- Companies targeted in mergers-and-acquisitions deals usually see their stock price increase, creating money-making opportunities for investors able to identify them.
- Morgan Stanley has singled out 15 companies that meet its proprietary criteria as high-likelihood acquisition targets.
Wall Street expects mergers-and-acquisitions activity to accelerate in 2018, which should create opportunities for investors looking to profit from accompanying stock spikes.
After all, when an acquisition offer is made, the company being bought usually sees its share price increase. So the process is simple – identify potential acquisition targets, buy them, and hope a deal gets announced.
Easier said than done. But lucky for you, Morgan Stanley is here to make things a little easier.
The firm has developed a model that sorts stocks by acquisition likelihood. The methodology involves calculating the probability that a company will be on the receiving end of at least one tender offer. And in figuring out its list, Morgan Stanley weighs a combination of cohort information and stock-specific fundamentals.
Without further ado, here are 15 stocks that the firm says are among the most likely to receive an acquisition offer sometime in the next 12 months.
(Note that Morgan Stanley has screened its universe of companies to include only large and liquid stocks and that all company statistics are as of year-end 2017. The firm's list has also been culled so it doesn't include more than two companies from the same sector.)
Domino's Pizza
Ticker: DPZ
Industry: Consumer discretionary
Year-to-date trading volume: $44.5 billion
Market cap: $8.3 billion
Six Flags Entertainment
Ticker: SIX
Industry: Consumer discretionary
Year-to-date trading volume: $15.9 billion
Market cap: $5.6 billion
Pinnacle Foods
Ticker: PF
Industry: Consumer staples
Year-to-date trading volume: $17.5 billion
Market cap: $7.1 billion
Herbalife
Ticker: HLF
Industry: Consumer staples
Year-to-date trading volume: $19.4 billion
Market cap: $6.0 billion
Transocean
Ticker: RIG
Industry: Energy
Year-to-date trading volume: $35.9 billion
Market cap: $4.2 billion
Weatherford International
Ticker: WFT
Industry: Energy
Year-to-date trading volume: $25.6 billion
Market cap: $4.1 billion
Navient
Ticker: NAVI
Industry: Financials
Year-to-date trading volume: $10.7 billion
Market cap: $3.5 billion
Allergan
Ticker: AGN
Industry: Healthcare
Year-to-date trading volume: $157.6 billion
Market cap: $54.4 billion
Express Scripts
Ticker: ESRX
Industry: Healthcare
Year-to-date trading volume: $66.2 billion
Market cap: $42.3 billion
Conduent
Ticker: CNDT
Industry: Information technology
Year-to-date trading volume: $10.2 billion
Market cap: $3.4 billion
FireEye
Ticker: FEYE
Industry: Information technology
Year-to-date trading volume: $18.4 billion
Market cap: $2.6 billion
Graphic Packaging
Ticker: GPK
Industry: Materials
Year-to-date trading volume: $13 billion
Market cap: $4.8 billion
W.R. Grace
Ticker: GRA
Industry: Materials
Year-to-date trading volume: $10.5 billion
Market cap: $4.8 billion
Taubman Centers
Ticker: TCO
Industry: Real estate
Year-to-date trading volume: $9.8 billion
Market cap: $4 billion
Spirit Realty Capital
Ticker: SRC
Industry: Real estate
Year-to-date trading volume: $20.8 billion
Market cap: $3.9 billion
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