Neil Hennessy said investors need to look at value stocks that offer attractive price-to-sales multiples and avoid what he sees as a dying "Magnificent Seven" trade. The Hennessy Funds CEO said buying the Magnificent 7 , the group of megacap tech stocks credited with driving the market higher for the past year and a half, is no longer smart after their monster runs led to exorbitant multiples. Instead, Hennessy, whose firm runs assets of about $4 billion , advised investors to look at value stocks such as car dealer Group 1 or emergency, rescue and fire equipment maker Oshkosh Corp.
With "the Magnificent Seven, that game's over," he said on CNBC's " The Exchange ." "The boat's already sailed." While Hennessy admitted that the Magnificent 7 stocks have performed well, he said their average price-to-earnings multiple sits at around 47 while their price-to-sales multiple is above 12.
"Get real," Hennessy said of those valuations. The money manager, who started in the stock market in 1979, said artificial intelligence, the buzzy technology that has captured the imaginations of investors since late 2022 and given upward momentum to megacap tech, could now be overblown. "The reality of our world is money is shifting over to value," said the University of San Diego alum.
"Where the euphoria is in AI and crypto — and I'm not sure you really want to be there." .SPX OSK,GPI YTD mountain The S & P 500 vs.
Oshkosh and Group 1 For investors interested in value, Hennessy said one of the .
