In a CNBC’s Halftime Report program on Thursday, GAMCO Investors’ Mario Gabelli revealed three of his top picks for the second quarter of 2014. Talking about the market in the second half, Gabelli said he likes Interpublic Group of Companies Inc (NYSE:IPG), International Game Technology (NYSE:IGT) and International Flavors & Fragrances Inc (NYSE:IFF).
“The market, based on earnings, based on multiples, based on valuations, is OK, but there’s no margin of safety, and you can have a shock. The shock could come out of a faster rise in interest rates on the day it happens because the economy’s getting better. It could come out red line in Syria, what happened in Crimea. There’s a lot that can go wrong, but there’s a lot that go right,” Gabelli said.
Talking about Interpublic, Gabelli said that Michael Roth, who CEO of Interpublic, has done “a terrific job.” Interpublic is one of leading organizations of advertising agencies and marketing services companies, and has a market cap of $8.3 billion.
International Game Technology is his second pick. According to Gabelli, the company is not as well run and a company that has some suitors looking at it, good cash flow.”
“They hired a banker to look at alternatives, which means somebody was knocking on their door, which is not inappropriate, given the lackluster focus on the management team,” Gabelli said about International Game Technology.
The third pick of Gabelli is International Flavors & Fragrances, which is a global creator of flavors and fragrances used in a wide variety of consumer products.
Gabelli said: “a company that has a substitute in what I call the health-and-wellness theme, and that is a substitute for salt and sugar and they are working on it. Hard to get details, and it’s a company that I lik, and owned it for a long time, International Flavors and Fragrances. They’re going through a management change. You’re talking about a company with 80 million shares of $100 stock, $5 in earnings.”
Watch the full video: