Gabelli, Gross on Where to Look in 2012

Top value investor Mario Gabelli is high on stocks in the automobile, cloud computing, and snack food industries in 2012.

Speaking as part of Barron’s 2012 Roundtable, Gabelli says big growth in auto sales in China, as well as an aging fleet of existing vehicles and the need for different types of trucks due to the widening of the Panama Canal, bode well for a number of auto stocks. Among the picks he likes are Genuine Parts, a replacement auto parts maker, and Navistar International, which sells trucks and buses.

In the cloud computer arena, Gabelli likes firms that “provide co-location services, allowing you to place your computer in their facility.” Among his picks: Internap Network Services and Cincinnati Bell. He’s also interested in the snack food industry, where he sees several potential spinoff possibilities and acquisition targets. Snyder’s-Lance is one firm he thinks could benefit from being acquired.

Gabelli also likes “financial engineering” plays, including spinoffs like Fortune Brands Home & Security (as well as its former parent, Beam).

This portion of the Roundtable also includes 2012 forecasts from several other prominent investors, including PIMCO bond guru Bill Gross. “A titanic struggle is occurring between delevering and reflating on the part of the central banks,” Gross says. “Reflation has been successful, but in some ways the Fed has gone too far. The central bank’s role is to promote liquidity and preserve credit extension throughout the economy, but they have allowed too much risky credit to be created in the process.”

Gross says that “if the economy is threatened by delevering, which could lead to inflation or deflation, we are going to experience financial repression for the next five to 15 years. It is a necessary condition.” His tips to avoid that repression: Invest in certain closed-end funds that can borrow money at 0.25% rates, and lend it out safely at 4%, 5%, or 6%. He also likes some high-yielding utility stocks and some state bonds that are on the safer side.