Mario Gabelli, founder and chief executive officer of the Gabelli Asset Management, recently offered his nine stock picks for investors to thrive and survive a post-pandemic investing world.

“The economy faces several speed bumps," he recently told Barron's. "How are the banks going to fare? We’re working our way through that. And, what happens when certain government stimulus programs expire at the end of July?" he asked.

"Second-quarter earnings are likely to be disastrous," said Gabelli, who has a reputation as one of the world’s most astute stock pickers, earning the nickname “Super Mario.”

"By the middle of August, we’ll be dealing with more political dynamics. On the other hand, the Federal Reserve has done more than anyone could have imagined to flood the system with money," he said.

"At what point does the stock market look past this year and consider the economic outlook for 2021? We could have a W-shape recovery with a swoosh, with the second leg up starting in September or October. I expect U.S. gross domestic product to rise in 2021," he predicted.

“Corporate revenue will look better in 2021, but gross profit margins will narrow. Wages and regulatory costs tied to healthcare will rise, as will other costs. Corporate tax rates will increase next year. In addition, companies aren’t buying back stock. In fact, every day somebody is selling stock," he said.

"I expect to see a lot more mergers, some facilitated by SPACs [special-purpose acquisition companies] or private equity, or corporations looking to grow. Amazon.com [ticker: AMZN], for instance, might decide to buy a filmed-entertainment company to gain access to a library of content," said Gabelli, who learns industries from the top down and gets into the details of companies from the bottom up. He looks at stocks as if he were buying the entire company, considering factors such as growth rates, business advantages, valuation and margin of safety.

Over the course of nearly 45 years, his investments have averaged a 16.9 percent compounded annual return.

Gabelli's 9 Picks (Company/Stock Symbol)

1. NextEra Energy Partners(NEP)
2. Avangrid (AGR)
3. Maple Leaf Foods (MFI.Canada)
4. Davide Campari-Milano (CPR.Italy)
5. GCP Applied Technologies (GCP)
6. Herc Holdings (HRI)
7. Deutsche Telekom (DTE.Germany)
8. Vivendi (VIV.France)
9. Sony (SNE)

For his part, billionaire investor Bill Gross is predicting that value stocks like IBM and Altria Group (MO) are likely to fare better than growth stocks like Apple (AAPL) or Amazon.com (AMZN) in the near term, due to a correlation with real interest rates.

U.S. real yields - which adjust for inflation - have been declining in response to the Federal Reserve's aggressive monetary actions over the past few months to limit the economic fallout of the coronavirus pandemic, Reuters said.

The yield on the 10-year Treasury Inflation-Protected Security (TIPS) has been trading with a negative yield since late March and is now minus 0.803%, near an all-time-low.

Gross, who co-founded Pacific Investment Management Company, then spent four years at Janus Henderson before leaving in 2019 to manage his own money, said that the reason that the "Fab 5 stocks" and growth stocks in general had done "so fabulously well" centers on falling real interest rates that "are still reaching historic lows."

Gross is referring to a clutch of high-performing stocks: Amazon, Facebook (FB), Apple, Netflix (NFLX) and Google's parent Alphabet (GOOGL), according to his spokesperson.

The yields of TIPS are highly correlated with growth stocks, but have far less of an effect on the prices of traditional value stocks, Gross wrote in his July "The Real Deal" Investment Outlook.

The future price disparity of Microsoft (MSFT), Apple and Amazon "is subject to an ongoing decline in real rates, which to my mind, have seen their best days," Gross said. "Value stocks, versus growth stocks, should be an investor's preference in the near-term future," he writes.

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