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5 Stocks to Keep on Your M&A Deal Radar in April

WMS Industries

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I'll admit it -- this one still stings me a little bit: I was wrapping up my analysis to build a position in WMS Industries (WMS - Get Report) when the firm announced at the end of January that it was being acquired by Scientific Games (SGMS) and rocketed by 60% overnight. While WMS shareholders are used to gambling being a central part of this stock, they probably didn't realize that they'd be the big winners here.

WMS makes gaming machines used by casinos across North America. The firm owns a collection of sought-after licenses such as Lord of the Rings, Monopoly and Battleship, and specializes in immersive gaming experiences. I won't bother with this stock's balance sheet or cash flow generation analysis anymore -- it's not very relevant. But while the big upside is over and done with in this stock, there's still a merger arbitrage opportunity in the mid-single digits.

While that's hardly the 60% upside that shareholders took home on the heels of the acquisition bid announcement, the high likelihood of the deal getting closed quickly -- or scrubbed in favor of a potential rival -- makes it a decent risk/reward payoff.
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DELL $0.00 0.00%
PCS $11.84 0.00%
BRY $0.00 0.00%
CWH $25.47 -0.12%
WMS $27.91 -1.27%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

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