Gabelli: Stocks that will double in 5 years
Discussing a few stock names investors can count on for the long-term to go higher, with Mario Gabelli of Gamco Investors.
financial engineering, subset of that, andrew, is a shrink. time warner, down 50%, secondly, newscorp dropping stock, viacom shrinking substantially. recovery, each of these stocks because of the rising middle class around the world and the notion of having that mobility in their hand and want content, you’ll see the stocks double. hold on, time warner. i like all four of them. newscorp, viacom and discovery. they’ll all crumble. okay. in five years — cbs? i like what he’s doing but for a different reason. in the broadcasting area, like consolidation, media general which has already tripled this year will again double in the next three or four years. media general’s going to double. hold on, now we’ve got five. oh, i give you more. these are all going to double. time warner, newscorp. total return of 14% gives you a double in five years. so combination of dividends and cash flow and the stock prices in part driven b the use of cash flow to buy back stock. another one, when a management change, you talked about ohio. i’ll give you one from akron and canton, ohio. a management change. this is no long you are your grandmother’s security company. things you wanth regard to cost reduction and a management change. has 63 million shares sells at 33. and essentially if they pull it off five years from now with the earnings we look at you can see a stock and total return of a double. in this market — where the market may not do anything for 33 years, there’s a lot of significant companies. i think genuine parts will give you a 14% for five years. you’re marking to market daily, you’re not going to feel comfortable during time periods like this. let me ask you a couple of questions. i want to go back to time warner and newscorp. do you need to break. some people have talked about whether you want to split up hbo, put that aside. do you have to do a lot more at each of these places? the model that they’re following is simple. can we — given our revenue base of subscription revenue, grow ebitda and take the incremental ebitda and take the leverage that we go and buy back stock? and it’s not complicated.
There will be a surprise in 2014: Gabelli
Looking ahead to how a new Fed Chair, the rising middle class in China and India and other economic stories may impact 2014’s market, with Mario Gabelli, Gamco Investors.
there will be a surprise. what is the surprise in 2014? will it be saying i can’t trust somebody else negotiating my country security? will it be some other political dynamic? will it be terrorism? there’s no margin of safety necessarily in the broad market but stock specific — but is the fed doing something that covers up a lot of problems with companies at this point? carl icahn said this week or last week when he looks around, this is the liquidity driven market and all of that is covering up for poor management. well, you know, there are 90% of the companies in the united states, the ceo comes to work every day trying to figure out how to increase the intrinsic value. driving profits and helping the stock price. yeah, there’s always 5% or 10% of those that are just laid back. and we have several of those. in fact, management changes. management changes are an important part of a catalyst to drive values. for example, federal mogul, he changed management. those are important elements. notwithstanding that on a global basis, there’s some really easy ways to look at business. the rising middle class of china and india. enormous, high propensity to travel as they increase the gdp. and real disposable income. so there’s a great runway for commercial aviation, which we’ve talked about when i was on last time. and we just finished a conference where airbus presenting and boeing is coming out of dubai and looking at their ship set deliveries. do you like both airbus and boeing? or is there one you pick over the other? well, i like the vendors of both of those. i have no problem with them. we talk about the big puppies, the airplanes, dream liner and a350 and so on. but really the 737 and the a320, you have a great ramp-up in production and the whole vendors are going to do well and you’re going to now — who are some of those vendors? well, the companies, kman, companies that supply parts, there’s an array of them that can do well. part of them are also tied to military and sequestration, round two could have a hiccup. at the same time, the japanese are likely to kind of — going to start spending more on military expenditures, more money spent on in the middle east. you’ll have a navy, the saudis are looking at something to do