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. ...