Q: Ten companies were recently identified as the top undervalued mid cap stocks. Would you consider any of these to be buys and if so, (given no consideration for sector) can you list in terms of most favorable first. Also, which do you think will "hold on" best given the economic uncertainty and likelihood of recession.
We would consider the following as buys: BEPC, TCN, NVEI, LSPD, KEY, LUN.
We think BEPC, TCN and KEY are most likely to hold up in a recession given their valuations, sector exposure and business models. BEPC's exposure to the utilities sector is defensive and we like KEY's pipeline infrastructure exposure, which reduces its cyclical exposure to oil prices. TCN's exposure to multi-family residential units is also defensive in our view. It should experience some tailwinds from rising rents and a lower valuation. (5iResearch)