Neil Hennessy suggests investing in these 2 stocks over megacap tech companies

Welcome to Extreme Investor Network, where we provide unique insights and valuable information to help you make informed investment decisions. Today, we’re diving into the world of value investing with advice from Neil Hennessy, CEO of Hennessy Funds.

Hennessy recently discussed the importance of looking beyond the “Magnificent Seven” trade, referring to the group of megacap tech stocks that have driven the market higher over the past year and a half. He warned investors against continuing to pour money into these stocks, as their exorbitant multiples make them less attractive from a value perspective.

Instead, Hennessy suggested focusing on value stocks like car dealer Group 1 and emergency equipment maker Oshkosh Corp. These companies offer attractive price-to-sales multiples and present opportunities for long-term growth.

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When it comes to evaluating value stocks, Hennessy emphasized the importance of looking at the price of the stock to sales ratio. He recommended not paying more than $1.50 for $1 in sales, and highlighted Group 1’s impressive ratio of about 20 cents on the dollar. Additionally, Oshkosh Corp. boasts a price-to-sales multiple of 0.9 and a P/E ratio of just 7, making it an attractive option for value investors.

While these stocks may have underperformed in 2024, Wall Street analysts see potential for a turnaround. With buy ratings and price targets implying significant upside, both Group 1 and Oshkosh Corp. offer promising opportunities for investors seeking value in today’s market.

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