Stockpickr: This Week's Rocket Stocks

I believe BEA is a huge takeover candidate. With all of the liquidity sloshing around in the market, this company will get taken over; it's just a question of when.

I also like that deep-value investor Bruce Sherman of Private Capital is long the stock. More than 40 companies Sherman has held in his portfolio have been acquired in the past few years.

I believe potential acquirers of BEA Systems include Oracle(ORCL Quote), Microsoft(MSFT Quote) and even Symantec(SYMC Quote).

Let's next take a look at j2 Global Communications(JCOM Quote), the Internet fax company. The Los Angeles-based company reports earnings after the close Monday. Analysts are expecting 32 cents a share, up from 26 cents a share a year ago. There are a few key points to note about j2:

• Heavy short position: With 4.28 million shares short, and given the average daily volume, it would take more than seven days for the shorts to cover their position if the stock were to rise.
• Excellent balance sheet: j2 has about $150 million net cash in the bank and almost no debt.
• j2 has exceeded or met earnings estimates for the past four quarters.
• Analysts have been upping their estimates over the past 90 days.
• The stock trades for only 18 times estimated earnings for 2008, with analysts expecting earnings per share to climb from $1.40 in 2007 to $1.65 in 2008.

I've pointed out j2 Global before, featuring it in the portfolio Who Will Cisco Buy Next?, in which I state:

J2 Global is also an interesting play here. The company provides Internet faxing (it used to be called JFax), conference calling and other CRM, or customer relationship management, services. A combination of WebEx(WEBX Quote) and j2 Global would result in a truly unified communications platform for the enterprise.

Similar to Akamai(AKAM Quote) and WebEx (other members of the Who Will CSCO Buy Next? portfolio), j2 Global trades at 15 times cash flow. It has about $156 million cash in the bank with essentially no debt, so the balance sheet is pristine. Last year it had EBITDA of $78 million and 21% revenue growth.

This year, analysts are estimating revenue to grow from $181 million to $223 million. That's substantial growth for a company that is trading at only a slightly above-average P/E compared to the market-at-large.

j2 Global also makes The Forbes Top 10 list, a portfolio we created on the basis of a Forbes article last fall on the top 200 small companies in the U.S.