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Buy Now — Gain Later, Says Picker

Neil Hennessy of Hennessy Funds is known for his use of the price-to-sales ratio to pinpoint the best places for a stock market investor's dollar. Based on that ratio — he's ready to buy.

"Today, you can buy a dollar of revenue in the Dow Jones (Industrials) for 74 cents on the dollar," he told CNBC. "Historically, it's traded over the last five years at $1.20 for a dollar in sales."

Hennessy says investors have been getting rid of shares in some very good companies, and now is the time to pick them up cheap.

Recommendation:

"Look at Caterpillar," he said. "Everybody knows that growth is slowing around the globe...but think about it...if you buy Caterpillar today, you get a 5 percent yield, and that dividend is covered by three and a half to one."

(Watch the entire Hennessy interview: Video, above.)

Disclosure:

Disclosure information for Neil Hennessy was not immediately available.

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Compare Caterpillar & Its Rivals:

- Joy Global

- Deere

- Bucyrus Intl.

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Disclaimer

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