The Motley Fool

Top stock picks for April

We asked our contributors to pick their favorite ASX stocks to buy in April. Here are their top ideas.

Bradley Murphy: Macquarie Group Limited (ASX: MQG)

Macquarie Group announced to the market this week that it expects its result for FY14 to be between 40% to 45% higher than that of FY13 on the back of improving market conditions.

Macquarie is now in a strong position to leverage a recovery in global market conditions and increased mergers and acquisitions activity. Favourable market conditions should prevail going forward due to stronger global stock markets, increased capital market activity, an improving U.S. economy and increased IPO market.

As the global market continuse to improve, Macquarie should see significant earnings growth and consequently, share price appreciation. The group’s solid performing annuity-style businesses provide reliable earnings and should prevent any downside to the current share price.

Motley Fool contributor Bradley Murphy owns shares in Macquarie Group.

Mike King: FSA Group Limited (ASX: FSA)

FSA Group provides debt solutions and lending services to customers. What that means is that the company helps those who are struggling with debt with solutions tailored to individual clients, including payment arrangements, debt agreements and debt consolidation as well as factor finance for small businesses.

In the last half year, FSA saw earnings per share climb 41%, and expects to see net profit after tax rise 18% for the full 2014 financial year. Trading on a prospective P/E ratio of 10.7 and likely to pay a fully franked dividend yield of over 5%, FSA looks attractive.

Motley Fool writer Mike King does not own shares of FSA Group.

Andrew Mudie: Freedom Foods (ASX: FNP)

Freedom Foods is a small supplier of cereals, snacks and non-dairy beverages under the brands Freedom Foods, A2 milk, So Natural, Australia’s Own, Paramount and Brunswick.

The company delivered 15% revenue growth and 30% earnings growth in the first half and is starting to get some traction in the U.S., in line with targeted growth plans. The company is also exposed to the booming market for gluten-free foods and long-life products.

Additional capacity is coming online this year, and at some stage the company will have to realise on its balance sheet the $100 million shareholding in NZ-listed A2 Corp which is currently on the books at a value of $10.4 million. Expansion into Asia is on the cards and it looks like a great long-term growth opportunity.

Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned.

Tom Richardson: Breville Group Ltd (ASX:BRG)

It’s not cheap, but kitchen appliance maker Breville Group seems to keep surprising the market to the upside and I think it has plenty of potential to keep growing profits rapidly based on its highly successful move into North America with the UK and other markets now primed to follow.

The simple strategy of powerful marketing, product innovation and more global distribution looks a winner, all supported by growing consumer demand for its home lifestyle products. Average annual total shareholder return over the past five years is a spectacular 80.3% and it looks a good business to own.

Motley Fool contributor Tom Richardson owns shares of Breville Group.

Chris Koenig: JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is a specialty retailer of branded home entertainment products. It is focused on marketing to the younger demographic with relatively high disposable income.

Having hit a double bottom of $17.48 and $17.60 on 30 January and 25 March, respectively, this year, it is looking very interesting right now.

The recent high of $23.13 occurred on 7 November last year. Aided by a rising Australian dollar, JB Hi-Fi is my pick for April with a target of $22.50, near its top of the trading range.

Motley Fool contributor Chris Koenig does not own shares in JB Hi-Fi Limited.

Regan Pearson: Santos Limited (ASX: STO)

I have had my eye on Santos for a while now, but the recent weakness in price makes now an attractive time to buy. Shares have fallen 16% in the last six months.

Santos offers one of the cheapest pools of oil and gas reserves available with a EV/2P ratio of 13.4 compared to Woodside Petroleum’s (ASX: WPL) 23.09. The company is forecasting compounded annual growth of 6% to 2020 and expects to significantly increase dividends as cash flows grow – ideal for investors with a long-term investment horizon.

Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned.

Sean O’Neill:  Yellow Brick Road (ASX: YBR)

A small non-bank lender led by chairman Mark Bouris (you may recognize his name from Money Magazine),Yellow Brick Road recently announced a raft of acquisitions and a share buyback scheme which – combined with its earnings growth —  should light a fire under its share price in the future.

Yellow Brick Road is a riskier investment as it is not expected to turn a profit until 2015, but staggering earnings growth (129% in the wealth management category and 73% in lending) last year makes the future look glossy. This is a share to buy for capital gains right now, with the hope of a dividend in the future.

Motley Fool contributor Sean O’Neill doesn’t own shares in Yellow Brick Road.

Peter Andersen: Western Areas Ltd (ASX: WSA)

Western Areas is a highly productive nickel miner with interests in Australia and Finland. Competitive advantages include being Australia’s lowest cost nickel producer, producing mines that are high grade and long life and mine locations with access to infrastructure and port facilities.

With the nickel price improving after a few years in the doldrums, Western Areas is well placed to offer shareholders substantial returns from 2015 onwards. A recent capital raising has removed any balance sheet risk and increases in proven reserves are likely. At $3.26 Western Areas is selling at 11 times estimated 2015 earnings including a 4% fully franked dividend.

Motley Fool contributor Peter Andersen owns shares in Western Areas.

Tim McArthur: Virtus Health Ltd (ASX: VRT)

Successful long-term investing requires an ability to identify a business that has a long-term tailwind that can allow it to grow for many years. A company that would appear to fit this bill is the recently listed IVF-service provider Virtus Health.

Virtus operates in an industry that has appealing growth dynamics that should benefit the company for many years. Like most companies in the health sector, the structural trend of a higher per capita income is also advantageous.

The other key to successful investing is buying at the right price. At $7.40 the shares have already provided a wonderful return for IPO investors who snapped up stock at $5.68. With the stock well down from its recent high of $9.20, however, now could be the time for investors who missed the IPO to pounce.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.

Ryan Newman: Village Roadshow Limited (ASX: VRL)

The entertainment and media group has been one of the most consistent performers on the ASX over the last five years – a trend that looks set to continue.

The company operates a number of theme parks in Queensland and the U.S. and recently opened another Wet ‘n’ Wild in Sydney. It is exploring the possibility of making a push into the promising Asian market within the next few years.

Yielding 4.5% (fully franked, of course), the stock has fallen 16% since its recent high of $8.05, giving you a fantastic opportunity to buy while the price is right!

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Owen Raszkiewicz: Donaco International (ASX: DNA)

Donaco is a casino operator and technology company with its flagship asset being the Lao Cai International Hotel strategically located on the northern Vietnamese border with China. In recent times, Donaco’s share price has rocketed on positive earnings news, a divestment of its core business and, even more recently, an institutional placement which is aimed at providing funds for future acquisitions.

I was disappointed at the institutional placement, merely because retail investors like me didn’t get the opportunity to buy more shares. Donaco has nearly completed renovations of the facility, taking it from a 34-room hotel, to a brand new resort complex with 428 rooms.

Motley Fool contributor Owen Raszkiewicz owns shares in Donaco International.

Thinksmart Limited (ASX: TSM)

Thinksmart has over $40 million cash, compared to a market capitalisation of about $62 million, because the company recently sold their Australian business to Flexigroup Limited (ASX: FXL). Motley Fool contributor Peter Andersen covered the consumer financing company, which retains its UK-based business in this recent article. To my mind, the company divested the riskier Australian business, while retaining a business with more growth potential – if I’m right, that is a good indication that the board is a good one.

Capital return in the form of a special dividend has been slated, and the company is already buying back shares. I think $20 million for the UK business is in the vicinity of a fair price. Therefore, if management invest the cash they don’t return at satisfactory rates, then the current share price of under 40c is likely to look cheap. The biggest risk is that the money is spent on unsuccessful growth initiatives or a unsatisfactory acquisition; neither path is particularly uncommon, and the potential may justify a discount. Personally, I haven’t bought shares in the company because I’m not completely comfortable with the exposure to consumer financing. Thinksmart may not yet be a buy, but it deserves a spot on your watch list.

Motley Fool contributor Claude Walker does not own shares in Thinksmart.

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