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Analysts often speculate about potential takeover/leveraged buyout candidates because, upon the announcement of a takeover, the target often jumps in stock price to reflect the premium being paid in the acquisition.

We created a universe of rumored potential takeover/LBO targets from various sources including iStockAnalyst and Seeking Alpha. We then screened this universe for those seeing extremely bearish sentiment, with increased short selling month-over-month and an increasing put/call ratio over the last two weeks. Such extreme bearishness might indicate that the companies are undervalued and therefore attractively priced for an acquisition.

To access the complete list of takeover targets, click here.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.





We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



List sorted by increase in put/call ratio.

1. Harris Corp. (NYSE:HRS): Communication Equipment Industry. Market cap of $4.96B. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have increased from 11.76M to 13.42M month-over-month, a change representing 1.31% of the company's 126.34M share float. Put/call ratio has increased 136.67% over the last ten trading days (from 0.30 to 0.71). Might be undervalued at current levels, with a PEG ratio at 0.94, and P/FCF ratio at 14.51. The stock is currently stuck in a downtrend, trading 9.45% below its SMA20, 13.71% below its SMA50, and 16.78% below its SMA200. It's been a rough couple of days for the stock, losing 9.24% over the last week.

2. Collective Brands, Inc. (NYSE:PSS):
Apparel Stores Industry. Market cap of $717.67M. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have increased from 12.07M to 12.72M month-over-month, a change representing 1.16% of the company's 56.22M share float. Put/call ratio has increased 105.71% over the last ten trading days (from 1.05 to 2.16). Might be undervalued at current levels, with a PEG ratio at 0.8, and P/FCF ratio at 8.12. The stock is currently stuck in a downtrend, trading 16.55% below its SMA20, 21.12% below its SMA50, and 39.07% below its SMA200. It's been a rough couple of days for the stock, losing 7.9% over the last week.

3. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $2.38B. Takeover/LBO rumor sourced from iStockAnalyst. Shares shorted have increased from 3.96M to 5.22M month-over-month, a change representing 2.60% of the company's 48.42M share float. Put/call ratio has increased 44.44% over the last ten trading days (from 0.72 to 1.04). The stock is currently stuck in a downtrend, trading 27.77% below its SMA20, 25.95% below its SMA50, and 11.33% below its SMA200. It's been a rough couple of days for the stock, losing 32.72% over the last week.

4. James River Coal Co. (JRCC):
Industrial Metals & Minerals Industry. Market cap of $656.76M. Takeover/LBO rumor sourced from CNBC. Shares shorted have increased from 9.33M to 9.90M month-over-month, a change representing 1.93% of the company's 29.57M share float. Put/call ratio has increased 14.29% over the last ten trading days (from 0.21 to 0.24). The stock is currently stuck in a downtrend, trading 10.24% below its SMA20, 10.14% below its SMA50, and 15.35% below its SMA200. It's been a rough couple of days for the stock, losing 15.38% over the last week.

5. Savient Pharmaceuticals, Inc. (SVNT): Biotechnology Industry. Market cap of $497.28M. Takeover/LBO rumor sourced from Minyanville. Shares shorted have increased from 21.71M to 22.66M month-over-month, a change representing 1.59% of the company's 59.81M share float. Put/call ratio has increased 12.26% over the last ten trading days (from 1.06 to 1.19). This is a risky stock that is significantly more volatile than the overall market (beta = 2.17). The stock is a short squeeze candidate, with a short float at 32.28% (equivalent to 11.62 days of average volume). It's been a rough couple of days for the stock, losing 6.67% over the last week.

6. Cirrus Logic Inc. (NASDAQ:CRUS): Semiconductor Industry. Market cap of $992.34M. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have increased from 5.62M to 6.59M month-over-month, a change representing 1.50% of the company's 64.84M share float. Put/call ratio has increased 11.43% over the last ten trading days (from 0.35 to 0.39). The stock has lost 23.75% over the last year.

7. American Eagle Outfitters, Inc. (NYSE:AEO): Apparel Stores Industry. Market cap of $2.55B. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have increased from 11.74M to 14.17M month-over-month, a change representing 1.37% of the company's 177.00M share float. Put/call ratio has increased 10.34% over the last ten trading days (from 0.29 to 0.32). It's been a rough couple of days for the stock, losing 5.16% over the last week.

Short data sourced from Yahoo Finance, options data sourced from Schaeffer’s, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Takeover/LBO Targets With Increasing Short Selling and Put/Call Ratios