Targeting Potential Takeovers, Part 1

1. Financial Losers: Bank of America, Citi 2. Cell Therapeutics on Dilution Watch: BioBuzz 3. The Six Top Tech Stocks of 2010 4. FedEx: Analysts' Upgrades, Dowgrades 5. Dry Bulk 2010: Five Stocks to Watch

Editor's Note: This Christopher Atayan column is a special bonus for RealMoney readers. It appeared on Street Insight on Jan. 11. To sign up for Street Insight, please click here.

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At this point in the economic cycle, all of the low-hanging fruit has been picked clean. The easy earnings gains from cost-cutting and the upturn in the economy are over, and it's now strictly "belly to belly" efforts to gain market share. My corporate client base encompasses all industries and geographies, and every single one of my clients is thinking acquisition right now.

The large ones and the small ones are all looking for ways to build their businesses externally. Of course, they go about it in different ways. The smaller companies are looking to buy the remnants of failed competitors on the cheap. The middle-sized clients are looking for that nice, clean bolt on acquisition and have reconciled themselves to the notion that they are going to have to compete with private equity to do so. The large clients are willing to pay up for quality.

Investing in potential acquisition candidates is my way of participating in a stock market that is fully valued. There is one major caveat: Never invest with the notion that an acquisition is imminent -- in some cases it could take years to materialize. So all acquisition ideas have to pass my quality hurdle first, because they need to be able to stand the test of time. I will present several ideas that meet my criteria.

Ordinarily, I don't travel offshore to look for investments. However, one very high-quality bank has caught my attention. That is the Australia and New Zealand Banking Group (ANZ - commentary - Cramer's Take), which offers a juicy 5.25% yield. The company is one of the most efficiently managed banks in the world and is the third-largest bank in Australia and the largest in New Zealand. ANZ provides the conservative investor a relatively low-risk way to play growth in Southeast Asia.

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At time of publication, Atayan was long National City, 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].