After some summer unrest, the U.S. equity market is once again hitting fresh peaks, prompting many investors to lament that there are no good values left. Forbes interviewed Mario Gabelli, the billionaire investor who has made a career out of spotting attractive opportunities the rest of Wall Street, for his best ideas:
Diebold
Gabelli says this maker of ATMs is in the early stages of a turnaround with a “terrific service team” led by CEO Andy Mattes, who is focusing on software capabilities like electronic security. “Diebold stock is at $36*,” says Gabelli, “if Mattes is successful, we expect to see an increase of 50% over the next three years.”
Chemtura
In contrast to Diebold, Gabelli calls specialty chemicals company Chemtura a late-stage turnaround, set to complete the sale of its agro-solutions business by mid-October. He expects CEO Craig Rogerson to use the nearly $1 billion in proceeds to eliminate debt ($800 million as of June 30 according to FactSet) and further shrink the company’s outstanding share count by repurchasing stock.
“A combination of improving earnings before interest, taxes, depreciation and amortization and the reduced number of shares would result in a 50% increase in the public price two years out,” Gabelli predicts.
Weatherford
This oil services company’s management-led turnaround should
emphasize its focus on fracking.
“The stock has moved up nicely, but it is still in the process of reducing debt by shedding non-core assets,” Gabelli says.
21st Century Fox
Forget all the headlines around Rupert Murdoch’s brief pursuit of Time Warner,
Gabelli thinks the media mogul’s response after being stiffed by his
target is right on point.
“This company has committed to using its financial flexibility and buying back stock,” he says, some $6 billion worth in the next 12 months instead of loading up on debt to buy Time Warner.
And, Gabelli says, Fox has plenty of earnings power of its own over the next few years “as Fox Sports complements its Fox News franchise.”
National Fuel & Gas
Another energy play rounds out Gabelli’s picks. He likes this one because management is focused on “monetizing underlying assets in the Marcellus Field along with its pipeline business, perhaps including a spinoff of the utility business.”
