Best cheap shares to buy in April 2023

With mixed economic conditions around the world, it can be difficult to decide which stocks and sectors to invest in. Despite concerns about a possible recession in the UK and US, the FTSE 100 has performed well since October and is up 14% in the past year. Recent economic and jobs data from the Eurozone and the US have also been positive, while China is enjoying pent-up consumer demand after reopening following the Covid lockdowns.

However, inflationary cost pressures and high energy costs persist in the UK, while pressure to raise wages also continues. With these issues in mind, here are three shares we think could offer good value this April.

EasyJet – recovery is taking hold

The post-Covid recovery is finally bedding in at the budget airline, which was hard hit during the pandemic and subsequently challenged last year by the Russian invasion of the Ukraine.

At the full-year results in November, EasyJet's losses narrowed to £178 million (from losses of £1.1 billion in 2021), while revenues almost tripled to £5.8 billion (from £1.5 billion in 2021). The load factors in the fourth-quarter also returned to 92%.

Meanwhile, trading has continued to improve in the first-quarter. EasyJet said in its trading update for the quarter announced in January that passenger growth was up 47% year-on-year, while the airline and EasyJet holidays had seen record revenue booking days that month.

First-quarter losses reduced to £133 million (from £213 million last year), while EasyJet holiday made a profit of £13 million versus a £1 million loss in the same period in 2021. Revenue per seat rose 36% compared to the same period last year and Easter bookings are strong, while EasyJet holidays is also already 60% sold for the summer season.

However, there should be further improvements to come at the budget airline, assuming ongoing capacity issues at Amsterdam and Gatwick don’t continue to plague the company again this year. The company, along with TUI, KLM and other carriers, plans to sue the Dutch government over the issues at Schiphol Airport.

Meanwhile, in chief executive Johan Lundgren’s words, “EasyJet does well in tough times.” The cost of living crisis should play into its hands, with customers looking to save money by booking flights and holidays with the airline.
Analysts at broker UBS think the shares could reach 600p, while those at Deutsche Bank Aktiengesellschaft predict they will hit 580p.

At 515.4p, the shares are up 15% over the past 12 months but are still worth buying. The company is due to post its half-year results on 18th April, which if positive, could provide a boost.

IMI powering ahead

Engineering firm IMI is one of broker Peel Hunt’s top stock picks for this year. It has three businesses – its precision engineering side controls the flow of liquids, while its hydronic division provides energy efficient heating solutions and the critical engineering business helps energy and process companies operate more efficiently. Its products and services essentially help businesses improve productivity and save energy.

The shares are more lowly rated than peers Rotork and Spectris, which trade on price earnings ratios in the mid-20s. IMI shares trade on a forward PE for 2023 of around 15, for example.

Recent results earlier in March were upbeat. Revenues for the full-year 2022 increased by 10% to £2 billion, boosted by three acquisitions, while operating profits rose by 8% on an organic basis (14% statutory) to £364 million. The order book is also up 14%, while orders in the IMI critical engineering side are up 18% and operating margins improved by 120 basis points over the period.

Chief executive Roy Twite is upbeat on the outlook for the company and says it boasts a “resilient portfolio” supported by “macroeconomic trends”.

Broker JP Morgan Chase also recently updated its price target on the shares to 1,800p from 1,655p. At 1593.8p, the shares have had a good run this year and are up 23% but are still some way off their five-year highs of 1826p.

PPHE Hotels – buy for recovery prospects

Analysts at broker Jefferies recently upgraded their rating on the hotelier’s shares to ‘buy’ from ‘hold,’ increasing their price target on the shares to 1,600p from 1,300p. They say there is a “disconnect between PPHE's share price and fundamental performance” and believe that falling debt levels and the company’s new investment fund could boost the shares. PPHE is launching a €250 million European hospitality fund to buy up assets on the Continent.

Revenues for the full-year 2022 rose 133.5% to £330.1 million, beating analyst expectations, while the company also returned to profit in the period, posting a pre-tax profit of £8.3 million (loss of £47.5 million in 2021). Occupancy rates also doubled from 30% in the previous year to 60, improving to 72% in the fourth-quarter, while RevPar (revenues per available room) rose 168% to £96.2 in the period.

Bookings for the new year are also strong, while new hotel openings and particularly the opening of art’otel Zagreb during the first-half of 2023 are expected to boost revenues.

The shares are down 10% to 1205p over the past 12 months and lag behind other hoteliers. There are still risks to the recovery of PPHE’s businesses in China, given Covid, and the possible effects of the cost of living crisis on hotel bookings.

However, the company says it is absorbing inflationary cost pressures with price increases. Meanwhile, analysts at Berenberg Bank also think the shares could hit 2,000p.

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