My Top 3 Stock Recommendations

By Anthony J. Bauer, Head of Private Equity at Hennessy and Associates

Investors right now are concerned over a possible recession in the near future, and are weary of any investments which carry any risk. However, the key to surviving a bear market is to calmly wait for the market to recover, while at the same time taking advantage of the current drop in prices on the right stocks.

Here are my top 3 recommendations for right now.

Nio Inc

Electric vehicle maker Nio is suffering from the ramifications of the general weakness in consumer buying trends, mainly caused by inflation and a global slowdown in spending due to concerns over the future of the global economy, and this will probably last for at least until the end of this year.

This stock is currently at a low ebb, its lowest price for over two years, and, while it may experience a small drop still, the long-term future is bright for this industry leader, and the second half of the year is expected to bring more capacity in foundries to help EV producers ramp up production.


Microchip Technology

This company, which is a leading developer and manufacturer of microcontrollers, memory and interface products for embedded control systems, has had to, along with its competitors, deal with the effects of a global supply chain shortages, which has led to increased lead times and manufacturing constraints.

Its current level of $58 a share is quite a bit below its all-time high, but the company has strong fundamentals, and this is in a sector which has proved resilient during previous downturns, and has huge potential for the long-term future. It has a 9.8 times price-to-earnings on estimated non-GAAP EPS of CY23, which is near Microchip’s lowest traded valuation in the past five years, and I expect the price to go to $70 by the month’s end.


Public Storage

This is a company which owns, develops, and operates self-storage facilities in the U.S.A. Interestingly, a large part of its customer base prefers not to move their stored items around too much, which means it is easier for the company to raise its monthly fees. In addition, the company recently sold its Business Parks unit to Blackstone, which is expected to bring in $2.7 billion in proceeds for Public Storage.

The sector of the storage operating environment is backed by strong and sustained demand, and Public Storage has solid fundamentals, a strong balance sheet, and plenty of cash reserves to cover any expenditure for the rest of the year. It has a bond of $500 million set to mature this year, but it would not need to raise any additional capital to repay its bond and make future acquisitions. Its current price of $314 is on the low side and I would expect the stock to reach $350 by the end of the month and then steadily rise throughout the year.