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.
"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 information for Neil Hennessy was not immediately available.
Compare Caterpillar & Its Rivals:
- Joy Global
- Bucyrus Intl.