3 Surprisingly Underrated Stocks to Buy in April

Some stocks are sort of like the late comedian Rodney Dangerfield; they “don’t get no respect.” Others get some respect, but not the respect they probably deserve. Their market valuations just don’t reflect their full potential. We asked three Motley Fool contributors to point out some of those underrated stocks that they think are smart picks to buy in April.

Here’s why they chose Axsome Therapeutics (AXSM 1.87%), Johnson & Johnson (JNJ 1.02%), and Pfizer (PFE 1.04%) as opportunities that especially stand out.

Multiple catalysts are on the way for Axsome Therapeutics

Prosper Junior Bakiny (Axsome Therapeutics): Last year, Axsome Therapeutics’ share price doubled, partly due to the FDA approving its depression medicine Auvelity for use. But 2023 isn’t shaping up to be great for the biotech, at least so far. The company’s stock is down by 19% since the start of the year.

But investors should view this as an opportunity to add shares of Axsome Therapeutics to a well-diversified portfolio, as the drugmaker has several potential catalysts coming. Perhaps the most important catalyst concerns AXS-07, a candidate treatment for migraines that failed to earn approval from the U.S. Food and Drug Administration (FDA) in 2022.

The agency pointed to manufacturing issues as the problem, meaning Axsome Therapeutics won’t need to run additional clinical studies on the drug. It plans to resubmit its application for AXS-07 to the FDA later this year. Meanwhile, the biotech intends to start a pivotal study for Auvelity as an aid for smoking cessation in the fourth quarter. 

Axsome Therapeutics is also running a phase 3 study for AXS-12 as a potential treatment for narcolepsy (a sleep disorder), and it expects to report top-line results from that soon. It also plans to send an application to the FDA for AXS-14, an investigational therapy targeting fibromyalgia, a chronic disorder that causes pain and sleeping issues, sometime this year. Lastly, Axsome plans to start a late-stage study of its drug Sunosi targeting ADHD in the first half of this year.

These developments should have positive impacts on Axsome Therapeutics’ stock performance. And even more importantly, the biotech is moving ahead on important clinical and regulatory steps that will allow it to expand its product lineup in the next few years. Axsome Therapeutics’ market cap of around £2.6 billion doesn’t fully reflect the company’s potential, at least in my view.

That’s what makes the company a great underrated stock to buy in April. 

Johnson & Johnson is trading at a surprising discount

David Jagielski (Johnson & Johnson):  When a top healthcare stock goes on sale, investors should consider jumping at the chance to buy it. That’s the situation with Johnson & Johnson right now. Since the start of the year, the stock has slumped by 13% and now trades near its 52-week low.

It’s valued at 14 times its forecast earnings — a bargain when you consider the average healthcare stock trades at a forward price-to-earnings multiple of 17. So what’s holding down this stock? The company’s legal issues are never too far away.

After an appeals court judge recently quashed J&J’s attempt to have a subsidiary declare bankruptcy — a subsidiary created as part of its attempt to perform a controversial maneuver known as the “Texas two-step” aimed at minimizing its liabilities relating to lawsuits over asbestos in its talc baby powder — investors are rightfully concerned that the company could be facing significant payouts. The issue is by no means over. Johnson & Johnson continues to fight the dismissal of the bankruptcy filing and is taking the matter to the Supreme Court.

But this company has generated £77 billion in free cash flow over the past four years. I’m confident that even if it is ordered to make significant payouts in those lawsuits, it could afford to do so, and that it’s a calculated risk worth taking. I also doubt a judge would levy penalties so large as to destroy a business the size of Johnson & Johnson.

Nonetheless, the news that the company’s effort to limit its potential liabilities from those lawsuits had hit a roadblock is likely why its stock isn’t doing better this year, as its share price tumbled following that latest development.  However, for investors who are willing to look past that and focus on the company’s otherwise strong operations and long-term growth opportunities, Johnson & Johnson is an underrated buy. The healthcare giant is spinning off its slow-growing consumer health business to focus more on pharmaceuticals and medical devices.

And although its top-selling drug Stelara will lose exclusivity this year, Johnson & Johnson is confident that it can grow its pharmaceutical business to £60 billion in revenue by 2025, and that’s without factoring potential in mergers and acquisitions. In 2022, pharmaceutical sales totaled £52.6 billion. On top of it all, Johnson & Johnson is also a Dividend King that has increased its payouts for 60 consecutive years.

In April, it will likely extend that streak to a 61st year. With an already solid yield of 3% at the current share price, the company’s attractive payout and solid track record only sweeten the deal for prospective investors. Investors shouldn’t hesitate to jump on this well-known but underrated healthcare stock.

Pfizer is stronger than it appears at first glance  

Keith Speights (Pfizer): Pfizer has so many woes that a country song could be written about it.

Sales of its enormously successful COVID-19 products — vaccine Comirnaty and antiviral therapy Paxlovid — are expected to plummet in 2023. Pfizer faces a loss of exclusivity for several of its top-selling products over the next few years. Unsurprisingly, the stock has fallen by more than 20% year to date.

But I think that Pfizer is stronger than it appears at first glance. Sure, sales for Comirnaty and Paxlovid will fall significantly this year. However, the company projects strong rebounds in sales for both products in 2024.

There’s also a possibility that the Chinese market will open up for Paxlovid, which would boost revenue even more.  What about those top products losing exclusivity? Pfizer anticipates that its launches of new non-COVID-19 products through the first half of 2024 will more than offset any losses stemming from drugs losing exclusivity.

That doesn’t factor in any other potential new product launches in the second half of this decade. Don’t forget Pfizer’s wheeling and dealing. The company thinks that it will add roughly £25 billion in revenue by 2030 from business development.

It has already made headway on this front recently with its announcement of plans to acquire Seagen. My view is that Pfizer stock is looking increasingly attractive with a string of recent regulatory wins and progress with its pipeline. I also like the company’s high dividend yield of nearly 4.1%.

With payouts of that size, Pfizer doesn’t have to deliver too much share price growth to beat the market.

Tags:

adnams-cellar-and-kitchen listed on couponmatrix.ukhamleys listed on couponmatrix.ukmaxpeedingrods listed on couponmatrix.uksingle-price listed on couponmatrix.ukwhsmith listed on couponmatrix.ukwingham-wildlife-park listed on couponmatrix.uk
adnams-cellar-and-kitchen listed on couponmatrix.ukAdnams has been brewing its beers in the coastal town of Southwold since 1872. As well as distinctive brewery delights, Adnams also offers award-winning spirits, gin and vodka. Sip on a taste of homemade heaven with an Adnams voucher code and enjoy a cold brew for less. Dedicated to making great tasting and fantastic value products that won’t cost the earth, Adnams works in harmony with local farmers and nature, so that it can continue making fantastic blends for years to come.
hamleys listed on couponmatrix.ukThe world’s oldest and grandest toy shop, Hamleys is the hub for household imagination. Home to toys and games fit for all ages – including LEGO, science kits, figurines, board games, puzzles and more – find your fun and buy it on a budget with the latest Hamleys discount code. Complete with sweets, books, clothing and gifts for an all-inclusive shopping experience, see why Hamleys has stood the test of time as the kingpin of the toy box.
maxpeedingrods listed on couponmatrix.ukMaXpeedingrods is one of the leading online retailers for car parts and accessories. MaXpeedingrods discount code offers great deals on car parts and accessories. MaXpeedingrods also offers free shipping on orders over $100. MaXpeedingrods has a wide selection of car parts and accessories for all types of cars – all of which can be bought for less with the latest MaXpeedingrods discount code . So next time you need to get your hands dirty under the bonnet, remember the quality components available at MaXpeedingrods. At Groupon, we work hard to find the best deals parts and accessories from MaXpeedingrods, so you can get your engine revving without breaking the bank. We update our site regularly with the latest MaXpeedingrods promotions so that you can save money on your next tune-up, whatever the vehicle, whatever the weather. MaXpeedingrods offers a variety of car parts and accessories, from suspensions compressors to quickshifters, ensuring that there’s no part too small to be found amongst its wares. From optimum handling both on and off the track, give your car and upgrade with the perfect Maxpeedingrods coilovers. Shop smart and use the newest MaXpeedingrods coupon to get a great deal on any coilover that you need to take your motor to the next level. Whether you need to lower your chassis for minimal wind resistance or dampen the sound entering your vehicle’s cabin, coilovers are always a solid choice that’ll help your four wheels in the race.
single-price listed on couponmatrix.ukFor affordable, no-fuss fashion that doesn’t skimp on style, turn to SinglePrice and its extensive inventory of fashion, footwear, accessories and beauty products. Compiling quality clothing and gear before offering it all at incredibly reasonable rates, you’ll be amazed at how low prices go with our SinglePrice voucher codes at Groupon. Looking your best doesn’t have to cost you half a paycheck, not when you can shop smart and get a whole new look for less at SinglePrice. If the prices on offer at SinglePrice don’t amaze you enough already, know that you can get the same threads for up to 50% less by opting to shop in the SinglePrice sale. Whether you’re looking for fresh sports vest to get your sweat on at the gym or high-waist jeans to show off your curves, there’s enough variety in the sale section to fill any gaps in your wardrobe on a budget. Simple comes hand-in-hand with style whenever you opt for a SinglePrice top. Comfy, affordable and available in dozens of different colours and motifs, there’s bound to be a top amongst this diverse portfolio that vibes with your preferred style and colour palette. Bring along a SinglePrice discount code and you could bag two tops for the price of one! It doesn’t matter whether you’re mingling with friends in town or lounging it on your sofa, a SinglePrice top can be adapted to every scenario.
whsmith listed on couponmatrix.ukIn the UK WHSmith is a household name and as it comes ever closer to its bicentenary year, it is as popular now as it ever has been. As a trusted household name, you could snap up a WHSmith discount code and cut the cost of a range of products from books and magazines to stationary and confectionery, WHSmith has a bit of something for everyone.
wingham-wildlife-park listed on couponmatrix.ukSee the wonders of the natural world at Wingham Wildlife Park – Kent’s fastest expanding wildlife exhibit. Sporting exotic residents including arctic wolves, Chilean flamingos and moon bears, there are plenty of animals you can adore at a discount with the use of the latest Wingham Wildlife Park voucher. With new animals introduced every year and the opportunity to enjoy up-close experience with these wondrous beasts, it’s not surprising that Wingham Wildlife Park is such a hit with animal enthusiasts.