NEW YORK ( TheStreet) - As investors look to 2012, it's important to continue to consider M&A as a catalyst for stocks. Rumors about Yahoo! ( YHOO), Research In Motion ( RIMM) and Netflix ( NFLX) dominated the merger headlines and whipsawed share prices in 2011, sans any completed deals.
"We still see ample opportunity for deals in the coming year as buyers look to scoop up businesses with more promising growth prospects amid an uncertain economic environment," writes Morningstar analyst Bridget Freas in a January report. Freas argues that while lackluster growth and sovereign debt concerns continue to be a deals headwind, companies may look for small-to-midsized deals to drive growth. "
We believe acquisitions of smaller rivals will become an increasingly attractive way to augment growth aspirations and fortify market leadership positions amid sluggish organic prospects," writes Freas. Six companies that Morningstar outlined in its report as potential M&A candidates in 2011 were eventually completed, including Constellation Energy ( CEG) and Petrohawk Energy, which were included on its "top M&A investment ideas list." Often the deals paid off for existing shareholders. While Constellation was bought for a 22% premium to share prices, Petrohawk was taken out at almost double the price that it traded at when Morningstar highlighted it as a M&A candidate. Here's are Morningstar's ten new top investment ideas among potential acquisition candidates, with details on potential acquirers and reasons why they may be compelling for a growth hungry buyer.