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Last weekend, Mario Gabelli was prominently featured in Barron’s mid-year roundtable.
Gabelli is considered one of the world’s great stock pickers. Gabelli stock picks have delivered annualized returns of 16.3% dating back to 1977. And his accolades include being named domestic equity fund manager of the year by Morningstar.
Discover more about Gabelli stock picks and his secret investment for earning extra income and beating the market (click here for details).
In January, Gabelli shared National Beverage (NASDAQ: FIZZ) as a top recommendation.
National Beverage makes sparkling flavored water drinks under the LaCroix brand. One key benefit is that these drinks are sugar-free, making them more appealing for health-conscious consumers trying to cut down on sugar.
Since his initial recommendation, National Beverage shares have jumped 93%. Gabelli’s Gamco Investors still owns a stake worth $28 million. But in his comments to Barron’s, it’s clear that he doesn’t see considerable upside from here.
“National Beverage has now become a darling of those who recognize that there is strong and growing demand for sparkling water. La Croix is one of the brands that bigger companies have to look at. If a momentum-oriented investor wants to buy the shares, knowing that this is a hot market segment that will attract competition, that’s okay.”
Most folks, including me, missed out on National Beverage. I recall reading Gabelli’s analysis of the company back in January, but never took the time to do my own research into the stock.
Latest Among Gabelli Stock Picks
So, what’s an alternative investment in the sector? Today, Gabelli is bullish on a company called Cott (NYSE: COTT). The Canadian company, valued at $2 billion, is a private-label maker of sparking water products.
Here’s what Gabelli told Barron’s:
“Cott has made a bunch of acquisitions and has $2.15 billion of net debt. It has a growing private-label business in sparkling water. In recent years, it also entered the home- and office-delivery market for water and coffee in the U.S., U.K., and Europe.
Cott will generate about $450 million of EBITDA [earnings before interest, taxes, depreciation, and amortization] this year and $550 million by 2021. U.K. currency-translation problems have caused a bit of an air pocket in the results, as the pound has fallen to 1.29 to the dollar from 1.60 last year. In the next few years, the stock will overcome that. We have a price target of $21.”
Gabelli is a value investor who focuses on smaller, overlooked and under-loved companies.
His funds have bought up 1.3% of Cott’s shares outstanding, worth $21 million. According the 13F filings with the S.E.C., he’s recently been buying the stock.
Cott had $3.2 billion in sales in 2016. And based upon Gabelli’s estimates, shares trade at around 4.5 times this year’s EBITDA.
With Gabelli’s share price target of $21, Cott shares could jump 48% from the current price.
Cott is just one of the companies that Gabelli praised during the Barron’s Roundtable.
Gabelli’s Personal Stake
However, he failed to mention his large personal stake in this investment. In fact, Gabelli has already invested $27.3 million.
Few investors talk about these unusual investments. In fact, none of the nine Barron’s Roundtable members ̶ including DoubleLine’s Jeff Gundlach, T. Rowe Price’s Brian Rogers or Goldman Sachs’ Abby Joseph Cohen ̶ even mentioned this investment.
Honestly, I think that’s a huge mistake. And tomorrow at 12 p.m. Eastern / 9 a.m. Pacific, I’d like to explain everything.
This live training event will explain exactly WHY great investors ̶ including Mario Gabelli, Jeff Gundlach, Carl Icahn, and Bill Ackman ̶ are personally investing here (even if they don’t share these investments with Barron’s or on CNBC).
It’s 100% free to attend. Go here ASAP to confirm your spot.