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).
7) Textron Inc. (NYSE:TXT)
GAMCO Investors’ Stake Value: $129.5 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.4%
Number of Hedge Fund Holders: 26
Textron Inc. (NYSE:TXT) is a conglomerate, engaged in designing, manufacturing, and servicing specialty aircraft for various end markets. The firm’s aviation segment manufactures and services Cessna and Beechcraft business aircraft.
Textron Inc. (NYSE:TXT) has a robust brand recognition. This, together with its extensive product mix, should fuel the company’s growth prospects for the upcoming quarters. This is because these abilities enable it to generate revenue from multiple streams. Thanks to its robust portfolio, mainly Aviation segment, it grew its top line by 4% and its bottom line by 10% over the previous 3 years.
In 2Q 2024, the company saw revenues of $3.5 billion, up from the previous year’s $3.4 billion. The increase in revenue was led by higher Textron Aviation revenues (reflecting increased pricing), and higher Bell revenues (largely due to higher military volume). Textron Inc. (NYSE:TXT) anticipates continued strong margins and profitability, mainly in the aviation segment. The growth is also expected in international markets, mainly with the new Ascend jet.
Also, technology investments in the aviation sector might support the company’s business areas.
Citigroup upped its price target on shares of Textron Inc. (NYSE:TXT) from $111.00 to $115.00, giving a “Buy” rating on 22nd July. As of the end of 2Q 2024, Insider Monkey’s data indicates that 26 out of the 912 hedge funds profiled were shareholders of Textron Inc. (NYSE:TXT).
6) American Express Company (NYSE:AXP)
GAMCO Investors’ Stake Value: $131.12 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.42%
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) is a global financial institution, that provides consumers and businesses with charge and credit card payment products.
The payments are shifting to electronic forms, which continues to benefit American Express Company (NYSE:AXP). The company has a strong brand value, which attracts loyal and highly profitable customers. Its growth should continue to be helped by healthy international activity, and new cardmembers, mainly the youth.
In 2Q 2024, American Express Company (NYSE:AXP) saw stable growth of 6% YoY in billings, healthy new card acquisitions of 3.3 million, and double-digit growth in card fee revenues for 24th consecutive quarter.
The network effects should continue to act as a tailwind for the company’s business. The company has ~150 million credit cards in circulation, with millions of merchants accepting such cards. Since 2021 end, the company has grown its business significantly, improving revenues by ~50% and card member spending by ~40%. The company added ~23 million new cards and more than 30 million merchant locations.
The payment volume, card fees, and interest income on card loans should be able to support overall revenue growth moving forward. Apart from these drivers, healthy loan underwriting and operating leverage can fuel its earnings growth.
Analysts at Royal Bank of Canada increased their target price on the shares of American Express Company (NYSE:AXP) from $265.00 to $267.00. They gave an “Outperform” rating on 22nd July. According to Insider Monkey, 68 hedge funds were bullish on American Express Company (NYSE:AXP) as of 2Q 2024.
Artisan Partners, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said about American Express Company (NYSE:AXP):
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
5) Modine Manufacturing Company (NYSE:MOD)
GAMCO Investors’ Stake Value: $138.9 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.51%
Number of Hedge Fund Holders: 31
Modine Manufacturing Company (NYSE:MOD) offers thermal management solutions to diversified markets and customers. It offers engineered heat transfer systems and heat transfer components for use in on- and off-highway original equipment manufacturer (OEM) vehicular applications primarily in the United States.
Modine Manufacturing Company (NYSE:MOD)’s stock has seen a strong run up of over ~80% on a YTD basis. Much of this appreciation was mainly due to the benefits of AI infrastructure upcycle. The company enhanced data center cooling solutions and manufacturing capacity to address increased demand. Moving forward, its technology roadmap and focus on high-potential businesses should continue to act as tailwinds for future growth in the AI data center market.
Modine Manufacturing Company (NYSE:MOD) kicked off its fiscal year with healthy 1Q 2025 results, exceeding expectations and leading to an upgraded financial outlook for FY 2025. Its gross profit went up by 27% to reach $162.6 million and its gross margin saw an improvement of 400 basis points to 24.6%. This was mainly because of benefits from ongoing 80/20 initiatives, increased average selling prices, lower material costs, and a favorable sales mix.
The business momentum in its high-growth, high-margin areas – which includes data centers and stationary power generation – remains healthy and should help offset further softness in automotive, agriculture, and construction equipment markets. Modine Manufacturing Company (NYSE:MOD) expects data center sales to grow in the range of 80% – 90%, which is a strong increase from its initial guidance of 60% to 70%.
The company continues to develop new products and anticipates significant growth in EV offerings. Modine Manufacturing Company (NYSE:MOD) now focuses on M&A opportunities globally and expects a revival in heat pump demand later in the year or the following year. The company’s performance is expected to stem from growth areas like data centers, HVAC, and liquid air ATS.
Analysts at B. Riley increased their price objective on shares of Modine Manufacturing Company (NYSE:MOD) from $125.00 to $140.00, giving the stock a “Buy” rating on 1st August. As per Insider Monkey’s data, 31 hedge funds were long Modine Manufacturing Company (NYSE:MOD) as of 2Q 2024.
Chartwell Investment Partners, LLC, an affiliate of Carillon Tower Advisers, Inc., released third quarter 2023 investor letter and mentioned Modine Manufacturing Company (NYSE:MOD). Here is what the fund said:
“Modine Manufacturing Company (NYSE:MOD) was another strong performer. Modine’s performance technologies segment is experiencing high demand as it provides thermal solutions for electronic vehicle (EV) and hybrid vehicle manufacturers. The company also has focused on growth opportunities in the data-center market, selling data center cooling solutions needed for energy intensive artificial intelligence (AI) projects.”
4) Crane Company (NYSE:CR)
GAMCO Investors’ Stake Value: $180.7 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.96%
Number of Hedge Fund Holders: 31
Crane Company (NYSE:CR) is a diversified industrial firm, which is engaged in manufacturing a broad range of products, such as valves, vending equipment, payment acceptance equipment, and aerospace components.
Over the past year, Crane Company (NYSE:CR)’s stock witnessed an increase of over ~70%. This appreciation came after its separation from Crane NXT. Crane Company (NYSE:CR)’s products find their use in mission-critical applications. Therefore, the margin for error appears to be slim (for example, wastewater pumps/brake control systems which are used on airplanes). Its reputation for quality and reliability should act as a tailwind moving forward.
Over the past few decades, Crane Company (NYSE:CR) has developed well-established and long-lasting customer relationships. The company has built a significant installed base of equipment which continues to generate recurring revenue. Collectively, these factors are expected to drive the company’s performance.
In 2Q 2024, the company posted sales of $370.6 million, exhibiting an increase of $18.2 million, or 5.2% on a YoY basis. This was primarily driven by $20.5 million, or 5.8% sales benefit due to the acquisition of the OpSec Security business, and $2.9 million, or 0.8% core sales growth. The company has narrowed its full-year adjusted EPS guidance to between $4.20 – $4.35. It continues to focus on operational excellence and driving profitable growth.
Analysts at Stifel Nicolaus upped their price target on the shares of Crane Company (NYSE:CR) from $157.00 to $168.00. They gave a “Buy” rating on 18th July. Crane Company (NYSE:CR) is held by 31 hedge funds as of Q2 2024, as per Insider Monkey’s data.
3) GATX Corporation (NYSE:GATX)
GAMCO Investors’ Stake Value: $183.8 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.99%
Number of Hedge Fund Holders: 12
GATX Corporation (NYSE:GATX) is the provider of railcar leasing and maintenance services. It operates 4 business segments: rail North America, rail international, and portfolio management.
The company released its 2Q 2024 results, wherein, it saw revenues of $386.7 million, while analysts’ estimates were $385.5 million. Its EPS (non-GAAP) sat at $1.43. This compares to the analysts’ expectations of $1.78.
Its stock currently trades at ~19.2x its forward earnings, which is at a discount to the sectoral average of ~24.4x. The higher demand for railcar leasing across numerous industries, such as refining and petroleum, chemicals, plastics, and food and agriculture, should continue to act as the principal growth enabler for GATX Corporation (NYSE:GATX). Through exploiting this demand trend, it should be able to expand its customer base and enhance its market share.
GATX Corporation (NYSE:GATX) continues to place deliveries of new railcars under its existing supply agreement. It also acquired more than 600 railcars in the secondary and spot markets during 2Q 2024.
While the investment pipeline for engines is expected to remain strong throughout the year, it expects stable demand for railcars and aircraft spare engines moving forward.
Susquehanna increased its price objective on the shares of GATX Corporation (NYSE:GATX) from $120.00 to $122.00, giving the stock a “Neutral” rating on 24th April. As per Insider Monkey’s 2Q 2024 data, 12 hedge funds reported owning stakes in GATX Corporation (NYSE:GATX).
2) Mueller Industries, Inc. (NYSE:MLI)
GAMCO Investors’ Stake Value: $189.3 million
Percentage of GAMCO Investors’ 13F Portfolio: 2.05%
Number of Hedge Fund Holders: 25
Mueller Industries, Inc. (NYSE:MLI) is engaged in making copper, brass, aluminum, and plastic products. It works through 3 business segments: piping systems, industrial metals, and climate. Over the past few years, the company has benefited from higher demand in the construction and industrial sectors.
In 2013, its gross margins were hovering somewhere around 13%. In FY 2023, its gross margins were over ~23%. Therefore, the company has strong and sustainable pricing power on its goods. Over the short to medium term, Mueller Industries, Inc. (NYSE:MLI) is expected to be supported by an expected rebound in construction activity and interest rate cuts. The company’s diversified product line, serving numerous sectors, together with its strong distribution network should continue to act as growth drivers.
Wall Street analysts opine that continued investments in infrastructure and construction might support the company as these sectors are the main drivers of demand for its products. Recently, the company indicated undertaking a $20 million investment at the U.K. tube mill and refinery. This will enable copper tube mills to melt and recycle the scrap. Moreover, the company recently highlighted that its internal investments continue to pay off. It expects these investments to yield even greater benefits as and when market conditions improve.
Its acquisition of Nehring Electrical Works, which was completed during 2Q 2024, gives a substantial platform for expansion in the energy infrastructure space. As per Insider Monkey’s 2Q 2024 database, 25 hedge funds were long Mueller Industries, Inc. (NYSE:MLI).
Diamond Hill Capital, an investment management company, released its third-quarter 2023 investor letter and mentioned Mueller Industries, Inc. (NYSE:MLI). Here is what the fund said:
“We also initiated short positions in Mueller Industries, Inc. (NYSE:MLI), Bank of Hawaii, Alarm.com Holdings and Garmin in Q3. Mueller Industries is a leading producer of copper tubes and pipes for plumbing and HVAC systems — a cyclical industry with largely commoditized products that has seen meaningful margin gains in recent years tied to tailwinds we anticipate will likely reverse in coming years. Further, we expect long-term volume trends will likely remain sluggish as copper piping continues losing share to plastic over time. Given our expectation earnings power will revert to historical levels over time, we initiated a short position during the quarter.”
1) Herc Holdings Inc. (NYSE:HRI)
GAMCO Investors’ Stake Value: $198.1 million
Percentage of GAMCO Investors’ 13F Portfolio: 2.15%
Number of Hedge Fund Holders: 32
Herc Holdings Inc. (NYSE:HRI), through its subsidiaries, provides equipment rental services in critical markets, such as construction, industrial and manufacturing, petrochemicals, refineries, civil infrastructure, and automotive, among others.
In 2Q 2024, the company saw record equipment rental revenue of $765 million, exhibiting an increase of 9% YoY and record total revenues of $848 million, an increase of 6% YoY. During 2Q 2024, the company benefited from positive rental pricing, improved fleet efficiency, and enhanced market share.
For 2H 2024, mega project activity continues to ramp up into peak season as expected. Notably, higher revenue growth for the remainder of the year and incremental adjustments made in 2Q 2024 to better align the local cost structure should help drive more normal margin and REBITDA (Rental Adjusted EBITDA) flow through for 2H 2024.
Despite slower growth in the current rate-sensitive local market, the outlook for rental demand remains strong. This is because the pipeline for mega projects is healthy, data center construction continues to accelerate, and federal infrastructure spending continues to roll out. Herc Holdings Inc. (NYSE:HRI) should continue to ride high, mainly due to fleet efficiency, pricing power, and growth opportunities available in the entertainment and industrial sectors. It plans to capitalize on the opportunities available in construction activity over the upcoming 3 years.
JPMorgan Chase & Co. initiated the coverage on the shares of Herc Holdings Inc. (NYSE:HRI) on 7th June. They gave a “neutral” rating and a price target of $155.00. Around 4 research analysts gave a “Hold” rating and 1 analyst gave a “Buy” rating on Herc Holdings Inc. (NYSE:HRI)’s stock.
As per Insider Monkey, 32 hedge funds hold Herc Holdings Inc. (NYSE:HRI) as of Q2 2024.
While we acknowledge the potential of HRI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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