Stick With Durable Stocks to Play M&A

Church & Dwight Offers Opportunities

Church & Dwight (CHD - commentary - Cramer's Take) has one of the strongest brand franchises going in Arm & Hammer and Trojan condoms. The company has done a fantastic job of brand extension over the years and has moved beyond baking soda to kitty litter, oral care and personal products.

C&D fits several of the parameters I am looking for in an acquisition candidate. It has an outstanding track record of growth and a well-balanced portfolio for future growth, and its earnings-per-share growth is consistent.

Moreover, in the event that nothing happens in the short term, the company has several other factors going for it. It has multiple levers to deliver future EPS growth, which include margin expansion, better management of SG&A and debt reduction, in addition to organic volume growth. Finally, C&D has an excellent record of making accretive acquisitions on its own.

The one negative is that it does not pay a high dividend while you wait. Still, Church & Dwight is a company that does have a lot of internal investment opportunities.

EchoStar Will Make a Tasty Dish

I continue to believe that EchoStar Communications (DISH - commentary - Cramer's Take) eventually will be a nice addition for someone in the media or telecom sector. At this point, the company has more than 11 million subscribers, which makes it a major force in advertising. The company is profitable and is expected to earn $1.71 this year, so it is not wildly expensive.

Management just picked up the satellite business from Cablevision Systems (CVC - commentary - Cramer's Take). EchoStar also has managed to push through some modest price increases. Its CEO is a very hard bargainer, so it might be some time before a sale would go through.

In the meantime, EchoStar will keep accumulating more subscribers, and the asset will continue to become more valuable. The stock has done nothing over the course of the last year. At some point, the board and management will feel pressured to take action.

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At time of publication, Atayan was long Morgan Stanley, although holdings can change at any time.

Christopher Atayan is a managing director of Slusser Associates, a private investment banking firm in New York that specializes in mergers and acquisitions and structured financings. He is also a principal in GBH Investments, which makes private equity investments on behalf of an educational foundation. Atayan has held both of these positions since 1988. He also currently is a director of Franchise Concepts. Atayan holds a bachelor's degree from the University of Wisconsin and attended the University of Chicago Graduate School of Business. Under no circumstances does the information in this commentary constitute a recommendation to buy or sell securities. Atayan appreciates your feedback and invites you to send it to [e-mail].