This article will discuss the 10 Best Stocks to Buy from Mario Gabelli Stock Portfolio.
GAMCO Investors, Inc., formerly Gabelli Asset Management Company, is a prominent American firm, which has its headquarters in Rye, New York. The company specializes in offering investment advice and brokerage services to mutual funds, institutional clients, and select investors. The company was founded and is majority-owned by Mario Gabelli, who earned over $750 million in compensation over the past several years.
Veteran investor Mario Gabelli has earned millions of dollars by betting on the unloved. He likes to invest in companies that are NOT being followed or that are NOT being covered by Wall Street analysts. If the companies are not forming part of an index, it makes them even more appealing.
The hedge fund manager remains committed to active value investing. His investment philosophy of focusing on value stocks over growth stocks prevailed even when passive-index funds and Nasdaq “FAANG” dominated the market during the US Fed’s loose interest-rate policies. His investing secret is simple– “Find a good business having good management, buy the stock at a reasonable price, and then hold that stock for the long term.”
As per Insider Monkey’s 2Q 2024 database, out of the total investment portfolio, ~21.7% accounts for Industrial goods.
What Lies Ahead for the US Stock Market as Per Gabelli Funds
Gabelli Funds believes that the US Presidential election is expected to add to market volatility in 2H 2024. At the same time, the much-anticipated rate cuts in September might give a boost to rotation into areas of the market that have lagged during the year. The investment management firm sees increased volatility in the election. That being said, the economic weakness and volatility are expected to be offset by the underlying rotation and lower rates.
Gabelli seems to be optimistic about the broader US economy. He believes that companies have healthy cash flows and that gross margins are better. The only thing that might weigh over the US equities is the geopolitical risk.
Gabelli recently appeared in the prestigious Barron’s Roundtable discussion. He believes that World GDP, which is measured by the International Monetary Fund, is expected to be ~$115 trillion in 2025. The U.S. is 26%, and China is 17%. The consumer makes up for ~70% of the U.S. economy, and industrial spending accounts for ~12%.
Mario Gabelli mentioned that the US Fed is focused on the four R’s. The first is keeping “rates high for longer.” The second R is “continued runoff of the central bank’s balance sheet,” now occurring at a $60 billion pace monthly, down from ~$95 billion in early 2024. Next, the US Fed continues to make efforts to “reduce aggregate demand.” However, the higher government spending continues to offset these efforts. Finally, the Chairman continues to be “rhetoric about bringing the inflation down.”
Mergers and acquisitions (M&As) and other financial engineering strategies are expected to ramp up substantially, for numerous reasons. Gabelli believes that several private equity funds are about to see the end of their 10-year life cycles, and limited partners (LPs) need liquidity. Therefore, this situation will lead to higher sales. Mario Gabelli expects M&A to pick up globally in 2H 2024.
While the S&P 500 is up over ~15% on a YTD basis, the veteran investor believes that stocks can compound at ~8% annual growth rate in the upcoming years, significantly higher than the earnings from fixed-income securities.
Mario Gabelli is Optimistic About These Sectors
Mario Gabelli seems to gain interest in the sports franchises. This is because sports will remain central to linear television and streaming. The buzz is that media companies are shelling out hefty sums for broadcasting and streaming rights.
Moving on, the veteran hedge fund manager believes that artificial intelligence is a great technology, just like other market experts.
Gabelli’s next pick is natural gas. He believes that, over the next few years, there is a huge potential for prices to increase. This is because some producers are capping wells or producing less and demand continues to pick up as compared to power generators and liquefied natural gas exports.
Mario Gabelli Stock Portfolio: 10 Best Stocks to Buy
Our methodology
At the end of the second quarter of 2024, Insider Monkey was tracking the portfolios of 912 hedge funds. We made use of GAMCO Investors’ 13F portfolio to assess and analyze the 10 Best Stocks to Buy. The top 10 stocks to buy according to GAMCO Investors are ranked in ascending order of the fund’s stakes in them.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Mario Gabelli Stock Portfolio: 10 Best Stocks to Buy
10) Madison Square Garden Sports Corp. (NYSE:MSGS)
GAMCO Investors’ Stake Value: $111.7 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.21%
Number of Hedge Fund Holders: 36
Madison Square Garden Sports Corp. (NYSE:MSGS) is engaged in the live sports and entertainment business. Its reportable segment, MSG Entertainment, contains live entertainment events, such as concerts and other live events, like family shows, performing arts, and special events.
The company, an owner of the New York Knicks basketball team and New York Rangers hockey team, is a way for the public to have access to favorable dynamics of sports franchises.
Despite COVID-19, the value of the teams continues to grow together with global popularity of basketball. Also, the Knicks on-court has improved with young players and healthy draft capital that might lead to additional fan engagement and create incremental pricing power for year years to come.
The strong demand for tickets together with new sponsorship deals are expected to act as tailwinds for the company.
While the premium hospitality sales and playoff-related revenues should fuel the company’s financials in the upcoming few quarters, the value of their teams should help the company steer through the challenges (like changes in the sports media environment). Also, Madison Square Garden Sports Corp. (NYSE:MSGS) is open to strategic financial decisions, such as minority stake sales.
The company is expected to see growth via renewals and new sales in premium hospitality. It also has plans to expand club space and renovate suites at The Garden.
Madison Square Garden Sports Corp. (NYSE:MSGS) saw record revenue of more than $1 billion for FY 2024, exhibiting a rise of 16% YoY. The results were supported by healthy demand for the Knicks and the Rangers, as both the teams saw successful regular seasons which led to playoff runs.
The average price target for Madison Square Garden Sports Corp. (NYSE:MSGS)’s stock is $227.50. At the end of Q2 2024, 36 hedge funds tracked by Insider Monkey reported having stakes in Madison Square Garden Sports Corp. (NYSE:MSGS).
9) AMETEK, Inc. (NYSE:AME)
GAMCO Investors’ Stake Value: $112.3 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.22%
Number of Hedge Fund Holders: 41
AMETEK, Inc. (NYSE:AME) is a diversified industrial conglomerate. It operates via 2 segments: electronic instruments, or EIG, and electromechanical, or EMG.
AMETEK, Inc. (NYSE:AME) plans to increase investments in its business and utilize its strong balance sheet to deploy capital on strategic acquisitions, thereby, positioning it for continued long-term growth. It plans capital deployment for strategic acquisitions, opportunistic buybacks, and increasing dividends.
In 2Q 2024, AMETEK, Inc. (NYSE:AME) saw sales of $1.73 billion, reflecting a rise of 5% from the same period in 2023. The acquisitions added 8 points in the quarter and foreign currency was a marginal headwind. The company’s operational performance in the quarter was healthy, with strong core margin expansion.
Its operating margins came in at 25.8% in 2Q 2024, up 40 basis points from the prior year. Excluding the dilutive impact from acquisitions, its core margins increased ~180 basis points in the quarter. Its diluted EPS is expected to be in the range of $6.70 – $6.80 for the year, exhibiting a rise of 5%-7% from the previous year.
With moderation in inflation, AMETEK, Inc. (NYSE:AME) saw a positive pricing benefit in 2Q 2024, which should help it in 2H 2024. Its defense business should remain robust, and contribute high single-digit growth for FY 2024. The company remains optimistic about the Chinese market and expects this market to pick up shortly. Also, it is implementing some cost-saving measures, while introducing new products for the Paragon business. These initiatives should be earnings accretive in 4Q 2024.
Analysts at Oppenheimer initiated coverage on the shares of AMETEK, Inc. (NYSE:AME), and raised their rating from a “Market Perform” to an “Outperform.” They gave a $200.00 price target on 22nd May.
According to Insider Monkey’s 2Q 2024 data, 41 had held stakes in AMETEK, Inc. (NYSE:AME).
8) Sony Group Corporation (NYSE:SONY)
GAMCO Investors’ Stake Value: $113.9 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.23%
Number of Hedge Fund Holders: 29
Sony Group Corporation (NYSE:SONY) is a conglomerate that designs, develops, produces, and sells electronic equipment and devices. The company is also engaged in content businesses, like console and mobile games, music, and movies.
The company’s profit during the April-June quarter (1Q 2024) came in at ¥231.6 billion ($1.6 billion), up from ¥217 billion. Its quarterly sales went up by 1.6% to ¥3 trillion ($20 billion) as its entertainment business was strong. Sony Pictures Experiences should strengthen its position in the experiential live entertainment business. It plans to produce larger sensors for ultra-wide angle and telephoto cameras. Therefore, it continues to focus on capitalizing on the healthy recovery of the global smartphone market.
While the company remains vigilant about the competition in the semiconductor market, Sony Group Corporation (NYSE:SONY) continues to focus on high-end product production. This should help the company’s FY 2024 financials. The company also continues to focus on IP strengthening, which should help it navigate potential headwinds while exploiting diverse revenue streams.
The company has highlighted that global demand for animation offerings such as “Demon Slayer” remained healthy, which also includes streaming services like Amazon Prime. Also, its partnership with Crunchyroll, the US video streaming service, has proven to be a successful one. Sony Pictures Entertainment (SPE) CEO mentioned that Crunchyroll should act as a primary growth driver at SPE over the next few years.
The awareness and spread of the internet and streaming made anime accessible to everyone, and the group plans to ride the growth of anime outside Japan.
Notably, 2 research analysts gave the stock a “Hold” rating, and 3 analysts have assigned a “Buy” rating on the shares of Sony Group Corporation (NYSE:SONY). As of the close of Q2 2024, 29 hedge funds in Insider Monkey’s database held stakes in Sony Group Corporation (NYSE:SONY).
