Tags: Gabelli | stocks | increase | wealth

Gabelli: High-Quality Stocks Will Survive ‘Speed Bumps’

By    |   Friday, 02 Mar 2012 08:09 AM

The stock market may be subject to corrections, but plenty of opportunities still remain, says Mario Gabelli, chief executive of Gamco Investors.

“There are a lot of reasons why you might have speed bumps,” he tells CNBC.

“But when you look at the market, it’s a function of earnings and multiples. And multiples are a function of interest rates and psychology.”

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So how should investors approach the current economic environment?

“I subscribe to the philosophy that if you have a basket of high-quality stocks that can generate cash flow in whatever the outliers of the economy, whether inflation or deflation, that’s how you increase wealth,” Gabelli says. “It’s not a very complicated story.”

Many industries now provide opportunities, he says. “There’s plenty of ways to make money.”

Gabelli cites several companies that he likes. Vendors to Boeing and Airbus, such as Rolls Royce are among them.

He also mentions cable companies, including Cablevision, and companies that can benefit from financial engineering. That includes companies being spun off from Kraft, Fortune Brands, and Abbott Laboratories. Gabelli also touts Pepsi.

Other experts are bullish on stocks too. Laszlo Birinyi, president of Birinyi Associates, says the Standard & Poor’s 500 Index may reach a record 1,700 this year. That would represent a 24 percent gain from Thursday’s close of 1,374.

“We continue to be bullish and would encourage a more aggressive posture,” he writes in a report obtained by Bloomberg.

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