We recently published a list of Billionaire Mario Gabelli’s 10 Large-Cap Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against Billionaire Mario Gabelli’s other large-cap stock picks with huge upside potential.
Mario Gabelli needs no introduction, having risen to become one of the most successful money managers on Wall Street, backed by a research-driven equity investment style. Having founded Gamco Investors, formerly Gabelli Asset Management Company, in 1977, the investment firm has grown to over $32 billion in assets under management with a portfolio spread over 800 stocks.
Therefore, GAMCO is one of the most diversified hedge funds, offering exposure to some of the biggest and fastest-growing market segments. Over the years, Gabelli has relied on a value investment strategy that focuses on stocks trading below their fair value. In return, he looks for catalysts that could cause the stock’s value to rise substantially.
Some of the catalysts the fund manager often looks for include the sale or spinoff of a business. Mergers, industry consolidation, or regulatory changes also act as tailwinds in driving share value. The value investment strategy has been the catalyst behind GAMCO investors achieving impressive annualized returns of 16.3% since inception.
READ ALSO: Billionaire David Tepper’s 10 Stock Picks with Huge Upside Potential and Billionaire Jim Simons’ RenTech’s 10 Small-Cap Stock Picks with Huge Upside Potential.
Likewise, GAMCO Investors is well positioned to capitalize on emerging opportunities in the overall stock market, pulling back. Valuation levels have pulled back significantly in the aftermath of the stock market coming under pressure amid the US tariff-fueled trade war.
The announcement of President Donald Trump’s “Liberation Day” tariffs caused a significant upheaval in the stock and bond markets, resulting in the loss of trillions of dollars in investor wealth. While the administration temporarily suspended most reciprocal tariffs on April 9 for a period of 90 days, the looming threat of a global trade war poses risks to economic expansion. It is likely to shift capital flows in the equity markets.
Both policymakers and market players are also wary of the potential for a financial “mishap,” stemming from erratic movements in the U.S. Treasury market. Federal Reserve Chair Jerome Powell warned that current tariffs are “significantly larger than expected,” adding that “the same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
The tariffs imposed by U.S. President Donald Trump and other countries’ reactions have created uncertainty for investors’ holdings. Technology stocks have been the hardest hit amid the tariff wars after years of blockbuster gains fueled by the artificial intelligence frenzy.
Given the market downturns, an anticipated increase in consumer costs, and a heightened chance of a recession as a result of these tariffs, it is indeed challenging to envision what a victory would entail for Trump, who claimed in 2018 that “trade wars are beneficial and straightforward to win!”
On the other hand, now would be the best time to capitalize on the significant pullbacks in the equity markets. With most stocks trading at discounted valuations beyond historical averages, billionaire Mario Gabelli’s 10 large-cap stock picks with huge upside potential could offer a way out of the downturn.
Our Methodology
We combed Gamco Investors SEC Q4 2024 13F filings to identify Billionaire Mario Gabelli’s 10 Large-Cap Stock Picks with Huge Upside Potential. We then settled on stocks with more than 30% upside potential based on analysts’ ratings and analyzed why the stocks stand out, as solid value investments well poised to generate significant long-term value. The list is sorted in ascending order according to analysts’ projected upside potential.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Merck & Co., Inc. (NYSE:MRK)
Gamco Investors Equity Stake: $7.88 Million
Market Capitalization as of May 5: $208.01 Billion
Stock Upside Potential as of May 5: 39.37%
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is a science and technology company that develops and markets innovative medicines, vaccines, and diagnostics for oncology, diabetes, cardiovascular, and virology. While the stock has been under pressure over the past year, analysts at Guggenheim Securities insist it is a Buy despite cutting the price target to $108 from $115.
The analysts maintain a buy rating in the aftermath of the healthcare company delivering solid first-quarter 2025 results that exceeded Wall Street estimates. Revenue totaled $15.53 billion against $15.31 billion expected as earnings per share totaled $2.22, beating consensus estimates of $2.14. The impressive results were fueled by strong sales of the company’s flagship cancer drug, Keytruda, which helped offset the slow growth of Gardasil sales in China.
Nevertheless, Merck & Co., Inc. (NYSE:MRK) lowered its profit outlook for the year by $200 million, citing additional tariff costs. The company has built a significant presence in China that will be hit hard by the US-China trade war. Nevertheless, the company is poised to spend $1 billion on a new factory to make US supplies for its blockbuster cancer drug Keytruda. The facility is to produce an array of biological medicines and an easier-use version of Keytruda as the company seeks to reduce its dependence on China.
Overall, MRK ranks 4th on our list of Billionaire Mario Gabelli’s large-cap stock picks with huge upside potential. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
