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On CNBC's "Fast Money," he also said that one of his top stock picks in the sector was Lennar.
Also high on his list was a housing recovery play, Graco.
Gabelli said that he also liked companies with exposure to fracking and commercial aviation.
(Watch Video: Mario Gabelli's Favorite Bank Stocks)
"If you spent time going out looking at stocks where nobody'scovering them, you're going to find bargains. You turn over stones, and that'swhat we do every day," he said. "And I think the small-cap stocks are also agreat place for companies to buy."
Trader disclosure: On July 9, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Simon Baker is long GS; Simon Baker is long BBRY; Simon Baker is long AMZN; Simon Baker is long GRPN; Simon Baker is long MTB; Simon Baker is long BKS; Simon Baker is long TSLA; Simon Baker is long MSG; Simon Baker is long DISH; Josh Brown is long AAPL; Josh Brown is long JPM; Steve Weiss is long BAC; Steve Weiss is long C; Steve Weiss is long M; Steve Weiss is long SODA; Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long CRUDE OIL FUTURES.