Barron's Roundtable 2022: 27 Picks

Mario Gabelli picks:


GABELLI: "We like Genuine Parts [GPC] and Dana [DAN]. Both companies have 144 million shares outstanding. I wouldn’t have mentioned Dana, although the CEO has done a good job, and free cash flow is going to surge. They’re going to earn $3.50 to $4 a share in free cash flow over the next two years, compared with supply- chain-affected cash flow of $90 million or so in 2021. But Carl Icahn knocked on Dana’s door about a year ago and got two seats on the board in an agreement last week [Jan. 7]. His ownership stake is limited to 20%. Icahn has complemented the work accomplished thus far by CEO Jim Kamsickas, as Dana utilizes the cash flow from its core driveline business to position the company for the next-generation vehicle electrification technologies.

The company benefits from inflation. If there are 270 million cars on the road and the average age is just under 13 years, they will need repairs. The price of auto parts has been relatively flat for the past 10 to 15 years. Genuine sells $13 billion a year of auto parts. If its price for the auto parts it sells goes up 3% or 4% and mix and gross margins are relatively constant, it will have higher revenue to cover more controllable selling, general, and administrative expenses. The same is true for AutoZone [AZO] and O’Reilly Automotive [ORLY]. The difference is that Genuine uses LIFO [last in, first out] accounting for its U.S. auto-parts business. The use of LIFO defers payment of taxes on profits bolstered by inflation, as the low cost attached to inventory is kept on the books.

Earlier this month, Genuine bought Kaman Distribution Group, which sells industrial and automation parts. This business should help add automation to its operations. We think Genuine Parts could earn $7.50 a share this year, compared with $6.70 in 2021, and over $8 in 2023. The stock is at $138."

Henry Ellenbogen Picks:


David Giroux Picks:


Abbey Cohen Picks:



This was Barron’s Roundtable Part 2. I will try and run down an archived version of Part I. If I find it, I’ll add here to build out this thread.