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5 Best Stocks to Buy in April 2024 Report Cover

5 Best Stocks to Buy in April

By Michael Cintolo, Vice President of Investments, Cabot Wealth Network

Axon Enterprise (AXON)

Axon isn’t a household name, but the firm has a unique position in a very big market: The company is effectively the go-to technology (and, increasingly, weapons) for law enforcement agencies (mostly state and local, but it’s moving into other areas too, such as body cameras for retail to deter theft) in the U.S. and in other English speaking countries, not just boosting efficiencies but also cutting down on unnecessary deaths and improving evidence collection/use via a range of offerings. It all started with Tasers, the firm’s electrical weapons that have gotten more effective over the years (the latest release has more range), but the big draw these days is Axon’s cloud and sensor products—the firm has a slate of cameras and sensors (body, dashboard, etc.) that record mountains of video that’s eventually uploaded into its software suite, which makes it much easier to review, analyze and share, which in turn leads to quicker court cases, too. (Amazingly, Axon says it uploads more video every month than YouTube!) The firm also has cloud software for other key functions like dispatch, record keeping and even drone-based evidence collection, all of which is sold on a subscription basis. All told, Axon sees a market of $50 billion or so, and the stock is strong today because the top brass continues to crank out terrific results: In Q4, sales (up 29%, led by cloud service revenue that was up 44%), earnings (up 60%) and EBITDA (up 38%) all rose, but as always, the future-looking indicators were even better, with annualized recurring revenue of $697 million rising 43%, same-customer revenue growth of 22% and total future contracted revenue of $7.14 billion, up 54% from a year ago and up a whopping 23% from the prior quarter! Guidance for this year was solid, too (20%-plus revenue and EBITDA growth) with expanding margins. The valuation is up there, but there’s little doubt this growth story has a long way to run, and it’s one of the rare stories that should be immune to the ebbs and flows of the economy. The stock spent the middle of last year resting before kicking into gear, and the late-February earnings rally was a plus—as is the tight action since then, a sign big investors are still accumulating shares.

Diamondback Energy (FANG)

Oil stocks have been out of favor for a while, but the group has begun to percolate due to lots of actual and rumored M&A in the group, as well as resilient oil prices, which have been hovering near $80 per barrel despite all the central bank tightening and economic uncertainties of the past few quarters. Diamondback Energy has always been one of the most efficient operators in the sector, and a bold acquisition of late has investors excited: In February, the firm announced the purchase of privately held Endeavor Energy for a total consideration of $26 billion, which brings with it 344,000 net acres in the Midland Basin and will create the preeminent play in the larger Permian—there are tons of attractive points to the merger, including a 10% uplift to free cash flow in 2025 (and more beyond), a 60% bump in wells that have breakeven prices south of $40 per barrel (6,100 in total!), massive drilling efficiencies (Diamondback expects Endeavor’s drillings costs per foot to decline nearly 20% by 2025) and big overall synergies (eventually $550 million annually), too. It’s a big move and is expected to take time to be finalized—likely not until Q4—but in the meantime, Diamondback itself is doing just fine, with excellent Q4 results (free cash flow of $5.09 per share, leading to the equivalent of 90 cents per share of share buybacks and a $2.90 per share dividend) and a buoyant outlook for 2024 (at $80 oil and $3 gas, the firm should have about $19 of free cash flow this year) as it keeps CapEx in check and returns at least 75% of cash flow to shareholders. Even so, the Endeavor deal is the main attraction, setting the firm up to be a legitimate blue-chip energy play in the top basin in the U.S. The stock was holding just north of long-term moving averages for most of December, January and February, but the deal caused buyers to rush in, and FANG hasn’t really stopped going up since, marching higher nearly every day. Pullbacks will come, but if the group has turned up, Diamondback looks like the leader.

Hims and Hers Health (HIMS)

While most of the world has leapt forward with everything going digital, the vast majority of the medical field (for better or worse) is still done face-to-face, even for routine matters. To us, that’s really where Hims & Hers Health’s story shines: The firm has effectively created a successful telehealth operation where millions of people can get select health-related prescription (generic) medications at a low out-of-pocket cost for a variety of health needs, ranging from hair loss, ED, dermatology, birth control, mental health (anxiety and depression) and even weight loss, all of which are all giant markets, and users sign up for deliveries on a subscription basis (read: recurring revenue). Moreover, this isn’t just a glorified wholesaler: The company offers access to tons of board-certified physicians as well as nurse practitioners (more than 650 in all) that act quickly (less than 24 hours from visit to treatment submission) and, increasingly, can formulate personalized treatments. Indeed, across the entire platform, 30% of all subscribers are using personalized offerings, which makes them much “stickier,” and that figure is much, much higher for newer offerings (75% of female dermatology users have personalized products, while for weight loss (which is very new), it’s near 100%! That’s one reason why the top brass thinks three newer offerings (these two just mentioned plus mental health) can each bring in $100 million in revenue in 2025! Indeed, to this point, the uptake has been superb as it takes massive share among some small competitors—the firm ended 2023 with 1.5 million subscribers (up 48%), which drove a 47% gain in revenue (consistently $50-plus per subscriber, per month) in Q4 while EBITDA has been positive and growing five quarters in a row. Just as impressive to us is the underlying business: EBTIDA margins are already 8% here and headed much higher, and on average, the cost it takes to acquire a new customer is paid back (at least in gross margin dollars) in a matter of months, while 85% of users stick around. Management believes the train will keep rolling in 2024 (revenues up 36%, EBITDA doubling), and the lower-priced stock exploded higher on the news. To be clear, HIMS is a hot potato that could use more liquidity ($55 million or so of trading volume per day) and sponsorship (296 funds own shares), but we’re very intrigued.


From late October through late March, the S&P 500 rallied a whopping 27% in the past 21 weeks—and looking back over the past 50 years, the only other times something similar has happened has seen the market up north of 20% a year after those events, i.e., it was actually early in bull moves. If anything like that transpires this time around, it’s a very good bet that Bull Market stocks will do well—and so far, KKR is the leader of that group. The firm finished last year with $553 billion of assets under management (mostly private equity and credit-related), $446 billion of which are fee-based (which provides recurring income), while new capital raised in Q4 came in at $31 billion as the market took off, a solid acceleration compared to the $38 billion brought in during the prior three quarters combined. But the bigger Q4 news came near Thanksgiving, when KKR gobbled up the 37% of insurer Global Atlantic it didn’t already own; the partnership had been very successful in boosting originations for Global Atlantic and thus boosting KKR’s asset management business, and now the top brass thinks the full combination will drive distributable earnings per share nicely higher this year. When you combine that move with what could be a far more favorable (and easier-money) environment going ahead, there’s no reason KKR’s asset base, fee-based earnings and the like can’t boom from here—indeed, following the Atlantic buyout, the top brass boosted its fee-based earnings target to $4.50 per share in 2026, up from $2.68 per share in 2023. It’s not a hot AI stock, but all signs are pointed higher for KKR—indeed, the stock showed excellent persistence right off the market low, and after a tight consolidation, lifted up toward round-number resistance around 100 in February. And now, after tightening up again, the odds favor higher prices ahead—especially if the market remains supportive and easier money comes down the road.

Toll Brothers (TOL)

Every week brings another handful of key economic reports and speeches, but when you step back and look at the facts, you see that (a) leading economic indicators remain in good shape, (b) mortgage rates have very likely already seen their cycle highs and (c) the Fed seems more likely than not to be cutting rates sometime during the next few months. Add in a very low supply of new homes, and we think homebuilders can continue to surprise on the upside—and that especially goes for the names with exposure to the higher end of the market, where inflation and lingering economic uncertainty aren’t as much of a factor. Thus, it’s not surprising that Toll is probably the best performer in the group, bolstered by a sterling Q4 report in late February—not only did sales rise 9% and earnings leap 32% in the quarter (earnings were 24% above expectations!), but the vital forward-looking measures impressed, with net signed contract value of just over $2 billion rising a huge 42% from a year ago. As is the case in most quarters, Toll saw a big percentage of its buyers pay in cash (25%), and even among those that took a mortgage, the loan-to-value ratio was just 67% (putting down 33% on average), which was down two percentage points from the average of the prior four quarters. Looking ahead, management is bullish because of all of the above factors, believing its fiscal year (ending in October) earnings won’t just hold up but will actually push 10% higher or so this year. Obviously, if the macro picture significantly changes (huge housing supply comes online, major recession, etc.), then that would obviously alter the outlook—but the most likely outcome is a continued bullish environment for Toll and peers for many quarters to come. As for the stock, it showed great power off the market bottom and, like most housing peers, went straight sideways for a few weeks before and after the end of 2023, but then the earnings-induced breakout came in February, and the buyers remain firmly in control. We think homebuilders can continue to surprise on the upside going ahead.


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About Cabot Wealth Network

This report is published by Cabot Wealth Network which was founded in 1970 by Carlton Lutts, a disciplined investor with an engineering mind who developed a proprietary stock picking system using technical and fundamental analyses.

Since then Cabot Wealth Network, headquartered in Salem, Massachusetts, has grown to become one of the largest and most-trusted independent investment advisory publishers in the country, serving hundreds of thousands of investors across North America and around the world.


A growth stock and market timing expert, Michael Cintolo is Chief Investment Strategist of Cabot Wealth Network and Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides, which has helped Cabot place among the top handful of market-timing newsletters numerous times.