Gabelli's Major Quarterly Changes to Focus Five Stock Pick List (ARG, CF, LNCE, TE, YHOO, ASCMA, CCE, CVS, NAV)

August 1 might not sound like the start of a quarter to most, but this is that date of a key report from a unique brokerage and advisory firm.  Today marks the adjustment of Gabelli & Company “FOCUS FIVE” list for investors.  The last quarter was a rough one, but this list is still up about 190% since its January 31, 2006 launch versus a 1.6% drop for the S&P 500 Index.  The new FOCUS FIVE includes shares of Airgas Inc. (NYSE: ARG), CF Industries (NYSE: CF), Snyder’s-Lance Inc (NASDAQ: LNCE), TECO Energy Inc. (NYSE: TE), and Yahoo! Inc. (NASDAQ: YHOO).

Yahoo! Inc. (NASDAQ: YHOO) is a repeat member here for the second quarter in a row.  The companies deleted from the list were as follows: Ascent Media Corporation (NASDAQ: ASCMA); Coca-Cola Enterprises, Inc. (NYSE: CCE); CVS Caremark Corporation (NYSE: CVS); and Navistar International Corporation (NYSE: NAV).

Airgas Inc. (NYSE: ARG) is called “Gassed Up For Growth” with growth driven by manufacturing, medical, petrochemical, and utilities customers with 2012 sales growth of 11% and 35% earnings growth.  The old Air Products $70 bid is a plus, but Gabelli gave a private market value of $88 per share in 2012, implying more than 25% upside.

CF Industries (NYSE: CF) is called the “Fertilizer Boost” where increased demand from global crop shortages is fueling more plantings. Gabelli’s boost is somewhat based upon the belief that poor weather hurt crop yields and that the crop report will come in weaker than expected.  That should drive demand and offer earnings upside.  Its private market value was put at $230 per share in 2012, implying upside of close to 50%.

Snyder’s-Lance Inc (NASDAQ: LNCE) is the snack cracker company you know along with the Cape Cod chips brand and Gabelli sees earnings growing from $0.85 this year to $2.00 in 2015 as the private label business pressures ease along with a strong dividend.  Its private market value is $27.00 per share for 2012, implying about 30% upside.

TECO Energy Inc. (NYSE: TE) is featured as “Met Coal For Sale?” having long-term value and earnings power that should benefit from a constructive regulatory environment and favorable demographic trends. This is more of a special situation as Gabelli has a ‘sum of the parts’ analysis.  It derived a private market value of $28.00, implying just over 50% upside expectations.

Yahoo! Inc. (NASDAQ: YHOO) is called “Time For Action” where the core business and its investments put in a floor for the stock when you consider the value in Alibaba and Yahoo! Japan.  The private market value was put at $21.00, implying more than 60% upside.  The Thomson Reuters consensus price target is ‘only’ $17.86 and that $21 level meets the high on Wall Street as far as analyst price target objectives.

JON C. OGG