Stock Picks for April 2025

Stock Picks for April 2025

Today is April 10th, 2025 and it’s time for some new stock picks!

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Market Overview

The last few weeks have been all about President Trump’s tariffs. The US does indeed need to get its financial house in order. With US federal debt exceeding 120% of GDP, not including unfunded liabilities for “entitlements”, such as medicare and medicaid, and debt servicing interest expenses exceeding 25% of tax revenue collected, it is clear that something needs to be done NOW to prevent the unthinkable: bankruptcy of the US government. Reducing government spending in a democracy is quite hard as politicians of both parties tend to make promises to their constituents in order to get elected. Passing bills to reduce spending becomes very difficult.

Raising revenue through new taxes is also unpopular. Mr Trump seems to have found a way to raise revenue without upsetting his voter base. He’s been saying that revenue from tariffs is paid by other nations and that manufacturing jobs could be coming back to the US if imported goods are subject to tariffs. He’s not totally wrong about his assertions. While tariffs will be paid by the US consumer, the foreign producers could absorb some of the increased cost to the consumer by lowering their prices.

Good or bad the tariff discussion is here and it is impacting all markets tremendously. Market participants are correctly, in my opinion, viewing tariffs as short term inflationary and long term recessionary. Volatility increased immensely, stocks are lower, bond yields are not coming down much due to the inflationary nature of tariffs and the US dollar is not strengthening as demand for US stocks and bonds by foreign investors is not as high as it would have been under a stock market correction that was due to different reasons. This increased volatility is not to be feared however. It has created more investment opportunities as now we have more good companies trading at reasonable prices to choose from.

Banco Marco

With all that in mind my first stock pick is going to be an Argentinian Bank , Banco Marco, symbol BMA on the NYSE. The Milei administration in Argentina has been cutting regulations, reducing government spending and reforming the economy in Argentina for almost a year an a half now. Banks are levered plays on the economy and the Argentinian economy is on the mend.

Banco Marco is one of the best banks in Argentina. It has a median generated return of equity of 26% over the last 10 years and yet it trades at only 1.2 times book value. The reason for that is that historically Argentina has been a terrible place to invest under their previous socialist corrupt governments and it should now start receiving capital from foreign investors and valuations should go up over time. Even if valuations stay the same (unlikely) we would still expect a very nice total return from a company with this sort of profitability. This is great example of our motto of “buying good businesses at good prices”.

KB Homes

My second stock pick is a home builder, KB Homes, symbol KBH on the NYSE. KB homes builds single-family homes and communities across different geographical segments in the US including the west coast. With the recent unfortunate fires in LA home builders including KB homes should have additional demand for their services which is generally good for business.

Reasonably profitable company that’s generated a median return on equity of 13% over the last 10 years and it trades at a discount to book value at 0.95 times book. Good company, good price, we like it.

Dorian LPG

My third pick is Dorian LPG, symbol LPG on the NYSE. Dorian LPG  is an international liquefied petroleum gas shipping company focused on owning and operating gas carrier tankers, or VLGCs. Dorian LPG has offices in Connecticut, USA, London, United Kingdom, and Athens, Greece. The recent market sell off has impacted the price of crude oil and oil & gas stocks. While this is a transportation company, it trades like an energy company so it is very cyclical.

Cyclical companies like this are not consistently profitable. However, they offer good upside to shareholders if we buy them at a low enough price. The stock market is about flat year over year, despite the recent tariff tantrum sell off. Crude oil is down over 20% and Dorian LPG is down over 50%

Hopefully most of a tariff induced economic slowdown is priced in the stock already and we are buying this stock at a good price, we’ll see!

Give Us a Call

As always, if you have questions about whether these stocks fit in your portfolio or if you have any other investment related questions, give us a call! 604-288-2084

Thank you!

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