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3 Potential Takeover Targets: Gabelli

Three companies look increasingly attractive for takeover bids, Gabelli Funds CEO and Chairman Mario Gabelli said Tuesday.

On CNBC's "Fast Money," he argued that Navistar, Hillshire Brands and Post hold significant value that isn't being reflected in their stock prices.

Gabelli expanded on his view of Navistar, which counts activist investor Carl Icahn as a board member.

"Navistar is simple. It tracks its demand from Class A trucks, ties itself to GDP and they go through cycles," he said. "They made a mistake, and we did not figure out that they did not have a backup plan early enough."

Gabelli alluded to a Navistar engine that didn't work under U.S. Environmental Protection Agency regulations.

A "wildcard" was Fiat's Sergio Marchionne plans for its subsidiaries.

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"I think at some point once they figure out what to do with Chrysler that they may want to consolidate that, and if they don't, Navistar will still come in with $15 billion in revenues in a couple of years and $1 billion of EBITDA, and I think the stock with a market cap of $2½ billion is worth putting a few bets down," he said. "Now, short-term you've got some potholes."

Next on Gabelli's list of potential takeover targets to buy was Hilshire Brands.

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"This company sells at $32," he said. "I think you have a $45, $50 stock."

Gabelli said that the company could also see a turnaround within three to five years.

Lastly, he noted that Post Holdings had been around for a while.

"Cereal was around in 1890, so I don't have to guess about whether the next Netflix will be here," he said.

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"I also like to buy an individual that is a gifted CEO," Gabelli added, praising Bill Stiritz for his leadership at Ralston.

"I bet you he's going to put together a very interesting company over the next three or four years," he said, noting that Post had a market capitalization $1.47 billion, or small cap. "That's where you want to forage."

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.

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