We recently published a list of Mario Gabelli Stock Portfolio: The 10 Best Stocks to BuyIn this article, we will look at how GATX Corporation (NYSE:GATX) compares to the other stocks recommended by Mario Gabelli.
GAMCO Investors, Inc., formerly Gabelli Asset Management Company, is a major American company based in Rye, New York. The company specializes in investment advisory and brokerage services for mutual funds, institutional clients and select investors. The company was founded and is majority owned by Mario Gabelli, who has earned over $750 million in recent years.
Veteran investor Mario Gabelli has made millions of dollars by betting on the unloved companies. He likes to invest in companies that are NOT followed or covered by Wall Street analysts. If the companies are not part of an index, that makes them even more attractive.
The hedge fund manager remains true to active value investing. His investment philosophy of focusing on value stocks rather than growth stocks prevailed even when passive index funds and Nasdaq “FAANG” dominated the market during the US Federal Reserve’s loose interest rate policy. His investment secret is simple: “Find a good company with good management, buy the stock at a reasonable price and then hold that stock for the long term.”
According to Insider Monkey’s database for Q2 2024, industrial goods account for about 21.7% of the total investment portfolio.
What lies in the future for the US stock market according to Gabelli Funds
Gabelli Funds expects the US presidential election to increase market volatility in the second half of 2024. At the same time, the highly anticipated interest rate cuts in September could spur rotation into areas of the market that have lagged throughout the year. The investment firm expects increased volatility as a result of the election. However, economic weakness and volatility are expected to be offset by underlying rotation and lower interest rates.
Gabelli seems optimistic about the U.S. economy as a whole. He believes companies have healthy cash flows and gross margins are better. The only thing that could weigh on U.S. stocks is geopolitical risk.
Gabelli recently participated in Barron’s prestigious roundtable discussion. He estimates that global GDP, as measured by the International Monetary Fund, is expected to be around $115 trillion in 2025. The US contributes 26% and China 17%. The consumer accounts for about 70% of the US economy, and industrial spending accounts for about 12%.
Mario Gabelli mentioned that the Fed is focused on the four Rs. The first is to “keep interest rates high for longer.” The second R is “the continued emptying of the central bank’s balance sheet,” which is currently $60 billion a month, compared to about $95 billion in early 2024. Next, the Fed continues to make efforts to “reduce aggregate demand.” However, higher government spending continues to offset these efforts. Finally, the chairman continues to deploy “rhetoric about reducing inflation.”
Mergers and acquisitions (M&As) and other financing structuring strategies are expected to increase significantly for numerous reasons. Gabelli believes that several private equity funds are nearing the end of their 10-year life cycle and limited partners (LPs) need liquidity. Therefore, this situation will lead to higher turnover. Mario Gabelli expects M&A to pick up globally in H2 2024.
While the S&P 500 is up over 15% year-to-date, the experienced investor believes stocks can deliver an annual growth rate of about 8% in the coming years, well above the returns from fixed income securities.
Mario Gabelli is optimistic about these sectors
Mario Gabelli seems to have an increasing interest in sports franchises. Sports will continue to be the focus of linear television and streaming. Rumor has it that media companies are shelling out large sums for broadcast and streaming rights.
In addition, the experienced hedge fund manager, like other market experts, believes that artificial intelligence is a great technology.
Gabelli’s next choice is natural gas. He believes there is huge potential for prices to increase over the next few years. This is because some producers are shutting down their wells or producing less and demand continues to rise relative to power generators and LNG exports.
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An engineer examines a high-tech boiler and a freight car, demonstrating the company’s innovations in rail vehicle construction.
GATX Corporation (NYSE:GATX)
Value of GAMCO investor stake: $183.8 million
Percentage of GAMCO Investors’ 13F portfolio: 1.99%
Number of hedge fund owners: 12
GATX Corporation (NYSE:GATX) is a provider of rail leasing and maintenance services. The company operates four business segments: North American Rail, International Rail and Portfolio Management.
The company released its results for Q2 2024. In it, it reported revenue of $386.7 million, while analysts’ estimates were $385.5 million. Its earnings per share (non-GAAP) were $1.43, compared to analysts’ expectations of $1.78.
The stock currently trades at 19.2 times forward earnings, which represents a discount to the industry average of 24.4. Higher demand for railcar leasing across numerous industries such as refining and petroleum, chemicals, plastics, and food and agriculture is expected to continue to be the key growth driver for GATX Corporation (NYSE:GATX). By capitalizing on this demand trend, the company should be able to expand its customer base and increase its market share.
GATX Corporation (NYSE:GATX) continues to deliver new rail cars under its existing supply agreement. In addition, the company acquired more than 600 rail cars on the secondary and spot markets in Q2 2024.
While the engine investment pipeline is expected to remain strong throughout the year, demand for replacement engines for rail vehicles and aircraft is expected to remain stable going forward.
Susquehanna increased their price target on shares of GATX Corporation (NYSE:GATX) from $120.00 to $122.00 and gave the stock a “buy” rating in a research note on March 24.th April. According to Insider Monkey’s Q2 2024 data, 12 hedge funds reported owning shares of GATX Corporation (NYSE:GATX).
GATX total 3rd place on our list of the best stocks to buy according to Mario Gabelli. While we recognize GATX’s potential as an investment, we believe some highly undervalued AI stocks promise higher returns and do so in a shorter time frame. If you are looking for a highly undervalued AI stock that is more promising than GATX but trades at less than 5 times its earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
