Buy This Small Cap Powerhouse

I am today recommending purchase of Brady Corp. (BRC), the manufacturing of identification solutions, including RFID and bar code scanners and workplace safety products. BRC has solid historical growth, high returns on invested assets and a strong balance sheet which should enable it to ease past any economic weakness in 2023. BRC could be a beneficiary of a year-end rally in small cap stocks.

At the same time, I am recommending sale of Universal Health Systems (UHS). The shares have been trading around my $130 price target the past few weeks with no indications a breakout is eminent. The stock has made a great comeback from under $100 a share in recent months, but with higher cost still potentially weighing on earnings estimates next year, sell the stock.

Buy BRC stock under $50, my target is $67, which is only 15X next year’s EPS estimates. At the same time, Sell UHS at market price.