Top 10 Potential Takeover Targets
At Stockpickr, we use our takeover targets system each month to hunt down companies that are trading for less than five times cash flows, making them ripe for acquisition, especially in this frenzied environment. Those names then go into our System Trades of the Day portfolio.
The takeover targets system, which calls for buying a specific stock on the first day of the month and holding until month's end, has historically returned 5.7% per trade. The system also has not had a down year in the simulations we've run, in both bull and bear markets.
We update the takeover targets portfolio monthly so that the trades can be viewed for the entire month. The premise is fairly simple: When stocks become cheap enough (in our case, we believe less than five times cash flows is cheap), private-equity firms or other corporations are more likely to buy them for their cash flows -- even if the business is declining.
Two stocks on the list continue to catch our eye; we have watched them for the past few months. Let's revisit the bullish argument for each.The first is InterDigital (IDCC). Does your cell-phone ring? If so, then it may very well be making use of a patent owned by InterDigital and licensed by your cell-phone manufacturer. Patent licensing is a business that results in very choppy revenue and cash flows. But don't worry about InterDigital; it has $190 million in the bank and had $110 million in cash flows last year. The wireless technology business is solid, and its core customers aren't going anywhere.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV