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When a firm announces that it is being taken over or acquired by another firm, the target’s stock often jumps in price to reflect the takeover premium paid by the acquirer. This is why analysts speculate about potential takeover/leveraged buyout targets.

We compiled a universe of rumored potential takeover/LBO targets from various sources including Minyanville and CNN Money. We screened this universe for those stocks that are technically oversold (with RSI(14) below 40) and that are trading below $5.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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.

click on image to enlarge

Do you think these companies are likely to be taken over? Use this list as a starting-off point for your own analysis.

List sorted by market cap:

  1. Tenet Healthcare Corp. (NYSE:THC): Hospitals Industry. Market cap of $2.42 billion. Price at $4.89. RSI(14) at 37.17. Takeover/LBO rumor sourced from Seeking Alpha. This is a risky stock that is significantly more volatile than the overall market (beta = 2.23). The stock is currently stuck in a downtrend, trading 7.78% below its SMA20, 16.17% below its SMA50, and 21.59% below its SMA200. The stock has had a couple of great days, gaining 13.3% over the last week. The stock has performed poorly over the last month, losing 16.64%.
  2. Office Depot, Inc. (NASDAQ:ODP): Specialty Retail Industry. Market cap of $744.91 million. Price at $2.48. RSI(14) at 30.83. Takeover/LBO rumor sourced from CNN Money. This is a risky stock that is significantly more volatile than the overall market (beta = 3.29). The stock is currently stuck in a downtrend, trading 24.11% below its SMA20, 32.53% below its SMA50, and 45.84% below its SMA200. The stock has performed poorly over the last month, losing 26.11%.
  3. Savient Pharmaceuticals, Inc. (SVNT): Biotechnology Industry. Market cap of $304.16 million. Price at $4.07. RSI(14) at 25.09. Takeover/LBO rumor sourced from Minyanville. This is a risky stock that is significantly more volatile than the overall market (beta = 2.29). The stock is a short squeeze candidate, with a short float at 32.85% (equivalent to 13.05 days of average volume). The stock has had a couple of great days, gaining 7.58% over the last week. The stock has performed poorly over the last month, losing 45.24%.
  4. Chelsea Therapeutics International Ltd. (NASDAQ:CHTP): Biotechnology Industry. Market cap of $270.98 million. Price at $3.89. RSI(14) at 36.93. Takeover/LBO rumor sourced from Seeking Alpha. The stock is a short squeeze candidate, with a short float at 8.64% (equivalent to 7.26 days of average volume). The stock has had a couple of great days, gaining 5.85% over the last week. The stock has performed poorly over the last month, losing 22.1%.
  5. Novatel Wireless Inc. (NVTL): Diversified Communication Services Industry. Market cap of $108.36 million. Price at $3.23. RSI(14) at 25.77. Takeover/LBO rumor sourced from Seeking Alpha. The stock is a short squeeze candidate, with a short float at 15.47% (equivalent to 8.84 days of average volume). The stock is currently stuck in a downtrend, trading 25.42% below its SMA20, 34.94% below its SMA50, and 51.13% below its SMA200. The stock has performed poorly over the last month, losing 37.64%.

*All data sourced from Finviz.

Source: 5 Oversold Takeover/LBO Targets Trading Under $5