarterly increase. Overall, he has given investors a raise for 27 consecutive years – calling him a Dividend Aristocrat — while increasing the payment at a compound annual rate of 4.4%.
This steady dividend growth has created a lot of value for shareholders. Since its IPO, Realty Income has generated a compound annual total return of 15.5%.
Realty Income should be able to continue to generate a steadily growing revenue stream for years to come. The REIT has one of the best balance sheets in the industry and a reasonable dividend payout ratio. This gives him the financial ability to continue buying income-producing real estate, and he sees a huge opportunity for further growth. There is approximately $12 trillion worth of owner-occupied commercial real estate in the United States and Europe, which presents them with a huge acquisition opportunity.
Realty Income’s ability to continue to increase its already attractive 4% dividend should help it generate shareholder value. Add in sound below average volatilityand it’s a great stock that investors can consider adding to their portfolio this month.
An unconventional AI bet
chris snower (Assets received): Artificial intelligence (AI) is getting a lot of attention these days, but Upstart Holdings and its loan origination business is an angle of AI that’s a bit off the beaten path.
The company uses AI to streamline the loan application process for customers, with over 70% of loans fully approved through its automated system. And it’s not just effective. Loans issued on Upstart’s platform result in 75% fewer defaults than those made by traditional lenders, and its personal loan fee rates are 10% lower for customers.
Loan origination is not exactly an exciting business. But do you know what it is? The potential for Upstart to tap into the $727 billion auto loan market and the 4.6 trillion mortgage market. The company is just getting started in both of these areas and will build on the success it has already had with personal loans.
The good news for investors is that Upstart not only has a lot of potential, it already runs a successful business. Total revenue soared 252% in the fourth quarter (reported Feb. 15) and operating profit increased more than 5x to $60.4 million.
And the business looks even more attractive when you consider that 94% of its revenue comes from banks and lending institutions, which means the business has no substantial exposure to subprime borrowers.
Upstart shares may experience some short-term volatility as growth stocks are currently suffering in the market. But with the company’s shares currently down, snatching up some shares of this company could prove to be a smart bet over the next few years.
A Media Streaming Winner in the Wall Street Trash
Anders Bylund (Roku): Shares of media streaming technology expert Roku ( ROKU -3.60% ) are on sale these days. At the same time, the company’s future prospects are brighter than ever.
The stock is trading 74% below all-time highs from last summer at the time of writing. I understand why value investors are bundling this ticker with risky highs on the recent growth stock selloff as it changes hands for a princely 72x profit and 92x free cash flow even now. However, I don’t understand why Roku’s correction was much sharper than average. The tech-heavy Nasdaq Compound ( ^IXIC 0.00% ) the index was down just 11% from its December highs, by comparison.
As the world leader in streaming video platforms, this company wins as long as the digital media industry grows. Roku investors don’t care which streaming service might win or lose the Channel Wars, as all of these rivals rely on Roku’s proven hardware and software solutions to put their content in front of consumers. Additionally, Roku is introducing new revenue streams such as its own lineup of original shows, on-screen shopping tools, and more.
We haven’t seen anything yet. Roku is poised to bounce back from this mysterious sale with a vengeance. It’s one of my best long-term investment ideas, and as I said earlier, the stock looks affordable right now.
A social market that was left for dead
Tim Green (Poshmark): If you have a bunch of clothes in your closet that you want to sell and don’t want a consignment store taking a 50% or more discount, Poshmark is the way to go. Poshmark’s third-party resale marketplace not only connects sellers to 7.6 million active buyers, but it also makes the process fun by infusing social aspects. Through likes, comments, and shares, sellers can build a customer base and personal brand.
Poshmark, the company is doing very well. $1.8 billion worth of goods passed through its platform last year and the company generated $326 million in revenue. Those numbers were up 27% and 25%, respectively, from 2020. Poshmark isn’t profitable, in part because it ramped up marketing to drive growth, but it’s producing positive free cash flow.
Poshmark the stock is a very different story. Shares have fallen 87% from their all-time high, which they hit shortly after the company went public in early 2021. Poshmark is now valued at just over $1 billion.
It’s certainly true that growth has slowed and bottom lines are taking a hit as spending increases. But the market Poshmark is aiming for is vast — the resale market is expected to more than triple by 2025 to $47 billion. Poshmark isn’t the only player, but it’s big enough that network effects give it a significant advantage. Poshmark’s millions of buyers attract sellers, and these new sellers expand the selection and attract more buyers. It goes on and on.
Poshmark was founded in 2011, so it hasn’t experienced a non-pandemic recession. But given that the platform is geared towards second-hand clothes and bargains, it stands to reason that the company will hold its own if the economy deteriorates. Poshmark has nearly $600 million in cash and no debt, so it should be able to weather almost any storm.
Investing in Poshmark will take patience, but with a reduced valuation, a rock-solid balance sheet and a huge opportunity for long-term growth, the stock has a lot to offer.
A growth star trading at a discount
Jeremy Bowman (OK): Software-as-a-service (SaaS) stocks have been hit across the board in recent months as the pandemic boom many of them have been experiencing wanes.
However, cloud identity specialist Okta has seen steady growth, pandemic or otherwise, since its IPO in 2017, with organic revenue growth hovering around 40%. Nevertheless, the stock has fallen in recent months due to the massive sell-off in the sector. It took another hit after revealing that one of its third-party engineers had been hacked, although the company said the incident was not significant.
As a result, the stock is the cheapest since 2018, trading at a price-to-sales ratio of 18, or 14 based on this year’s expected earnings. While it doesn’t sound cheap, Okta provides an essential service to businesses, and it’s the fast-growing leader in an addressable market it now values at $80 billion. The hack may have damaged the company’s reputation, but it doesn’t appear to be a long-term threat to Okta, and the sale creates a short-term buying opportunity. Okta should be able to achieve its goal of at least $4 billion in revenue and a free cash flow margin of 20% by FY2026, implying it will grow revenue by at least 35% per year and will generate free cash flow of at least $800 million.
If the company can achieve this goal and continue to penetrate the vast market in front of it, buying now will pay off later.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.