Yogurt and More
Danone SA (ADR) (OTCMKTS:DANOY) is probably best known in the U.S. for its yogurts. However, the company is much larger than that. It also, baby food, water, and has a “clinical nutrition” unit. Still, its yogurt segment accounts for around half of the company’s revenue.
Gabelli believes “that Danone SA (ADR) (OTCMKTS:DANOY) stands to benefit from numerous converging global trends including a greater global focus on nutrition, an aging population, rising income levels in the emerging markets, and an increasing number of women in the workforce.” Moreover, “Danone SA (ADR) (OTCMKTS:DANOY) has one of the strongest potential top line growth rates among major food and beverage companies due to its participation in higher growth categories and significant emerging markets exposure.”
The stock yields around 2% and Gabelli expects Danone SA (ADR) (OTCMKTS:DANOY) to grow at rates faster than its peers over the next few years. Although the ADRs are heading toward all-time highs, the yield and growth prospects make this an interesting option for growth and income investors.
Distribution
Genuine Parts Company (NYSE:GPC) is a distributor of aftermarket auto parts, industrial parts, office products, and electrical components. It’s largest and best known division, owns the NAPA brand and accounts for around half of its top line. However, the company’s strength is really in getting things to where they need to be.
Gabelli is particularly fond of the auto group, however, because The United States has “…an aged vehicle population, including the highest percentage of off warranty vehicles in history.” That, he contends, will drive replacement part sales for several years. NAPA is a big industry player and will benefit. That said, the fund manager believes that “economic indicators remain supportive of the company’s industrial and electrical parts distribution businesses,” too.
The shares yield around 2.5%, but are trading near all time highs. The price to earnings ratio is about 20% higher than its five year average. Positive fundamentals in the auto segment, however, could keep the good times going. Momentum investors should take a look, while income investors should keep this one on their watch list. It has a long history of slow, but steady growth and a pullback to a yield in the 3% to 3.5% range may be a better long-term entry point.
Foolish final thoughts
Industry themes underpin each of the above stock highlights. Danone SA (ADR) (OTCMKTS:DANOY) and Corning Incorporated (NYSE:GLW) both have interesting prospects and are worth a look. However, Genuine Parts Company (NYSE:GPC) is a good company that appears to have gotten ahead of itself, so a patient approach may be the most appropriate.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Corning. The Motley Fool owns shares of Corning. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Dividend Picks From Mario Gabelli originally appeared on Fool.com is written by Reuben Brewer.
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