10 Tech Takeover Targets With Strong Corporate Governance

|
 |  Includes: ARRS, CA, CRUS, DELL, HPQ, ISIL, JBL, QSII, SYMC, YHOO
by: Kapitall

Analysts speculate about potential takeover/leveraged buyout (LBO) targets because when a firm announces that they are being taken over or acquired, the target’s stock often jumps in price to reflect the takeover premium paid by the acquirer.

We compiled a universe of rumored potential takeover/LBO targets from various sources including Seeking Alpha and The Motley Fool. We screened these stocks for those with strong corporate governance ratings, indicating that these firms are being run well.

Institutional Shareholder Services (ISS) gives ratings for four areas of corporate governance, on risks related to: the board, the audit committee, the compensation committee, and shareholder rights. We screened for companies receiving ‘low risk’ ratings in at least three of the four categories.

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.

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. Hewlett-Packard Company (NYSE:HPQ): Offers various products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. Market cap of $50.93B. Takeover/LBO rumor sourced from Nasdaq. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. Might be undervalued at current levels, with a PEG ratio at 0.79, and P/FCF ratio at 6.2. The stock has had a good month, gaining 11.77%.

2. Dell Inc. (NASDAQ:DELL): Provides integrated technology solutions in the information technology (IT) industry worldwide. Market cap of $29.85B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories. The stock has had a couple of great days, gaining 5.21% over the last week.

3. Yahoo Inc. (NASDAQ:YHOO): Operates as a digital media company that delivers personalized digital content and experiences, across devices and worldwide. Market cap of $20.11B. Takeover/LBO rumor sourced from The Motley Fool. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category.

4. Symantec Corporation (NASDAQ:SYMC): Provides security, storage, and systems management solutions to secure and manage information. Market cap of $13.18B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories. The stock has gained 14.27% over the last year.

5. CA Technologies (NASDAQ:CA): Designs, develops, markets, delivers, licenses, and supports information technology (IT) management software products that operate on a range of hardware platforms and operating systems. Market cap of $10.83B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. The stock has lost 1.69% over the last year.

6. Jabil Circuit Inc. (NYSE:JBL): Provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. Market cap of $4.38B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Shareholder Rights Risk category. This is a risky stock that is significantly more volatile than the overall market (beta = 2.04). Might be undervalued at current levels, with a PEG ratio at 0.93, and P/FCF ratio at 14.2. The stock has had a couple of great days, gaining 6.2% over the last week.

7. Quality Systems Inc. (NASDAQ:QSII): Develop and market health-care information systems. Market cap of $2.72B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. The stock is a short squeeze candidate, with a short float at 22.84% (equivalent to 16.57 days of average volume). The stock has gained 44.2% over the last year.

8. Intersil Corporation (NASDAQ:ISIL): Engages in the design, development, manufacture, and marketing of analog and mixed-signal integrated circuits. Market cap of $1.50B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. The stock has had a couple of great days, gaining 7.77% over the last week.

9. Arris Group Inc. (NASDAQ:ARRS): Develops, manufactures, and supplies telephony, data, video, construction, rebuild, and maintenance equipment for the broadband communications industry worldwide. Market cap of $1.31B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. The stock is a short squeeze candidate, with a short float at 11.46% (equivalent to 9.56 days of average volume). The stock has gained 11.56% over the last year.

10. Cirrus Logic Inc. (NASDAQ:CRUS): Develops high-precision analog and mixed-signal integrated circuits (ICs). Market cap of $1.15B. Takeover/LBO rumor sourced from Seeking Alpha. According to ISS, the company has 'low concern' in all corporate governance categories except ‘medium concern’ in the Compensation Risk category. The stock has had a couple of great days, gaining 9.4% over the last week.

*ISS ratings sourced from Yahoo Finance, 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.