In this article, we discuss the 10 value stocks to buy today according to Mario Gabelli.
Billionaire investor Mario Gabelli is known for founding and running GAMCO Investors as Chairman and CEO since 1977. Born to an Italian immigrant family in 1942, he began dabbling in stock investments at the early age of 13. He was a first-generation college student who graduated from the Fordham College of Business Administration in 1965, and later went on to get an MBA from Columbia University Graduate School of Business, and honorary doctorates from Fordham University and Roger Williams University. After graduation, Gabelli accepted a position at Loeb, Rhoades & Co. as a security analyst responsible for coverage of farm equipment, auto parts conglomerates and later media and broadcasting. According to Forbes, the billionaire investor is worth $1.8 billion as of 2022.
When asked about the qualities of a great investor, Mario Gabelli answered:
There is no substitute for experience in investing. Plus, while patience is key, one needs to be aggressive when the time is right in order to swing it big.
A leading proponent of the Graham-Dodd school of security analysis, Gabelli pioneered the application of Graham and Dodd’s principles to the analysis of domestic, cash generating, franchise companies in a large variety of industries. Gabelli’s proprietary Private Market Value methodology is now considered an analytical standard among the value investing community.
GAMCO Investors’ investment strategy focuses on bottom-up, structural investing. The firm’s offerings include client-directed custom separate accounts, SMAs, open-end mutual funds, closed-end funds, and UCITS funds. The hedge fund bases its stock picks based on decades of market analysis and corporate research, with a specific focus on undervalued firms that pay handsome dividends. Some of the top stocks in the portfolio of GAMCO Investors at the end of Q1 2022 included The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC).
Our Methodology
For this list, we have picked value stocks with a price to earnings ratio of less than 20 from the Q1 2022 portfolio of GAMCO Investors. We have also analyzed business fundamentals, analyst ratings, and growth prospects for each stock. Insider Monkey tracked more than 900 elite funds to determine how popular these stocks were among the hedge funds as of Q1 2022.
Value Stocks To Buy Today According To Mario Gabelli
10. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 61
P/E Ratio as of June 14: 9.54
Morgan Stanley (NYSE:MS) is an American multinational investment management and financial services company that makes money primarily from three main units: institutional securities, wealth management, and investment management. According to the 13F filings for the first quarter of 2022, Marco Gabelli’s GAMCO Investors owned 266,082 shares of Morgan Stanley (NYSE:MS), worth $23.25 million.
Earlier this May, Oppenheimer analyst Chris Kotowski upgraded Morgan Stanley (NYSE:MS) to Outperform from Perform with a $111 price target. According to the analyst, loan growth and rising interest rates are good for the banks, and even if the economy were to enter recession, the banking industry “would handle it better than any recession in history.” He adds that investors should take advantage of the recent share weakness.
Boykin Curry’s Eagle Capital Management held the largest stake in Morgan Stanley (NYSE:MS) in Q1 2022, with 14.12 million shares worth $1.2 billion. Overall, 61 hedge funds were bullish on the stock at the end of March 2022.
Similar to The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS) is a stock with attractive valuations.
Here is what Artisan Value Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2021 investor letter:
“Morgan Stanley, a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe the company will prove its resiliency and value over the long term.”
9. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 72
P/E Ratio as of June 14: 15.05
CVS Health Corporation (NYSE:CVS) is an American healthcare company that operates a network of retail pharmacies and clinics across the United States. The brands that operate under the company include CVS Pharmacy, CVS Caremark, MinuteClinic, and Omnicare. Mario Gabelli initially invested in the stock in 2012, and based on Q1 2022 data, currently holds 248,321 shares of the company worth approximately $25.13 million.
Tigress Financial analyst Ivan Feinseth in April reiterated a ‘Buy’ rating on CVS Health Corporation (NYSE:CVS) shares, and increased the price target to $125 from $122. According to the analyst’s assessments, the company’s primary care focus strategy combined with an “extensive” retail store and service network will continue to drive long-term shareholder value creation.
Of the 912 elite hedge funds tracked by Insider Monkey, 72 reported holding shares of CVS Health Corporation (NYSE:CVS), with combined positions worth $1.56 billion. This is in comparison to 71 hedge funds a quarter earlier. Harris Associates was the biggest shareholder of CVS Health Corporation (NYSE:CVS) at the end of the first quarter, with a stake worth $421 million.
Here is what ClearBridge Investments had to say about CVS Health Corporation (NYSE:CVS) in its Q4 2021 investor letter:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of CVS Health, which is well-positioned to help define the future of health care in terms of costs, quality and convenience.”
8. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 37
P/E Ratio as of June 14: 17.73
General Mills, Inc. (NYSE:GIS) is an American multinational manufacturer and marketer of branded consumer foods sold through retail stores. Founded in Minneapolis, the company originally gained fame for being a large flour miller. Securities filings for Q1 2022 reveal that Mario Gabelli’s hedge fund holds 584,699 shares of the company, worth about $39.59 million.
Earlier this June, General Mills, Inc. (NYSE:GIS) and Ecosystem Services Market Consortium announced a multi-year roadmap to scale Eco-Harvest, ESMC’s market program that recognizes and rewards farmers for beneficial environmental outcomes from regenerative agriculture. The company’s initial $3 million investment includes an ESMC grant to support the launch and development of Eco-Harvest alongside funds to scale regional programs.
On May 26, Deutsche Bank analyst Steve Powers raised the price target on General Mills, Inc. (NYSE:GIS) to $75 from $73 and kept a Buy rating on the shares after the company announced the sale of two of its side dishes businesses to Eagle Family Foods Group for $610 million. Although the divestiture is dilutive to near-term earnings, Powers believes that the transaction should modestly enhance the company’s long-term growth profile.
Insider Monkey spotted 37 hedge funds bullish on General Mills, Inc. (NYSE:GIS) having stakes worth $819.57 million in the company at the close of Q1 2022. This is compared to 36 positions in the previous quarter with stakes worth $781.36 million. Jim Simons’ Renaissance Technologies is the most prominent shareholder in the company.
Miller Howard Investments mentioned General Mills, Inc. (NYSE:GIS) in its third-quarter 2021 investor letter. Here is what the firm had to say:
“Other stocks providing balance against our cyclicals include General Mills (GIS). They pay good dividends supported by stable business models and have a conservative amount of debt. The dividend yield on our Income-Equity Strategy is now 3.6%. The No-MLP version yield is 3.5%. Both yields are roughly 2.5 times the yield on the S&P 500 Index, and we are seeing dividend increases across our portfolios. Our income advantage over the broad market is significant, yet we also believe that we have enough cyclical tilt to perform well in a recovery. We continue to monitor a variety of risks, with inflation and COVID-19 trends being most important.”
7. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
P/E Ratio as of June 14: 8.97
The Bank of America Corporation (NYSE:BAC) is an American multinational investment bank and financial services holding company. The bank primarily provides services in commercial banking and wealth management and is serving roughly 67 million consumer and small business clients. During Q1 2022, Bank of America Corporation (NYSE:BAC) accounted for 0.44% of GAMCO Investors’ portfolio.
Oppenheimer analyst Chris Kotowski lowered the price target on Bank of America Corporation (NYSE:BAC) to $50 from $52 and maintained an Outperform rating on the shares on May 3. Based on the analyst’s remarks, due to roughly triple the risk-adjusted capital ratios that existed before the Great Financial Crisis and “extraordinary de-risking” of the loan portfolio, banks under should remain “solidly profitable with their dividends intact.”
For the quarter ending March, Bank of America Corporation (NYSE:BAC) reported earnings per share of $0.80, beating estimates by $0.06. The company’s revenue of $23.23 billion for the quarter was also above consensus estimates by $135.8 million.
As of the first quarter of 2022, 99 hedge funds are bullish on the Bank of America Corporation (NYSE:BAC) with Berkshire Hathaway, managed by Warren Buffett, being the leading owner of equity in the company with shares worth $41.6 billion.
Miller Value Partners, an investment firm, mentioned Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here is what the fund said:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
6. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 48
P/E Ratio as of June 14: 5.07
DISH Network Corporation (NASDAQ:DISH) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network. It operates through its two segments: pay-TV and wireless. According to the Q1 13F Filings, GAMCO Investors reported holding 1.57 million shares, valued at approximately $49.88 million. With a P/E ratio of 5.07, it is one of the most undervalued stocks in Mario Gabelli’s portfolio.
Truist analyst Greg Miller upgraded DISH Network Corporation (NASDAQ:DISH) to Buy from Hold with a price target of $60, up from $25. The analyst states that the stock is beginning to rebound after its Investor Day presentation as investors digest the lack of detail associated with the likely $20 billion build plan. He adds that he is again reconsidering the investment prospects for the stock trading near 20-year lows, and is positive on its spectrum holdings and potential enterprise partnerships.
According to Insider Monkey’s Q1 data, 48 hedge funds were bullish on DISH Network Corporation (NYSE:DISH), down from 54 funds in the last quarter. Boykin Curry’s Eagle Capital Management was the company’s biggest shareholder for the quarter, with over 17.2 million shares worth roughly $546.12 million.
Much like The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC), DISH Network Corporation (NYSE:DISH) is on the radar of elite investors.
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
P/E Ratio as of June 14: 8.46
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational investment bank and financial services holding company headquartered in New York City. Not only is it the largest bank in the United States, it also boasts a position as the world’s largest bank by market capitalization, with a $335 billion value. Mario Gabelli reported owning 407,073 shares of JPMorgan Chase & Co. (NYSE:JPM) in Q1 2022, worth $55.49 million.
On May 24, Societe Generale analyst Andrew Lim upgraded JPMorgan Chase & Co. (NYSE:JPM) to Buy from Hold with a price target of $150, up from $145. According to Lim, the company at its investor day delivered positive guidance on net interest income, credit quality and investment bank trading revenues, hence painting a more optimistic image of JPMorgan Chase & Co. (NYSE:JPM)’s excess capital generation from 2023.
Hedge fund sentiment around JPMorgan Chase & Co. (NYSE:JPM) was positive at the end of the first quarter, where a total of 110 hedge funds owned positions in the banking firm, in contrast to 107 hedge funds in the previous quarter. Billionaire Ken Fisher’s Fisher Asset Management was the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM) in the first quarter of 2022, with a position consisting of 7.76 million shares valued at $1.05 billion.
ClearBridge Investments mentioned a few stocks in its Q4 2021 investor letter, and JPMorgan Chase & Co. (NYSE:JPM) was one of them. Here is what the fund said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 93
P/E Ratio as of June 14: 7.78
Wells Fargo & Company (NYSE:WFC) is an American multinational financial services company with corporate headquarters in, California; operational headquarters in Manhattan; and managerial offices throughout the United States and internationally. The company provides a wide variety of services ranging from consumer, corporate, and investment banking with an asset base of over $1.9 trillion. Mario Gabelli’s fund owns a $68 million stake in Wells Fargo as of the end of Q1.
Earlier this April, Barclays analyst Jason Goldberg raised his price target on Wells Fargo & Company (NYSE:WFC) to $64 from $62 and maintained an Overweight rating on the shares post the Q1 results. Based on the analyst’s notes, the company upped its 2022 net interest income and loan growth outlook and kept its expense forecast unchanged despite Q1 coming in higher than expected.
In its Q1 2022 earnings, Wells Fargo & Company (NYSE:WFC) posted a GAAP EPS of $0.88, which beat analysts’ estimates by $0.07. However, the company’s revenue of $17.5 billion fell short of market expectations and missed the estimates by $230 million.
According to Insider Monkey’s database, 93 hedge funds reported owning stakes in Wells Fargo & Company (NYSE:WFC) in Q1 2022, down from 94 hedge funds holding stakes in the company in the previous quarter. These 93 hedge funds hold a collective stake worth roughly $7 billion in the company.
3. Paramount Global (NASDAQ:PARA)
Number of Hedge Fund Holders: 40
P/E Ratio as of June 14: 4.17
Paramount Global (NASDAQ:PARA) is an American multinational mass media and entertainment conglomerate owned and operated by National Amusements. Citi analyst Jason Bazinet lowered his price target on Paramount Global (NASDAQ:PARA) to $44 from $47 and kept a Buy rating on the shares following the company’s Q1 results this May. The analyst continues to value Paramount Global (NASDAQ:PARA) on a sum-of-the-parts basis.
On May 3, Paramount Global (NASDAQ:PARA) released its earnings report for the fiscal first quarter of 2022, with earnings per share of $0.60 surpassing market estimates by $0.08. On the other hand, revenue for the quarter fell short of estimates by $57.96 million.
Out of the 912 elite hedge funds tracked by Insider Monkey in the first quarter of 2022, 40 were long Paramount Global (NASDAQ:PARA) with stakes worth $3.41 billion. This is compared to 64 funds in the preceding quarter, with stakes amounting to over $1 billion. Michael Weinstock’s Monarch Alternative Capital is one of the leading stakeholders in Paramount Global (NASDAQ:PARA), with over 12.2 million stakes worth approximately $133 million.
2. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 66
P/E Ratio as of June 14: 17.04
Deere & Company (NYSE:DE), operating under the brand name John Deere, is an American corporation that manufactures agricultural machinery, heavy equipment, forestry machinery, diesel engines, drivetrains used in heavy equipment, and lawn care equipment. At the end of Q1 2022, GAMCO Investors held shares worth over $93 million in Deere & Company (NYSE:DE), which represented 0.83% of its 13F portfolio.
Cowen analyst Matt Elkott initiated coverage of Deere & Company (NYSE:DE) with a Market Perform rating and $396 price target on June 9. The analyst believes the company’s precision agriculture exposure to be a “game-changing secular story,” and sees an incremental recurring revenue opportunity for the company from new precision technologies used in U.S. corn.
In its fiscal Q2 2022 report, Deere & Company (NYSE:DE) posted a GAAP EPS of $6.81, beating analysts’ expectations by $0.12. The company’s revenue for the quarter stood at $13.3 billion, showcasing an 11% year-over-year growth.
As per Insider Monkey’s data for Q1 2022, 66 hedge funds held shares in Deere & Company (NYSE:DE), up from 61 in the previous quarter. These stakes hold a collective value of over $2.12 billion. Of these, Jean-Marie Eveillard’s First Eagle Investment Management is a leading shareholder in the company, with stakes valued at $409 million.
ClearBridge Investments mentioned Deere & Company (NYSE:DE) in its Q1 2022 investor letter. Here is what the firm has to say:
“Industrials holding Deere (NYSE:DE) was also a strong contributor to performance during the quarter. Through its unmatched 5,000 dealer network across 160 countries, Deere is a major global player in agricultural, construction and forestry equipment, with a particularly dominant position in U.S. agriculture. Deere’s moat around its core equipment capabilities, coupled with years of substantial investments in technology and innovation, further extends its competitive advantage into precision agriculture, which allows for higher farm yields with lower use of fertilizers, pesticides and water, thereby improving farmers’ bottom lines while reducing their environmental footprint. In addition to drought conditions in Latin America, the war between Russia and Ukraine, two major exporters of corn and wheat, is further disrupting the global agricultural commodities market and pushing prices even higher. This should mean higher farmer revenues and greater demand for Deere’s equipment, which is further supported by some of the lowest levels of inventory of new and used equipment on record.”
1. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 69
P/E Ratio as of June 14: 14.49
American Express Company (NYSE:SXP) is an American multinational corporation that specializes in global credit card payment solutions and services. As of Q1 2022, Mario Gabelli’s GAMCO Investors owns 870,490 shares of the company which amounts to a stake of $162.78 million. It ranks among the top 5 holdings in the fund’s portfolio, and is one of the best value stocks to buy according to the billionaire investor.
On June 6, Edward Jones analyst Kyle Sanders upgraded American Express Company (NYSE:AXP) to Buy from Hold. The analyst says the company’s “loyal base” of affluent customers will be less affected by inflationary pressures, making American Express Company (NYSE:AXP) better positioned to sustain strong spending trends relative to its credit card peers. Further, the company’s recent initiatives to attract younger customers and strengthen its product offerings have led to “robust” new account growth.
Earlier this April, American Express Company (NYSE:AXP) announced a collaboration with Billtrust to enable suppliers to streamline acceptance of American Express virtual cards. With this integration, suppliers will have the ability to automate and accelerate virtual card payments from customers while receiving a real-time view of their outstanding invoices and current cash flow.
A notable stock among investors, 69 hedge funds reported holding stakes in American Express Company (NYSE:AXP) worth $33.18 billion as of the first quarter of 2022. This is compared to 64 hedge funds in Q4 2021 with stakes worth $28.97 billion. Warren Buffett’s Berkshire Hathaway is the leading shareholder in the company, with aggregate stakes valued at $28.35 billion.
You can also take a look at 10 Blue Chip Stocks in Warren Buffett’s Portfolio and Billionaire Ken Fisher’s Top 10 High Dividend Stock Picks.
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Disclosure: None. 10 Value Stocks To Buy Today According To Mario Gabelli is originally published on Insider Monkey.
