"A lot of bargains” among U.S. stocks will arise for investors in the next year as consumer spending rebounds, helping the economy to do the same.
That’s what Mario Gabelli, CEO of Gamco Investors, told Bloomberg
The stock market will rise as earnings recover, he says. And the worst recession in 50 years has pushed stocks down to attractive valuations, Gabelli maintains.
“The world is simple. You just want to find the best ideas, risk adjusted,” he says.
Analysts have predicted that earnings dropped 33 percent on average last quarter. But so far, many companies are reporting better than expected numbers.
“What’s coming in is kind of lackluster, but better than expectations,” Gabelli says. “What is the stock market a function of? The outlook for earnings.”
In particular, Gabelli likes the shares of asset manager Legg Mason. He sees the stock doubling in the next two to three years.
This week the company announced its first quarterly profit since the end of 2007. That pushed the stock to a nine-month high.
“Cash flow has turned, the balance sheet’s in great shape and they have some wonderful brands,” Gabelli says.
“If you want to have health in your portfolio, you should own it.”
William O’Neil, founder of Investor’s Business Daily, also sees stocks rising further.
“On March 12, I think it (the market) turned, and that was the beginning of a new bull market,” O’Neil told Moneynews.
“Markets are always perceptive. They’re looking ahead.”
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