Mario Gabelli’s Three Real Time Buys
L.S. Starrett Company (SCX)
Last week Gabelli increased his holdings in L.S. Starrett Company where he upped his stake 31.9%. The guru purchased a total of 81,142 shares at an average price of $11.13 per share. Since then the price per share has increased about 1%.
Gabelli now holds on to 335,500 shares of L.S. Starrett, representing 4.93% of the company’s shares outstanding. Gabelli is now the second largest guru shareholder to Chuck Royce.
Gabelli’s historical holding history:
L.S. Starrett is engaged in the business of manufacturing over 5,000 different products for industrial, professional and consumer markets. The company's products include precision tools, electronic gages, gage blocks, optical and vision measuring equipment, custom engineered granite solutions, tape measures, levels, chalk products, etc.
L.S. Starrett’s historical revenue and net income:
The analysis on L.S. Starrett reports that the company has issued $22.51 million of debt over the past three years, its revenue has been in decline over the past year and its price is at a 1-year high.
The company upped their dividend in June, bringing the company’s dividend yield up to 3.50%.
L.S. Starrett has a market cap of $77.7 million. Its shares are currently trading at around $11.25 with a P/S ratio of 0.30 and a P/B ratio of 0.60. The company had an annual average earnings growth of 32.30% over the past five years.
Strattec Security (STRT)
Last week Mario Gabelli increased his position in Strattec Security. The guru increased his position 4.82% by adding a total of 13,136 shares to his holdings. He bought these shares at an average price of $43.15, and since then the price per share has increased approximately 5%.
Gabelli now holds on to 285,647 shares, representing 8.58%of the company’s shares outstanding.
Gabelli’s historical holding history:
Strattec Security Corporation designs, develops, manufactures and markets mechanical locks, electro-mechanical locks, latches and related security/access control products for major North American and global automotive manufacturers.
Strattec Security’s historical revenue and net income:
The analysis on Strattec reports that the revenue has slowed over the past year, their interest coverage is comfortable and their price is nearing a 5-year high. Also over the past three years, Strattec has issued $2.25 million of debt.
The company recently released its first quarter fiscal 2014 results which reported:
· Net sales of $79.6 million, up from $70.8 million last year.
· Net income was $3.211 million, compared to $2.67 million in the prior year.
· Diluted EPS of $0.91, up from $0.78.
· Gross profit margin was 18.2%, compared to 19.4% last year.
Strattec Security designs locking systems for Chrysler Group, General Motors, Ford Motor, Tier 1, OEM customers and Hyundai/Kia.
Strattec also recently declared a dividend of $0.11 per share. This dividend is payable on Dec. 27 to shareholders of the record as of Dec. 13, 2013. This dividend represents a 10% increase from its previous quarterly distribution.
The Peter Lynch Chart suggests that the company is slightly overvalued:
Strattec Security Corp has a market cap of $150.3 million. Its shares are currently trading at around $43.50 with a P/E ratio of 15.80 and a P/S ratio of 0.50.
Edgen Group (EDG)
Gabelli made his first buy into Egden last week, buying 339,154 shares. The guru bought these shares at $12 per share. He holds 0.78% of the company’s shares outstanding, and his new buy makes him the only guru shareholder with a stake in Edgen Group
Edgen Group Inc is a global distributor of specialty products to energy sector, including steel pipe, valves, quenched & tempered & high yield heavy plate, and related components.
Edgen Group’s historical revenue and net income:
The analysis on Edgen reports that the company’s revenue has been in decline over the past three years, the price is at a 2-year high of $12 per share and the company’s inventory has been consistently building up.
On Oct. 22, several major law firms announced that they would be examining claims regarding breaches of fiduciary duty by the Board of Edgen in connection with their sale of the company to Sumitomo Corporation. The firms believe that there was a potential breach of fiduciary duties in connection to the sale of their company to the Japanese-based company. The cash deal was valued at $520 million, and under the proposed transaction Edgen shareholders will get $12 per share, but many believe that the price should be set at $15 per share.
Edgen Group has a market cap of $519.8 million. Its shares are trading at around $12 with a P/E ratio of 44.20 and a P/S ratio of 0.10.
Check out more of Mario Gabelli’s real time picks here.
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