Momentum has been driving the market, led by artificial intelligence stocks, with the S&P 500 up 10% for the first quarter. However, the markets have started broadening, with financials, industrials and energy stocks also rallying. This deeper dive will unearth some of the best bargain stocks to buy in April to take advantage of the improving market breadth.
Indeed, the market has had a scorching run since the bottom on Oct. 27, 2023. Since then, the S&P 500 is up 27%. Technology stocks, especially AI stocks, have outperformed massively and may be due for a breather. After all, parabolic moves don’t go on forever; eventually, reversion to the mean occurs.
This means that the value-conscious investor must look elsewhere to play this bull market. Luckily, there are plenty of bargain stocks to buy in April that are not overextended. Notably, these companies have a forward price-to-earnings below 15 and don’t necessarily need earnings growth. Multiple expansion from current levels could push the stocks higher.
Walgreens Boots Alliance (WBA)
After a decade of underperformance, Walgreens Boots Alliance (NASDAQ:WBA) could stage an incredible comeback under the leadership of new CEO Tim Wentworth. On March 28, the company reported Q2 fiscal year 2024 results, taking a $5.8 billion after-tax non-cash goodwill impairment charge related to VillageMD. Excluding the charge, the results were okay. Revenue was up 6.28% year over year (YOY) and adjusted EPS was up 3.4% to $1.20.
Under the new leadership, the company is pursuing an aggressive cost-savings plan. In the Q2 FY2024 earnings call, management indicated they could deliver a $600 million reduction in capex and see $500 million in working capital benefits. Management is also taking a strategic view of all business segments and making several operational improvements.
In response to customers facing inflationary pressures, the U.S. retail pharmacy unit is investing in key value items. Furthermore, it is focusing on customer experience by enhancing support for pickup in-store and same -day delivery.
There were other positive developments in the quarter. Pharmacy had another strong quarter of execution, and U.S. Healthcare delivered the first quarter of positive EBITDA. For FY2024, management narrowed its adjusted EPS guidance to $3.20 to $3.35. Therefore, WBA stock is one of the best bargain stocks to buy in April at 7 times forward earnings.
Vital Energy (VTLE)
With oil demand firming, crude oil prices have steadily increased since early February. Over the last two months, they have moved from $73 to $81 per barrel. At these high prices, Vital Energy (NYSE:VTLE) is one of the best bargain stocks to buy in April.
The independent energy company has just closed an impressive 2023. It completed six high-value acquisitions in the Permian Basin at a cost of $1.6 billion. As a result, it acquired 90,000 acres and established a core position in the Delaware Basin. According to management, these acquisitions will increase Q1 2024 production by 50% YOY.
2023 results were a highlight across all metrics. Total production was 96.6 thousand barrels of oil equivalent per day, representing a 22% increase from FY2022. Net income for the year was $695.1 million and adjusted free cash flow was $217.1 million.
The oil producer entered 2024 with healthy proved reserves of 404.9 million BOE, a 34% increase from 2022. Moreover, management expects to grow free cash flow by 60% in 2024. Looking at valuation multiples, Vital Energy is cheap at a trailing EV/EBITDA multiple of 3. Indeed, it’s one of the best bargain stocks to buy in the energy sector.
GigaCloud Technology (GCT)
GigaCloud Technology (NASDAQ:GCT) offers an online business-to-business marketplace. The company aims to revolutionize how suppliers and resellers manage big and bulky items. It is a full-service, end-to-end B2B solution provider.
As Q4 2023 results showed, the business is growing rapidly as they onboard more resellers. FY2023 revenues were $703.8 million, up 43.6%. Quarterly growth was even higher, with revenues of $244.7 million, growing 94.8% YOY and 37.3% quarter-over-quarter. For the full year, the company generated adjusted EBITDA of $108.3 million compared to $41.8 million in 2022.
Looking at the top operational highlights for 2023, GigaCloud Technology is one of the best bargain stocks to buy in April. Gross merchandise volume increased 53.3% YOY to $794.4 million and third-party sellers grew 45.5% to close the quarter at 815. On the buyer side, active buyers grew 20.5% from 2022 levels, exceeding 5,000. Additionally, the average spending per buyer increased 27.2% to $158,569.
The firm made two strategic acquisitions – Noble House and Wondersign – in 2023 to accelerate growth. Wondersign will support entry into the brick-and-mortar market. It will facilitate the integration of retail systems into its expanding B2B digital catalog.
Based on Q1 2024 revenue guidance of $230 to 240 million, management expects at least 80% growth. Despite the impressive growth, you can buy GCT stock at a bargain 10 times forward earnings. This is a growth stock that should be in your portfolio.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
