In this article, we discuss the 10 best small-cap stocks to buy according to billionaire Mario Gabelli.
Investors are confident in the economy’s gradual recovery after suffering heavy losses amid the coronavirus crisis. As confidence for the post-pandemic economy builds, small-cap stocks are gaining traction. Small-cap and cyclical equities are more sensitive to the economy, so a robust economic rebound would favor them.
According to Forbes, in recent months, the small-cap Russell 2000 Index has outperformed previously untouchable large-cap indices such as the Nasdaq 100. For the six months ended February 28, 2021, the Russell was up more than 40%, while the Nasdaq 100 was up only 7% and the S&P 500 was up around 10%.
The Rise of Small-Cap Stocks
Small-cap stocks are popular among investors because of their potential for providing better returns in the long term. Small-cap stocks will continue to thrive given their ability to sustain profits during an economic recession. In the first quarter of 2021, The Russell 2000 and S&P 600, two popular small-cap indexes, returned 12.4% and 17.9%, respectively.
A perfect example of a small-cap stock that grew big in the clinical-stage psychedelic medicine biotech sector is Mind Medicine (MindMed) Inc. (NASDAQ:MNMD), which is one of the most popular stocks among Reddit and Robinhood investors. Mind Medicine (MindMed) Inc. manufactures and markets medicines and treatments inspired by psychedelics to treat addiction and mental disease. The company has a market cap of $864 million and a 52-week price range of $0.3950-$5.9900. Shares of Mind Medicine (MindMed) Inc. jumped 677% over the last twelve months.
Another notable stock that was once cheap and trading at an affordable price is GameStop Corp. (NYSE:GME). In 2002, the company started with a lower market cap of around $1.12 billion. As of May 27, the market cap of GameStop Corp. (NYSE:GME) is already at $17 billion. The American video gaming merchandise retailer provides the most comprehensive range of new and used video gaming consoles, accessories, and video game titles in both physical and digital forms. The company’s 52-week price range of $3.77-$483. Shares of GME jumped 5,501% over the last twelve months.
Another notable stock that started trading cheap is Amazon.com, Inc. (NASDAQ:AMZN). The company went public in 1997 at $18 per share, valuing the business at $438 million. The corporation now has a market capitalization of $1.6 trillion. Amazon.com, Inc. is one of the leading e-commerce, cloud computing, digital streaming, and artificial intelligence platforms worldwide. The 52-week range of Amazon.com, Inc. is $2,378.23 – 3,554.00. Shares of AMZN climbed 35% over the last twelve months.
Investing in small-cap stocks during the pandemic provides tremendous growth potential with long-term sustainability, as these companies often focus on long-term endeavors.
Choosing profitable stocks is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
In this article, we are goin to take a look at some of the best small-cap stocks in the portfolio of billionaire Mario Gabelli, who oversees GAMCO Investors. Gabelli’s portfolio includes several large cap companies including Amazon.com, Inc., Bank of America Corp (NYSE: BAC), Microsoft Corporation (NASDAQ: MSFT) and Apple Inc (NASDAQ: AAPL). But in this article our focus remains on small-cap stocks.
We used Q1’2021 13F holdings data of GAMCO for this analysis.
Best Small-Cap Stocks to Buy According to Billionaire Mario Gabelli
10. Myers Industries, Inc. (NYSE:MYE)
Market Cap: $786.86 Million
Percentage of GAMCO Investors’ 13F Portfolio: 0.55%
Stake Value of GAMCO Investors: $62 Million
We start our list of the 10 best small-cap stocks to buy according to billionaire Mario Gabelli with plastic and rubber manufacturer Myers Industries, Inc. (NYSE:MYE). The polymer manufacturer headquartered in Ohio, United States, runs a wholesale market of plastic containers, rubber tire repair products, and custom rubber materials. Founded in 1933, Myers Industries, Inc. offers its services to growing markets from the agriculture, medical, commercial, and automotive demands. In 2019, Myers Industries, Inc. acquired assets from Tuffy Manufacturing Industries, Inc., a tire repair equipment and supplies distributor, to expand in specific markets and create an advantage on strategic account customers.
Like Amazon.com, Inc., Bank of America Corp, Microsoft Corporation and Apple Inc, MYE is a notable stock in Gabelli’s Q1 portfolio.
Myers Industries, Inc. has a market cap of $786.68 million. The company posted revenue of $4.6 million in the first quarter of 2021, up from $0.7 million during the same quarter of 2020. The 52-week price range of Myers Industries, Inc. is $12.75-23.98. The share price of MYE increased by 67% in the last twelve months. In December 2020, KeyBanc upgraded Myers Industries to Overweight and announced a $25 price target.
9. Diebold Nixdorf, Incorporated (NYSE:DBD)
Market Cap: $1.05 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.46%
Stake Value of GAMCO Investors: $53 Million
Ranking 9th on the list of best small-cap stocks to buy according to billionaire Mario Gabelli is multinational financial and retail technology firm Diebold Nixdorf, Incorporated (NYSE:DBD). Ohio-based Diebold Nixdorf, Incorporated develops self-service transaction systems such as automated teller machines (ATM) and currency processing systems. In 2019, the company released its DN Series ATM, the first recycled and recyclable material made ATM. The machine decreases CO2 emissions from refining to transportation.
Diebold Nixdorf, Incorporated has a market cap of over $1.05 billion and posted a first-quarter of 2021 revenue of $943.9 million, which beat analysts’ expectations by $2.83 million. The 52-week price range of Diebold Nixdorf, Incorporated is $4.74-17.30. Shares of DBD jumped 156% over the past twelve months.
Like Amazon.com, Inc., Bank of America Corp, Microsoft Corporation and Apple Inc, DBD is a notable stock in Gabelli’s Q1 portfolio.
Roubaix Capital LLC mentioned Diebold Nixdorf, Incorporated in its Q4 2020 investor letter:
“The largest detractor in the short portfolio during the fourth quarter was Diebold Nixdorf (DBD). The company’s primary business is selling automated teller machines to banks. We view the cash ecosystem as a structural share loser and several companies in this ecosystem are on our short focus list. While electronic payments continue to consistently take share, and while there was some concern about using paper money during the health crisis, DBD was able to post reasonable results. The stock has carried a low valuation as many stocks do when they have secular pressure. This low valuation allowed the stock to rally alongside the market in Q4 and we exited on our risk discipline. We will continue to monitor this stock and others in this ecosystem for opportunities to re-short when the risk-reward is more favorable.”
8. Ingles Markets, Incorporated (NASDAQ:IMKTA)
Market Cap: $1.17 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.46%
Stake Value of GAMCO Investors: $52 Million
Ranking 8th in our list of the best small-cap stocks to buy according to billionaire Mario Gabelli is American regional supermarket chain Ingles Markets, Incorporated (NASDAQ:IMKTA). The supermarket chain operates over 197 supermarkets in the Southeastern United States. Ingles Markets, Incorporated also operates gas stations, shopping centers, and milk processing plants.
Ingles Markets, Incorporated has a market cap of $1.16 billion. The company’s revenue in the quarter that ended on March 27, 2021, came in at $1.18 billion, up from $1.14 billion in the same period in 2020. The 52-week price range of Ingles Markets, Incorporated is $34.92-67.60. Shares of IMKTA increased 48% over the past twelve months.
7. Kaman Corporation (NYSE:KAMN)
Market Cap: $1.45 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.92%
Stake Value of GAMCO Investors: $105 Million
American aerospace company Kaman Corporation (NYSE:KAMN) ranks 7th in our list of the 10 best small-cap stocks to buy according to Billionaire Mario Gabelli. The Connecticut-based company produces helicopters, drones, rotor blades, and alike. In 2020, Kaman Corporation purchased Bal Seal Engineering, Inc., one of the leading manufacturers of precision springs and caps. The acquisition gave leverage to Kaman Corporation in engineered products and services, allowing Kaman to serve new clients in the medical technology, aerospace and defense, and automotive end markets.
Like Amazon.com, Inc., Bank of America Corp, Microsoft Corporation and Apple Inc, KAMN is a notable stock in Gabelli’s Q1 portfolio.
Kaman Corporation has a market cap of $1.44 billion. The company’s net sales in the first quarter of 2021 decreased 17.2% to $171.6 million from $207.3 million in the previous year. The 52-week price range of Kaman Corporation is $37.38-$59.80. Shares of KAMN jumped 38% over the past twelve months. In November 2020, KeyBanc maintained an Overweight rating on Kaman and raised the price target to $65.
6. Griffon Corporation (NYSE:GFF)
Market Cap: $1.49 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.91%
Stake Value of GAMCO Investors: $104 Million
Ranking 6th in our list of the 10 best small-cap stocks to buy according to billionaire Mario Gabelli is diversified management and holding company Griffon Corporation (NYSE:GFF). The New York-based multinational conglomerate was founded in 1959 and operates through five subsidiaries: the AMES companies, ClosetMaid, Clopay Building Products, CornellCookson, and Telephonics Corporation.
Griffon Corporation has a market cap of $1.49 billion. The company’s revenue increased 12% to $634.8 million in the second quarter of the fiscal year 2021, up from $566.4 million in the previous quarter. On January 2021, Raymond James maintained an Outperform rating on Griffon and raised the price target to $27.
Like Amazon.com, Inc., Bank of America Corp, Microsoft Corporation and Apple Inc, GFF is a notable stock in Gabelli’s Q1 portfolio.
5. Astec Industries, Inc. (NASDAQ:ASTE)
Market Cap: $1.53 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.65%
Stake Value of GAMCO Investors: $74 Million
Ranking 5th on the list of best small-cap stocks to buy according to Billionaire Mario Gabelli is specialized equipment for road building manufacturer Astec Industries, Inc. (NASDAQ:ASTE). The Tennessee-based company was founded in 1972 and owns over sixteen brands of innovative rock to road-building products. In 2020, the company acquired Concrete Equipment Company, Inc. and BMH Systems, Inc., the acquisition will improve Astec’s capacity to meet the demands of their end-users.
The company has a market cap of $1.47 billion. The company recorded a net sales decrease of 1.5% to $284.4 million in the first quarter of 2021 as compared to the same period of 2020. The 52-week price range of Astec Industries, Inc. is $41.29-80. The stock has gained 50% in the last twelve months.
4. The E.W. Scripps Company (NASDAQ:SSP)
Market Cap: $1.79 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.66%
Stake Value of GAMCO Investors: $75 Million
American broadcasting company The E.W. Scripps Company (NASDAQ:SSP) is one of the small-cap stocks to buy according to billionaire Mario Gabelli. The Ohio-based company, founded in 1878, runs an award-winning investigative reporting newsroom in Washington, DC. The company owns different media platforms such as Court TV, Laff, and Grit. At the beginning of the year, the company acquired ION Media Networks Inc. The acquisition allowed the company to reach a wider audience via free over-the-air broadcast, cable or satellite, over-the-top, and digital distribution.
The company has a market cap of $1.76 billion. The 52-week price range of The E.W. Scripps Company is $7.86-24.78. Shares of CUTR surged 127% over the past twelve months.
3. GCP Applied Technologies Inc. (NYSE:GCP)
Market Cap: $1.84 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.82%
Stake Value of GAMCO Investors: $93 Million
Construction products technology provider GCP Applied Technologies Inc. (NYSE:GCP) ranks 3rd on the list of small-cap stocks to buy according to billionaire Mario Gabelli. The company produces concrete management systems, and thermal and moisture protection products. One of the latest acquisitions of GCP was R.I.W Limited, a waterproofing supplier. The acquisition allowed GCP to add waterproofing capabilities to the company’s product line.
The company has a market cap of $1.82 billion. On March 23rd, Jefferies analyst Laurence Alexander downgraded GCP Applied Technologies, Inc. from Buy to Hold with a price target of $19.00. The 52-week price range of GCP Applied Technologies Inc. is $16.65-$27.78. Shares of GCP increased 19% over the past twelve months.
2. EnPro Industries, Inc. (NYSE:NPO)
Market Cap: $1.88 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.86%
Stake Value of GAMCO Investors: $98 Million
EnPro Industries, Inc. (NYSE:NPO) ranks 2nd on the list of small-cap stocks to buy according to billionaire Mario Gabelli. The company is one of the leading manufacturers of materials science-enabled products for technology-intensive sectors. In 2020, EnPro acquired Alluxa, Inc., one of the leading optical filters for the industrial technologies market. The acquisition supports the company’s portfolio of materials science-based firms with leading technologies that serve markets with positive secular tailwinds.
EnPro Industries, Inc. has a market cap of $1.86 billion. The company reported an income in the first quarter of 2021 of $18.0 million, up from $10.1 million in the same quarter of 2020. On March 8, Oppenheimer maintained Outperform on EnPro Industries and raised the price target to $95. EnPro Industries, Inc.’s (NYSE:NPO) 52-week price range is $43.30-$96.16. Shares of NPO increased 86% over the past twelve months.
1. Otter Tail Corporation (NASDAQ:OTTR)
Market Cap: $1.98 Billion
Percentage of GAMCO Investors’ 13F Portfolio: 0.16%
Stake Value of GAMCO Investors: $19 Million
Topping the list of the 10 small-cap stocks to buy according to billionaire Mario Gabelli is Minnesota-based energy firm Otter Tail Corporation (NASDAQ:OTTR). Founded in 1907, the company provides electricity and energy services to over 423 towns and retails and delivers to about 14 municipal utilities. In May 2021, the company completed its Astoria Station, a 245-megawatt (MW) simple-cycle natural gas combustion turbine located in South Dakota. The Astoria Station can generate dispatchable energy while emitting 85% less carbon and light sulfur dioxide or mercury.
The company has a market cap of $1.97 billion and total revenues of $261.7 million in the first quarter of 2021, up 11.5% compared to the same period in 2020. The 52-week price range of Otter Tail Corporation is $35.36-49.45. Shares of OTTR climbed 11% over the past twelve months.
You can also take a peek at 10 Cheap Stocks To Invest In February 2021 and Top 10 Stocks to Invest in For Beginner Investors.
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This article is originally published at Insider Monkey.
