If you’re like me, searching high and low for under-the-radar stock picks is an everyday occurrence. Finding great long-term buys means going through all kinds of information to find those gems that turn into 10 baggers.
Yearly, I look forward to the stock picks from Wall Street professionals assembled by Barron’s as part of its annual Roundtable, where portfolio managers reveal some of their favorite stocks for 2024.
This year’s crew of experts included veteran stock picker Mario Gabelli and 10 others. These wise investors provided Barron’s readers with 56 stocks. Many of the names are favorites of mine; it’s going to be tough to reduce the selection to just three.
At the very least, let me assure you that I will recommend one pick from three of the panelists; there won’t be any doubling up. Secondly, the picks will be from three sectors, again, not wanting to double up.
Here are the three I’ve settled on as the best under-the-radar stock picks to buy for 2024.
Chemed (CHE)
My first pick is Cincinnati-based Chemed (NYSE:CHE), an interesting holding company recommended by Henry Ellenbogen, the Chief Investment Officer and Managing Partner of Durable Capital Partners in Maryland.
I am always attracted to less traditional companies, and Chemed is undoubtedly that. It essentially is two completely different businesses: Vitas Healthcare, which provides end-of-life hospice care, and Roto-Rooter, a plumbing, drain cleaning and water cleanup services provider.
As Ellenbogen points out, Vitas, one of the leading hospice care providers in the U.S. Florida, where there are many older people, is its largest market, accounting for as much as 60% of its revenue. He expects it to grow revenues by 10% annually for the foreseeable future.
As for Roto-Rooter, not only is it the largest emergency plumber in the U.S., but it does it through franchising, so it’s got an asset-light business model. I like that. The pandemic delivered unusual growth. With that in the rearview mirror, he expects a 5-6% annual sales growth.
It expects to earn as much as $20.02 in 2023. By 2025, it could be as high as $25 a share. It trades at 21x its 2025 EPS.
Madison Square Garden Sports (MSGS)
Madison Square Garden Sports (NYSE:MSGS) could hardly be considered under the radar given its biggest assets, the New York Knicks and the New York Rangers, both of which play in America’s largest city.
However, despite its sports theme, the mid-cap stock doesn’t generate much volume. Its 30-day average is less than 124,000. Tesla (NASDAQ:TSLA) generates more than that every minute of an average day’s trading.
Interestingly, this pick from Mario Gabelli, the CEO and founder of Gabelli Funds — he’s been around for many decades — didn’t just recommend one sports-related investment. He also recommended Atlanta Braves Holdings (NASDAQ:BATRK), which owns the Atlanta Braves MLB team and real estate assets worth more than $700 million.
He had this to say about MSGS stock:
“Madison Square Garden Sports has 24 million shares outstanding, selling for $177 each. If you assume the Knicks are worth over $6 billion and the Rangers are worth over $2 billion, you’re getting the Rangers for free,” Gabelli said.
When you consider what prices buyers are willing to pay for professional sports teams, the company could likely bring in minority investors for each team, delivering a nice payday to shareholders without giving up control.
You will do alright if you own an NFL team for 20 or 30 years. Former Washington Commanders owner Dan Snyder generated a 700% return on his 24-year investment.
This is a put-it-in-the-drawer-and-forget-about-it type of investment.
Banco Bilbao Vizcaya Argentaria (BBVA)
The last selection is from GQG Partners CIO and Chairman Rajiv Jain. His company manages more than $100 billion in assets for clients worldwide. The GQG stands for “Global, Quality, Growth.” Although based in Fort Lauderdale, it trades on the Australian Stock Exchange.
The portfolio manager is very bullish about Brazil, specifically, and Latin America, generally. Three of his recommendations do a lot of business in Latin America. Banco Bilbao Vizcaya Argentaria (NYSE:BBVA) is the one I’m selecting.
Although based in Spain:
“BBVA receives almost 40% of the profits pool of the Mexican banking system. Mexico’s banking system is unique, in that it is extremely underpenetrated but highly consolidated. Three players control almost 80% of the system. Mexico accounts for 50% of BBVA’s profits, and Turkey, 15%. The bank’s return on equity is almost 20%, and it has been buying back shares,” Jain said in the Roundtable discussion.
In Q4 2023, its Mexican and South American businesses generated gross income of 18.60 billion euros ($20.06 billion), 61% of its 30.6 billion euros ($33.0 billion) overall.
Yielding 4.3%, you get paid to wait for its next move higher.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
