As a member of the Barron's Roundtable, Mario Gabelli, Chairman of GAMCO Investors, is a highly regarded stock picker. This year Gabelli's stock picks were laid out in the third installment of the Barron's 2011 Roundtable. In this article, I review the performance of those stocks since Gabelli's picks were published on January 29th. I have included a summary of Gabelli's recommendation for each stock with exact quotes in quotation.
In order to review the performance, I chose the price for each stock on Friday, January 28, 2011.
Genuine Parts (GPC)
What Gabelli said: This year GPC could earn $3.45 to $3.90 per share. Earnings could continue to grow at 10% for the next five years. The stock yields 3.5%. Sales of autos in the U.S. will rise by about a million units in 2011, but production will rise by only 700,000.
|1-28-11 Closing Price||$51.43|
|Percent Gain (Loss)||2.50%|
National Fuel Gas (NFG)
What Gabelli said: NFG owns a local gas utility in Buffalo, NY, worth $19 a share. It owns a pipeline business in the Marcellus Shale and has some production in the Gulf of Mexico and California. Combined with the utility, that is worth $40 a share. NFG owns most of the land it is drilling on, worth $7,000 - $8,000 per acre, or approximately $8 billion.
|Percent Gain (Loss)||4.30%|
Fortune Brands (FO)
What Gabelli said: Fortune Brands has a $9.6 equity value and $3.6 billion in debt for an enterprise value of $13 billion. FO "should earn $2.80 per share in 2010, and absent a break-up, earnings would march straight to $6 in 2014." "Debt would come down at an accelerating rate." Gabelli estimated that absent the break-up, FO would be worth $110 per share.
|Percent Gain (Loss)||-2.40%|
Sara Lee (SLE)
What Gabelli said: Coffee is a $58 billion business. Sara Lee is looking to split itself up (announced after stock pick). "We are looking at who will buy the coffee business."
|Percent Gain (Loss)||1.50%|
Madison Square Garden (MSG)
What Gabelli said: The value of MSG is in the cable networks. They receive $2 per month per subscriber and have 16 million subscribers. Gabelli says you are getting all of the other businesses (NY Knicks, NY Rangers, etc.) for free.
|Percent Gain (Loss)||8.50%|
Energizer Holdings (ENR)
What Gabelli said: ENR hasn't done much in the last two years (stock price movement). Earnings at the end of the fiscal year will be about $6.15 per share on revenue of $4.5 billion. Earnings could be $10 per share by 2015. "They will be virtually debt free by 2015" Gabelli said.
|Percent Gain (Loss)||-7.70%|
Thomas & Betts Corporation (TNB)
What Gabelli said: TNB sells for about 6.5 times EBITDA. It currently earns about $2.70 per share but will earn $6 per share by 2014.
|Percent Gain (Loss)||22.30%|
What Gabelli said: "Crane makes aircraft components. There will be 33,000 commercial aircraft flying in the next 20 years. Some 14,000 planes will be taken out of the market, allowing for 30,000 to be built."
|Percent Gain (Loss)||10.50%|
Millicom International Cellular SA (MICC)
What Gabelli said: MICC is a takeout play. They have 35 million customers in Africa and South America.
|Percent Gain (Loss)||0.00%|
US Cellular (USM)
What Gabelli said "[USM] is another favorite. It is based in Chicago and serves six million customers."
|Percent Gain (Loss)||3.60%|
Brinks Company (BCO)
This is Gabelli's gold recommendation (play on gold transportation). What Gabelli said: "About 7% more currency has been put into circulation in the past five years". BCO will generate about $3.6 billion in 2011, and $1.65 per share in earnings. Earnings could grow at a 17% annual rate.
|Percent Gain (Loss)||20.40%|
On January 28, 2011 the S&P 500 index closed at 1276. Today the index is at 1319. This represents a gain of 3.3% for the index since Gabelli's picks were published. Gabelli's picks have an average gain of approximately 5.8%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.