Deciphering the code of "best stocks" to buy is a tough ask. However, there are some emerging themes investors can bank on in April to tilt the odds in their favor.
Artificial intelligence (AI), novel weight-loss medications, high-yield dividend stocks, and electric vehicles are powerful trend lines that ought to deliver market-beating returns for shareholders this month and beyond. With this backdrop in mind, here are five stocks that stand out as top buys in April.
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1. Nvidia
Thanks to the advent of ChatGPT, AI has quickly become a central theme among growth investors. Over the next few years, AI's rapidly improving abilities could fundamentally transform society by accelerating drug development, aiding in the production of self-driving vehicles, and perhaps even yielding Star Trek-level technologies such as autonomous surgical robots. The possibilities are endless. Nvidia (NVDA 3.60%), a graphics, computing, and networking solutions company, could play a key role in this ongoing AI revolution.
Investors have already picked up on this theme. Since the start of the year, Nvidia's stock has stormed higher by 90% at the time of this writing. The main reason is that Nvidia's cloud software and services have the potential to become an integral part of the AI-dominated future. Now, Nvidia isn't exactly a pure-play AI stock, but it is expected to be a pillar of the global AI architecture. This fact bodes well for the company's long-term outlook.
2. Viking Therapeutics
Viking Therapeutics (VKTX 4.42%) is a small-cap biotech with a monster value proposition. The company is developing two metabolic disorder drugs -- VK2735 for obesity and VK2809 for nonalcoholic steatohepatitis (NASH) -- that could be game changers in their respective fields.
VK2735 recently hit the mark in a small, early stage trial, causing Viking's shares to go parabolic. VK2809 is headed toward an all-important mid-stage readout in NASH this quarter, an event that could cause the biotech's stock to soar yet again.
The big picture is that VK2735 and VK2809 are targeting markets worth upward of $100 billion in combined value. At present, Viking's market cap is a measly $1.3 billion by comparison. In short, the market hasn't built any kind of premium into the drugmaker's stock yet.
The underlying reason is that both of these experimental drugs are well behind the field from a development standpoint, and a fair amount of risk remains ahead of VK2809's mid-stage readout. That said, VK2735 and VK2809 have the potential to be best-in-class medications for their indications, making this stock an intriguing speculative buy this month.
3. Madrigal Pharmaceuticals
Madrigal Pharmaceuticals (MDGL 4.63%) is poised to become the first company with a NASH medication approved by the Food and Drug Administration (FDA). The biotech recently scored a decisive win in a late-stage trial for the common liver ailment, setting the stage for a regulatory filing for the selective thyroid hormone beta-receptor agonist resmetirom later this year.
If approved, Wall Street thinks this drug could conservatively rake in $5 billion in annual sales. More optimistic estimates have put this figure north of $9 billion per year. Either way, Madrigal's stock would be ridiculously undervalued at its current market cap of $4.53 billion. This mid-cap biotech, after all, would likely fetch a premium in a buyout soon after an FDA approval for resmetirom in the NASH setting.
4. Medical Properties Trust
Medical Properties Trust (MPW 2.37%) is a healthcare real estate investment trust (REIT). The company's shares have been under heavy pressure over the past year due to rising interest rates and problems with key tenants making rent payments. Due to these headwinds, Medical Properties Trust has been a top target for short-sellers. A trend reversal appears to be taking shape, however.
The healthcare REIT's share price rose 9.5% over the past week in response to the sale of 11 hospitals in Australia. Medical Properties Trust booked approximately $818 million from this sale (at current exchange rates). The company plans to use these proceeds to accelerate its ongoing de-leveraging process.
Apart from its modestly improving fundamentals, Medical Properties Trust sports an enormous 14.4% dividend yield. Bears have argued that this dividend may have to be reduced in this harsh operating environment, but even a moderate reduction would likely still result in the company paying a top-flight yield. In turn, bargain hunters and passive income seekers may want to take advantage of this recent weakness in the REIT's share price.
5. Tesla
Tesla (TSLA 2.65%) is the overwhelming market share leader in the emerging electric vehicle space. Although legacy automakers like Ford are attempting to play catch-up by investing billions in electric vehicles and next-gen battery tech, Tesla's unrivaled technology and purpose-built facilities will almost certainly keep it ahead of these competitors for the foreseeable future.
Turning to the specifics, Wall Street analysts think Tesla's heavy investment in new production facilities in Berlin and Austin, Texas, will lead to greater production efficiencies, expanding margins, and ultimately, an outsized share of the high-growth electric vehicle market once the space has reached peak value.
Analysts are also optimistic that the company's extensive use of AI in its research and development efforts will yield further operating efficiencies down the road, thereby increasing its profitability over the long run.
Bottom line: Tesla's wide competitive moat and unparalleled innovative engine are two excellent reasons to buy this electric vehicle stock in April and hold it for the long term.
