If you feel that your recent stock picks are underperforming, you’re not alone. With the constant rotation in-and-out of technology stocks, and the seismic shifts between the Dow Jones Industrial Average and NASDAQ exchanges, it is hard today for investors to get any growth out of their portfolios.
The threat of inflation and rising interest rates, along with uncertainty about the pandemic recovery and vaccine roll out, has left the stock market moving in fits and starts since the end of January. The Dow Jones is up 7% year-to-date while the NASDAQ is up less than 1%.
With market volatility forecast to continue heading into the summer months, investors will likely need to adjust their thinking and focus on short-term stocks that they can use to generate profits in a matter of weeks and months rather than years. Adjusting one’s portfolio and taking a short-term view could be beneficial in the current environment.
In this article, we provide seven of the best short-term stocks to try for April. Hopefully markets will recover and these stocks will provide some immediate profits in the coming month.
- Kansas City Southern (NYSE:KSU)
- Volkswagen (OTCMKTS:VWAGY)
- Southwest Airlines (NYSE:LUV)
- Six Flags Entertainment (NYSE:SIX)
- Molson Coors (NYSE:TAP)
- Caterpillar (NYSE:CAT)
- Airbnb (NASDAQ:ABNB)
Best Short-Term Stocks: Kansas City Southern (KSU)
For the investor who’s thinking really short-term, why not try Kansas City Southern? The Kansas City, Missouri-based railroad’s share price has risen nearly 15% since news broke on March 21 that Canadian Pacific Railway (NYSE:CP) is buying Kansas City Southern for $25 billion. KSU shareholders will receive 0.489 of a Canadian Pacific share and $90 in cash for each share they hold, valuing the stock at $266 per share – 19% more than its close on March 19.
Is there still room for the stock to run higher? Likely yes, as the deal, which is subject to regulatory approval on both sides of the border, is not expected to be finalized until the middle of 2022. But investors may want to watch for a dip in KSU stock given its recent run-up on initial news of the Canadian Pacific deal.
Once finalized, the combined railroad will be the only link to Canada, the U.S. and Mexico with 20,000 miles of track. Canadian Pacific, for the first time, will have access to Mexico, which made up almost half of Kansas City Southern’s revenue last year. The newly formed company will be based in Calgary, Alberta and will be called “Canadian Pacific Kansas City,” or CPKC for short. And it will be a behemoth in the rail industry, with 20,000 employees and annual revenues of more than $8.5 billion.
Volkswagen (VWAGY)
Move over Tesla (NASDAQ:TSLA)! German automaker Volkswagen’s stock has been on a tear in recent weeks (jumping 20% since mid-March) after the company unveiled its electric vehicle (EV) strategy and announced plans to build multiple battery factories to power its new fleet of cars, trucks and sport utility vehicles (SUVs). Specifically, the company has said that it plans to develop six “gigafactories” in Europe by 2030 and aims to have 18,000 fast-charging stations for its electric vehicles throughout Europe by 2025.
Volkswagen executive Thomas Schmall has made no secret about his ambitions to supplant Tesla as the world’s top seller of electric vehicles.
VW stock got a further boost recently after analysts at Deutsche Bank forecasts that Volkswagen could surpass Tesla in annual sales of electric vehicles as soon as 2022. Furthermore, Deutsche Bank says that VW’s electric vehicle business could be worth $230 billion, more than the entire company is currently valued at. The bullish forecast comes as Volkswagen rolls out its ID.4 compact SUV globally. In the same exuberant forecast, Deutsche Bank upped its price target on VW shares by 46%.
The recent bump in the company’s stock price has led the German automaker to replace software giant SAP as the largest member of Germany’s benchmark DAX index.
Who knows where VW stock will be in a year from now, but in the short-term it is racing ahead of other automakers and investors should take notice.
Southwest Airlines (LUV)
Investors should fly Southwest Airlines to some short-term profits this spring. The number one U.S. airline for leisure travel is sure to benefit from the reopening of the economy, lifting of restrictions and consumers’ craving to travel far and wide and to southern locations this year. Air travel is rebounding strongly with the Transportation Security Administration (TSA) regularly screening more than one million passengers a day in March, the most screenings in more than a year. And there is plenty of runway left for air travel to grow as TSA screenings still remain 45% below their pre-pandemic levels.
Southwest Airlines, which is the biggest low-cost airline in the world, carries more domestic passengers than any airline based in the United States, flies to popular sun destinations in the Caribbean and Mexico, and has been profitable every year from 1973 to 2019, is primed to benefit as Americans escape the confines of their home and travel again.
LUV stock has risen 30% so far this year. While it has pulled back in recent weeks with the broader market at $57.62 a share, Southwest Airlines looks likely to fly higher as the pandemic recedes and travel really gains momentum during the summer.
Six Flags Entertainment (SIX)
People aren’t just keen to get on an airplane again. They’d also like to visit an amusement park with their family and climb aboard a roller coaster. This is where Six Flags Entertainment comes in.
The amusement park operator has seen its stock rise sharply in recent months on expectations that its theme parks across the U.S. will be fully reopened this summer. SIX stock has climbed 45% higher since the end of January this year and is now worth $46.17 a share.
While the stock’s momentum is likely to slow as we enter the summer, there’s indication that it will continue at least into April. SIX stock jumped 11% on the day it reported fourth-quarter earnings. While the company reported a net loss of $86 million, or $1 per share, for the quarter, it also noted that spending per guest jumped 17% to $47, and gave positive forward guidance, stating that business will steadily improve throughout this year. Investors enthusiastically applauded the bullish forecast.
Molson Coors (TAP)
Drinking alone at home is so 2020. This year, people can be expected to once again enjoy a cold beer at the ball park, on a restaurant patio, and at a live concert. As the economy reopens, sales of beer and other alcoholic elixirs are expected to soar.
Beer sales, which total more than $650 billion globally, are forecast to grow more than 7% a year between now and 2025, according to Statista. And beer remains the most popular alcoholic drink among Americans (42% of drinkers prefer beer versus 34% who prefer wine). The average adult in the U.S. drinks 26.2 gallons of beer a year.
Among beer manufacturers, Molson Coors is tops. The Chicago-based company that was formed through the merger of Molson of Canada and Coors of the United States brews popular beer brands such as Coors Light, Miller Genuine Draft and Blue Moon, among others. And the company currently holds roughly 30% of the beer market in the U.S. and more than 40% of the market in neighboring Canada.
TAP stock rose 15% this year and is currently at $52.02 a share. More growth is ahead in the short-term as friends and family gather for a cold one.
Caterpillar (CAT)
Machinery and engine manufacturer Caterpillar has been a major beneficiary of the reopening play among investors. At $228.14 a share, CAT stock has grown nearly 25% since the end of January.
Its run will probably continue in April and through to the summer as long delayed construction projects rev-up across the U.S. Many analysts have Caterpillar stock as one of their top industrial picks as we move beyond the global pandemic and as President Joe Biden’s administration prioritizes infrastructure projects.
A strong housing market and rebound in oil prices are other reasons to remain bullish on CAT stock, at least in the short-term.
More than half of Caterpillar’s sales come from foreign markets outside the U.S., and those markets, particularly in Europe and Asia, should also post strong results in 2021. Plus, Caterpillar maintains a strong dividend yield of nearly 2% and has increased its dividend payouts every year for nearly 30 years, giving investors one more reason to buy the company’s shares.
Airbnb (ABNB)
Why not play the travel boom that’s expected this summer by purchasing shares of Airbnb, the industry leader when it comes to home rentals around the world? Data shows that Airbnb is already getting a significant boost as travel starts to recover around the world with the distribution of Covid-19 vaccines. Data analytics firm AirDNA reports that Airbnb’s supply of available rental units is outpacing the supply of rooms at traditional hotel chains.
Airbnb’s global active listings increased by 2.5% in February of this year, compared with a year earlier, as travel begins to ramp up. Globally, there were over 5.4 million active listings on Airbnb in February, with more units available for rent than the combined total of 3.3 million units available at hotel chains Marriott (NASDAQ:MAR), Hilton (NYSE:HLT), and IHG (NYSE:IHG) combined, according to AirDNA. The appeal of short-term rentals with larger living spaces that are located in private residences has become even more appealing to travelers as we emerge from the pandemic, allowing Airbnb to perform better than traditional hotels and other forms of lodging.
ABNB stock has slumped 11% since the end of February on broad-based market volatility. But, at $183 a share, investors should view Airbnb stock as a buying opportunity. The stock can be expected to rise precipitously over the coming six months as travel again becomes a force around the world. Airbnb stock represents a great opportunity as the economy reopens.
On the date of publication, Joel Baglole held a long position in LUV.
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.
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March 30, 2021 at 10:24PM
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7 of the Best Short-Term Stocks to Try for April - InvestorPlace
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