In this article, we examined the 10 best bargain stocks right now based on Mario Gabelli’s Q1 portfolio.
The billionaire value investor Mario Gabelli, the founder, and CEO of GAMCO Investors, is bullish about the US economy and stock market in 2021 amid coronavirus vaccines rollout and economic reopening. He strongly believes that the US economy will perform well this year, helping several sectors that remained under pressure last year because of the coronavirus crisis. Increasing consumer spending, as well as Joe Biden’s $2 trillion infrastructure spending plan, will add to the economic and stock market momentum in 2021 and the years ahead. Gabelli, who first invested in stocks when he was only 13 years old, said in a recent interview that he is not holding money in cash as the value investor sees plenty of nifty-fifty positions out there. The 79-year old billionaire is bullish on infrastructure, media, and industrial and materials companies.
Born in the Bronx and went to Fordham Preparatory School, Mario Gabelli says he read market reports for fun when he was in school. The investor is a fan of the legendary investor Warren Buffett and his investment strategy is based on Benjamin Graham’s principles. He is a value investor and he focuses more on valuations and fair value instead of running behind trends and high-growth stocks. He held a small stake in technology giant Apple Inc (NASDAQ: AAPL), and a few months back he explained problems with Tesla, Inc. (NASDAQ: TSLA) stock. He doesn’t seek to invest in high-flying companies that are trading at significantly higher valuations following a pandemic-related rally.
Mario Gabelli is Bullish on Industrial Sector
Billionaire Mario Gabelli, the founder of Gamco Investors, is bullish on companies associated with infrastructure activities. Along with economic reopening, his enthusiasm is mainly backed by Joe Biden’s $2 trillion infrastructure plan. According to the world economic forum 2019 report, the United States was standing at the 13th spot in the world in infrastructure. Mario Gabelli has always emphasized the need of building bridges, roads and spending on other development projects. Biden administration plans to spend more than $400 billion on traditional infrastructure projects and $115 billion on roads and bridges. The proposed $2 trillion infrastructure plan also includes $100 billion in spending on public transit and railway projects.
As Mario Gabelli said in an interview that he will not sit on the sidelines, he held 31% of the $11.39 billion worth of 13F securities portfolio in industrial stocks that are likely to benefit from infrastructure spending.
“You need an element of support for a certain part of the population, particularly if you’re dealing in restaurants if you are in small businesses. But stepping back, we need an infrastructure bill,” he said.
The Billionaire is Optimistic about Several Other Sectors in 2021
Gamco founder, who has a net worth of about $1.9 billion, expects certain other sectors including automobiles, housing, travel, and tourism to rebound in 2021. His prediction is true as these sectors performed well since the beginning of this year, with the expectation for further room to run in the days ahead due to the wider availability of coronavirus vaccine.
He is also bullish over the future fundamentals of the communications sector. As of the end of the first quarter, he held a huge stake in broadcasting and communication services companies, accounting for almost 11.50% of the overall portfolio.
Google parent Alphabet Inc (NASDAQ: GOOG), Fox Corporation (NASDAQ: FOX), Sony Group Corp (NYSE: SONY), Bank of America Corp (NYSE: BAC) and Comcast Corporation (NASDAQ: CMCSA) are among the members of Mario Gabelli’s portfolio at the end of the first quarter.
While Mario Gabelli’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as 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.
Let’s now start digging into Mario Gabelli’s 10 best bargain stocks right now. These stocks look undervalued and have a strong growth potential for the future. We used Gabelli’s Q1 holdings data for this analysis.
Best Bargain Stocks Right Now Based on Mario Gabelli’s Q1 Portfolio
10. The Bank of New York Mellon Corporation (NYSE: BK)
Value investor Mario Gabelli has been holding a position in The Bank of New York Mellon Corporation (NYSE: BK) since 2001. At the end of the first quarter, Gamco Investors held $115 million worth of stake in The Bank of New York Mellon Corporation (NYSE: BK), accounting for 0.99% of the entire portfolio. Shares of one of the oldest banking giants grew 20% since the beginning of this year. Despite that, The Bank of New York Mellon Corporation (NYSE: BK) is among the best bargain stocks right now based on low valuations and growth potential.
The Bank of New York Mellon Corporation has experienced an increase in hedge fund interest in recent months. It was in 49 hedge funds’ portfolios at the end of March. The all-time high for this statistic is 58.
Like Alphabet Inc (NASDAQ: GOOG), Fox Corporation (NASDAQ: FOX), Sony Group Corp (NYSE: SONY), Bank of America Corp (NYSE: BAC) and Comcast Corporation (NASDAQ: CMCSA), The Bank of New York Mellon Corporation (NYSE: BK) is one of the best stocks to buy based on Mario Gabelli’s Q1 portfolio.
9. Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD)
The manufacturer and seller of aerospace and defense products Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) is among the best bargain stocks right now, according to Mario Gabelli. His investment firm is a long-running stockholder of Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD). At the end of the first quarter, Aerojet shares represented 1.14% of Gamco Investors’ 13F portfolio.
Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) was in 30 hedge funds’ portfolios at the end of December compared to 36 positions in the previous quarter.
8. Mueller Industries, Inc. (NYSE: MLI)
The manufacturer and seller of copper, brass, aluminum, and plastic products Mueller Industries, Inc. (NYSE: MLI) is a member of Gamco Investors portfolio since 2010. At the end of the first quarter, the New York-based hedge fund held 3.2 million shares of Mueller Industries, Inc. (NYSE: MLI), representing 1.14% of the entire 13F portfolio. Mueller Industries, Inc. (NYSE: MLI) has rewarded significantly to its shareholders since the beginning of this year both through dividends and share price gains.
The smart money was taking a bullish view. The number of bullish hedge fund positions improved by 1 in recent months. Mueller Industries, Inc. (NYSE: MLI) was in 20 hedge funds’ portfolios at the end of March compared to 19 positions in the previous quarter.
Like Alphabet Inc (NASDAQ: GOOG), Fox Corporation (NASDAQ: FOX), Sony Group Corp (NYSE: SONY), Bank of America Corp (NYSE: BAC) and Comcast Corporation (NASDAQ: CMCSA), Mueller Industries, Inc. (NYSE: MLI) is one of the best stocks to buy based on Mario Gabelli’s Q1 portfolio.
7. Crane Co. (NYSE: CR)
The industrial machinery product maker Crane Co. (NYSE: CR) also appears like the best bargain stock right now amid economic recovery. Its shares outperformed the broader market index year to date. The dividend factor also makes it a good stock to hold for the long term. At the end of the first quarter, Gamco Investors held 1.52 million shares of Crane Co. (NYSE: CR), representing 1.23% of the entire portfolio.
Crane Co. (NYSE: CR) was in 17 hedge funds’ portfolios at the end of March compared to 24 positions in the previous quarter. The all-time high for this statistic is 29. Like Alphabet Inc (NASDAQ: GOOG), Fox Corporation (NASDAQ: FOX), Sony Group Corp (NYSE: SONY), Bank of America Corp (NYSE: BAC) and Comcast Corporation (NASDAQ: CMCSA), Crane Co. (NYSE: CR) is one of the best stocks to buy based on Mario Gabelli’s Q1 portfolio.
6. American Express Company (NYSE: AXP)
The financial services giant American Express Company (NYSE: AXP) is ranked among the best bargain stocks right now. Gamco Investors has been enjoying American Express Company (NYSE: AXP)’s steady share price appreciation and sustainable dividend growth over the last two decades. The company currently offers a dividend yield of just over 1% and its stock price rallied 40% so far this year.
American Express Company (NYSE: AXP) was in 53 hedge funds’ portfolios at the end of the first quarter of 2021 compared to 60 positions in the prior quarter.
Like Alphabet Inc (NASDAQ: GOOG), Fox Corporation (NASDAQ: FOX), Sony Group Corp (NYSE: SONY), Bank of America Corp (NYSE: BAC) and Comcast Corporation (NASDAQ: CMCSA), American Express Company (NYSE: AXP) is one of the best stocks to buy based on Mario Gabelli’s Q1 portfolio.
5. CNH Industrial N.V. (NYSE: CNHI)
Gamco Investors look bullish over the future fundamentals of CNH Industrial N.V. (NYSE: CNHI). At the end of the first quarter, the firm held 9.90 million shares of CNH, weighted around 1.33% of the overall portfolio. CNH stock price saw a whopping rally of 141% last year amid stronger than expected demand for industrial products. In the March quarter, its industrial products revenue grew 40% year over year to $7 billion, with expectation for the continuation of strong demand across regions and segments. The company anticipates 14%-18% revenue growth for 2021 compared to the last year.
In the first quarter investor letter, Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, mentioned a few stocks including CNH Industrial. Here is what Longleaf Partners Fund stated:
“CNH Industrial (CNH) (23%, 1.19%), one of the world’s largest agriculture machinery manufacturers, was another top contributor. CNH reported strong fourth-quarter results, beating the consensus on every metric. The Agricultural Equipment (Ag) business, which represents the majority of our value, posted strong top-line growth of 19% YoY thanks to rising commodity prices, growing trade with China and the replacement of aging machinery fleets. Visibility for the first half of 2021 is strong, given solid Ag order growth across most key end markets, and we expect to see operational turnarounds in CNH’s other businesses. The company is also guiding 8-12% industrial sales growth for 2021, which is better than our initial expectation. The most positive surprise for the quarter was the company’s strong cash generation. CNH generated approximately $2.4bn FCF in the fourth quarter alone, driven by working capital release leading to a strong net cash position for the industrial segment. Due to the recent stock price appreciation, the price-to-value gap has narrowed, but we continue to have a positive view given a more favorable market outlook, the company’s strong execution capability and management’s continued commitments to value accretive transactions, including the planned splitting of the business and potentially other strategic asset sales.”
4. GATX Corporation (NYSE: GATX)
Railcar leasing company GATX Corporation (NYSE: GATX) is among the best bargain stocks right now, according to Mario Gabelli. As of the end of the first quarter, his hedge fund held $163 million worth of GATX shares. GATX Corporation is also the long-running stock holding of Gamco Investors portfolio. Although GATX’s stock price underperformed this year compared to the broader market index, its shares are still up 48% in the last twelve months. Furthermore, the company offers a dividend yield of 2.28% and it sustained dividend growth in the last 16 straight years.
GATX Corporation has experienced an increase in support from the world’s most elite money managers lately. It was in 16 hedge funds’ portfolios at the end of March compared to 12 positions in the previous quarter.
3. Griffon Corporation (NYSE: GFF)
Shares of the building products provider Griffon Corporation (NYSE: GFF) surged 24% since the beginning of this year, thanks to economic reopening. Moreover, its dividend yield of 1.24% makes it a good stock to hold for the long term.
Griffon Corporation (NYSE: GFF) was in 13 hedge funds’ portfolios at the end of March compared to 18 positions in the previous quarter.
2. ViacomCBS Inc. (NASDAQ: VIACA)
The media and entertainment company ViacomCBS Inc. (NASDAQ: VIACA) is among the top stocks holding of Gamco Investors. Despite a 25% year-to-date rally, ViacomCBS appears like the best bargain stock right now amid its lower valuations. Moreover, the company offers a dividend yield of just over 2% and it raised dividends in the last two consecutive years. Its returns are fully backed by financial numbers.
Its first-quarter revenue of $7.41 billion grew 14% from the year-ago quarter. The company had added 6 million global streaming subscribers during the first quarter to reach 36 million total while the global Pluto TV MAUs surged by 6 million to nearly 50 million.
1. Herc Holdings Inc. (NYSE: HRI)
Mario Gabelli’s hedge fund’s largest stock position Herc Holdings Inc. (NYSE: HRI) outshined the broader market index this year by a wide margin. Its stock price grew 68% so far this year, thanks to robust demand for its products and services. Herc Holdings shares represented around 2.49% of Gamco Investors’ entire 13F stock portfolio, according to the first quarter 13F filings.
HRI investors should be aware of an increase in activity from the world’s largest hedge funds of late. Herc Holdings was in 17 hedge funds’ portfolios at the end of the first quarter of 2021 compared to 15 positions in the previous quarter. The all-time high for this statistic is 29.
You can also take a peek at 10 Stocks Michael Burry is Selling and 11 Best Materials Stocks for 2021.
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Disclosure: None. 10 Best Bargain Stocks Right Now is originally published on Insider Monkey.
