2014 has been a big year for mergers and acquisitions so far. Year-to-date, deal volume is up 72% to $2.5 trillion. In the U.S., where equity markets have been on fire for the last two years now, M&A volumes are up a whopping 85.3% since the calendar flipped to January. A lot of that huge transaction volume has to do with the fact that suitors don't have many options to deploy their cash right now.
Even though the broad market has rallied hard in the last year, there are still pockets of value, particularly in some individual small-cap stocks. Likewise, with low interest rates and more cash than ever before parked on corporate balance sheets, large companies are in search of ways to earn meaningful ROI on that $1.25 trillion mountain of corporate cash.
So as management teams come to the realization that they need to either put money to work or hand it back to investors, acquisitions are looking a whole lot more appealing again. Mergers and acquisitions can provide amazing value for purchasing firms' balance sheets -- and they can provide instant gratification for shareholders in the target firm.
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Too often, investors think that there’s no money to be made once a deal has been announced, but that’s just plain wrong; between merger arbitrage opportunities and value creation for acquiring firms, it’s worth paying attention to Wall Street’s deal book. So that's exactly what we're doing this week.
With that, let's take a look at four M&A deal stocks worth watching right now.