Global pain will mean U.S. gain at least in terms of stock market investing, according to a strongly bullish analysis from Mario Gabelli and his team.
Investors will have a number of opportunities to take part in the American rebirth seen by executives at GAMCO, formerly known as Gabelli Asset Management, which manages $30 billion for clients. Those avenues include companies that specialize in luxury goods, health care and various aspects of technology, particularly data management and entertainment distribution.
"America right now is the crown jewel in the global investment landscape," Howard Ward, CIO of growth equities for GAMCO, said during a presentation at the Schwab IMPACT conference in Denver that included Gabelli and other company executives.
"We are benefiting from lower commodity prices, we have the best demographics in the developed markets. We have a manufacturing and energy renaissance ... and our relative bond yields are very attractive, which is going to continue to favor capital flight to the United States and favor the dollar."
Among the areas Ward said are appealing is the luxury goods sector, which has underperformed the broader market in 2014.
"The weakness that we have seen in China, the weakness in Asia's economy, have contributed to weakness in luxury spending, and that has hurt these stocks," Ward said. "That is creating opportunity."
Some companies the firm is watching are "consolidators" such as LVMH and Richemont that have been buying up various companies in the sector, as well as stand-alone brands that could be susceptible to takeover such as Hermes and Ferragamo.
The domestic focus is important, he said, at a time when Russia has been ostracized from the world, Japan has launched a stimulus that is unlikely to work and result in inflation, and while American stocks remain cheap and a better alternative to other asset classes.
"The U.S. economy is really shining pretty bright right now," Ward said. "There are signs that the growth is even going to accelerate from here ... and it's going to be even higher with the plunging price of gasoline."
Chris Marangi, an associate portfolio manager for Gabelli, talked about opportunities in health-care stocks including Merck and Bristol-Myers that are developing anti-cancer drugs to fight PD-1 (programmed cell death) proteins.
He also said increased focus on health and wellness should benefit companies including Danone and Whole Foods.
In digital technology, increasing consumer demand for better entertainment delivery should benefit MSG and Time Warner, Marangi said.
Gabelli himself said the firm is using the letter "E" to help guide its analysis: "Elections, that's behind us; the euro, what happens in Europe; what happens to earnings; what happens to the evaluation of companies, and what else should we be thinking about."
Disclosure: It could not be immediately ascertained if GAMCO has positions in the companies mentioned.
