It seems that every week we are hearing about another major takeover offer. Just last week Clorox (NYSE:CLX) received a takeover offer from Carl Icahn at $76.50 per share which puts a total deal value of about $12.6 billion. Read more about the deal here. Corporations are loaded with billions of dollars in cash and many are looking to find ways to generate returns on that cash that will exceed the very low rates of interest received from traditional money market and bank accounts, etc.
With more deals brewing, it makes sense to consider stocks which have solid fundamentals and have the potential to be a takeover target. Some of these stocks are trading at depressed valuations and that could attract a deal sooner rather than later, as cash rich companies look to take advantage of current bargains. Here are a few companies that are considered to be possible takeover targets by analysts, industry insiders or other investors.
Central European Distribution Corp. (NASDAQ:CEDC) shares are trading at $10.10. CEDC is a leading beverage distribution company, based in Pennsylvania. The 50 day moving average is $11.53 and the 200 day moving average is $18.04. Earnings estimates for CEDC are 83 cents per share in 2011 and $1.25 for 2012. The 52 week range is $10 to $28.08. Book value is stated at $23.83.
Why CEDC could see a takeover offer: This stock is trading at about one third of the 52 week high and at about half of book value. Just weeks ago, CEDC stock and options saw a spike in activity on takeover chatter. There are a number of very large beverage companies looking to acquire companies like CEDC. This company has substantial revenues coming from emerging markets like Russia and Poland, and other emerging European countries. British beverage giant Diageo just confirmed it is looking for acquisitions, particularly in emerging markets (read that here).
Symantec Corporation (NASDAQ:SYMC) shares are trading at $18.86. SYMC is a leading provider of security and other software solutions and is based in California. The 50 day moving average is about $19.20 and the 200 day moving average is about $17.86. Earnings estimates for SYMC are at $1.60 per share in 2011 and $1.79 for 2012. The PE ratio is about 11, which is lower than many other software companies. The book value is $5.84.
Why SYMC could see a takeover offer: Intel recently agreed to buy McAfee, which also provides similar software security, so there is renewed interest in security software companies. A number of major tech companies have billions in cash sitting on their balance sheets and are looking for acquisitions.
Force Protection (NASDAQ:FRPT) shares are trading at $4.65. This defense contractor is based in South Carolina. The 50 day moving average is about $4.81 and the 200 day moving average is about $5.12. Earnings estimates are about 37 cents for 2011 and 44 cents for 2012. This gives FRPT shares a PE ratio of only about 12.5 times earnings. This maker of armored vehicles has a very strong balance sheet with about $150 million in cash.
Why FRPT could see a takeover offer: Force Protection could be an interesting target for a major defense contractor, many of whom have substantial cash balances. According to Yahoo Finance, FRPT has about $150 million in cash on the balance sheet and a current market cap of about $335 million. When you factor in the cash, the enterprise value of this company is only about $194 million. That is very cheap for a profitable company with nearly $700 million in revenues.
Adobe Systems, Inc., (NASDAQ:ADBE) shares are trading at $28.77. Adobe is a leading provider of publishing, web design and other software solutions, and is based in California. The 50 day moving average is $32.57 and the 200 day moving average is $31.72. Earnings estimates for ADBE are at $2.27 per share in 2011 and $2.57 for 2012. The PE ratio is about 12, which is below many other software companies. The book value is $10.92.
Why ADBE could see a takeover offer: Adobe stock has fallen out of favor with investors for the last few months and that could be creating an opportunity for a larger company to buy this company. Shares have fallen from a 52 week high of about $36 to current levels. Adobe is trading at a below market valuation and is a leader in some key areas which show promise for future growth. A fund manager recently said Adobe is a possible takeover target and you can read about that here.
Synovus Financial Corp. (NYSE:SNV) shares are trading at $2. Synovus is a regional bank located in Georgia. The 50 day moving average is about $2.23 and the 200 day moving average is about $2.42. Earnings estimates are a loss of 22 cents for 2011 and a profit of 18 cents for 2012. This gives SNV shares a PE ratio of about 13 times forward earnings. The dividend is 4 cents per share per year which is a yield of about 1.6%.
Why Synovus could see a takeover offer: SNV is trading well below book value of $2.47 per share. SNV could be a target for a major bank looking to expand in this region. This company has been considered to be a buyout target by many, and regional banks continue to see a wave of buyout deals. According to a recent article, Credit Suisse recently upgraded SNV "in part because it is one of the top four likeliest mid-cap banks to be acquired in the wake of financial reform." Read that article here.
Xerox, Inc., (NYSE:XRX) shares are trading at $9.92. Xerox is a leading maker of document equipment, software and related products, and is based in Connecticut. The 50 day moving average is about $10.04 and the 200 day moving average is $10.73. Earnings estimates for XRX are expected to be $1.07 for 2011 and $1.24 for 2012. The book value is $8.93 per share. XRX pays a dividend of 17 cents per share which is equivalent to a 1.7% yield.
Why Xerox could see a takeover offer: Xerox is very undervalued at only about 6.5 times 2012 earnings. Some have speculated that Dell, Inc. (NASDAQ:DELL), Hewlett Packard (NYSE:HPQ), or International Business Machines (NYSE:IBM) could have an interest in buying Xerox. Some people think of copy machines when they think of Xerox, but this company has come up with some incredible inventions and technological advances through its subsidiary called "PARC" or "Palo Alto Research Center".