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It seems that every week we are hearing about at least one major takeover offer. 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. After a major decline in the stock market, many companies are trading at unbelievably low valuations and this makes several companies ripe for a takeover offer.
With more deals likely to be announced soon, it makes sense to consider stocks which have solid fundamentals and have the potential to be a takeover target. Here are a few companies which are trading at exceptionally low valuations and are considered by analysts, industry insiders or other investors to be a possible takeover target:
Symantec Corporation (NASDAQ:SYMC) shares are trading at $16.20. SYMC is a leading provider of security and other software solutions and is based in California. The 50 day moving average is about $18.36 and the 200 day moving average is about $18.12. Earnings estimates for SYMC are at $1.64 per share in 2011 and $1.82 for 2012. The PE ratio is about 9, which is lower than many other software companies.
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. With SYMC trading well off the 52 week high, it might be the perfect acquisition target.
Adobe Systems, Inc., (NASDAQ:ADBE) shares are trading at $23.78. Adobe is a leading provider of publishing, web design and other software solutions and is based in California. The 50 day moving average is $28.42 and the 200 day moving average is $31.52. Earnings estimates for ADBE are at $2.27 per share in 2011 and $2.57 for 2012. The PE ratio is about 10, 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. A fund manager recently said Adobe is a possible takeover target and you can read about that here. With the stock trading within $2 of the 52 week low, the company might be a compelling buy.
Xerox, Inc., (NYSE:XRX) shares are trading at $7.63. Xerox is a leading maker of document equipment, software and related products, and is based in Connecticut. The 50 day moving average is about $9.40 and the 200 day moving average is $10.42. 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 2.3% yield.
Why Xerox could see a takeover offer: Xerox is very undervalued at only about 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. You can read about that here. Many tech companies are cash rich and could easily buy a company like Xerox.
Hartford Financial (NYSE:HIG) shares are trading at $16.86. These shares have a relative strength index of about 31, which indicates the shares are very oversold. HIG is a leading insurance company. The 50 day moving average is $23.08, and the 200 day moving average is $25.90. Earnings estimates for 2011 have been impacted by storm losses and legal expenses, but are expected to rebound to about $4 per share in 2012. HIG pays a dividend of about 40 cents per share, which is equivalent to a yield of about 2.3%. This stock is trading well below book value which is stated at $45.93.
Why Hartford could see a takeover offer: Hartford has been rumored to be a takeover target more than once. Just a few months ago, the idea that German insurance giant Allianz might be preparing a takeover for Hartford was running through the markets and that was when the stock was trading around $27 per share. Read about that here. Now the stock is about $10 per share cheaper, and that only makes a deal far more affordable and likely.
China Dangdang (NYSE:DANG) shares are trading around $7.20. Dangdang is based in China, and is often said to be the Amazon.com of China. These shares have fallen from a 52 week high of $36.40. The 50 day moving average is $11.76. DANG has earnings estimates around break even for 2011 and 8 cents for 2012. The Dangdang website is already ranked as the 68th most popular site in China, and could continue to climb over the years. DANG has a current market cap of about $540 million, and an enterprise value of about $290 million, due to the cash on the balance sheet of roughly $250 million. That means about half of market cap is cash on the balance sheet. This stock is very oversold; back in June, it was trading around $20 and now is trading for about a third of that value. Famed hedge fund Citadel Advisors just disclosed a very major stake (many millions of shares) in DANG, which you can see here.
Why Dang could see a takeover offer: DANG has been the subject of takeover talks before, just a few weeks ago the stock spiked up on renewed takeover speculation. Read more on that here. Some investors think a company like Overstock (NASDAQ:OSTK) or Amazon.com (NASDAQ:AMZN), or Baidu (NASDAQ:BIDU) could make a major strategic investment or a takeover offer for DANG. If you did not buy Amazon.com in the single digits, this might be a second chance.
Hewlett Packard (HPQ) shares are trading at $24.54. HPQ is a leading technology company with products ranging from computers to printers. The 50 day moving average is $34 and the 200 day moving average is $40.01. Earnings estimates for HPQ are just over $5.01 per share in 2011 and $5.36 for 2012. This gives HPQ a super low PE ratio of only 7. HPQ pays a dividend of 48 cents per year, which is equivalent to a 1.5% yield.