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Analysts and investors follow potential takeover/leveraged buyout (LBO) targets because, on the announcement of a takeover, the target company’s stock often jumps in price to reflect the takeover premium being paid for the company. This is obviously great for shareholders.

We compiled a list of rumored potential takeover/LBO targets from various sources including Minyanville and CNBC. We screened this stock universe for those trading at the most significant discounts to their analyst target price, which serves as a proxy for fair value.

But because target prices are notoriously inflated, we only used the most pessimistic (the lowest) target prices, and for stocks with sufficient analyst coverage we only screened for stocks with 5 or more analyst ratings.

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 stocks should be trading higher? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by target price.

1. James River Coal Co. (JRCC): Engages in mining, processing, and selling bituminous, steam, and industrial grade coal in eastern Kentucky and in southern Indiana. Market cap of $290.19M. Takeover/LBO rumor sourced from CNBC. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $9.00. This implies a current upside of 31.77% from current levels around $6.83. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock is a short squeeze candidate, with a short float at 30.94% (equivalent to 5.24 days of average volume). The stock has had a couple of great days, gaining 27.59% over the last week.

2. Hartford Financial Services Group Inc. (HIG): Provides insurance and financial services in the United States and internationally. Market cap of $7.98B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 14 analysts that have set a target price on the stock, the lowest price target stands at $21.00. This implies a current upside of 28.13% from current levels around $16.39. This is a risky stock that is significantly more volatile than the overall market (beta = 2.97). The stock has had a couple of great days, gaining 16.53% over the last week.

3. Office Depot, Inc. (ODP): Supplies office products and services. Market cap of $661.91M. Takeover/LBO rumor sourced from CNN Money. Of the 13 analysts that have set a target price on the stock, the lowest price target stands at $2.50. This implies a current upside of 22.55% from current levels around $2.04. This is a risky stock that is significantly more volatile than the overall market (beta = 3.14). The stock is a short squeeze candidate, with a short float at 11.2% (equivalent to 5.52 days of average volume). The stock has had a couple of great days, gaining 20.41% over the last week.

4. Symantec Corporation (SYMC): Provides security, storage, and systems management solutions to secure and manage information. Market cap of $11.87B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 23 analysts that have set a target price on the stock, the lowest price target stands at $19.00. This implies a current upside of 21.79% from current levels around $15.60. The stock has had a couple of great days, gaining 5.02% over the last week.

5. Exelixis, Inc. (EXEL): Engages in the discovery, development, and commercialization of small molecule drugs for the treatment of cancer, metabolic, and cardiovascular disorders. Market cap of $545.99M. Takeover/LBO rumor sourced from Minyanville. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $5.00. This implies a current upside of 20.77% from current levels around $4.14. 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 10.43% (equivalent to 7.32 days of average volume). The stock has had a couple of great days, gaining 6.58% over the last week.

6. Quality Systems Inc. (QSII): Develop and market health-care information systems. Market cap of $2.09B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 16 analysts that have set a target price on the stock, the lowest price target stands at $41.00. This implies a current upside of 20.52% from current levels around $34.02. The stock is a short squeeze candidate, with a short float at 15.56% (equivalent to 8.66 days of average volume). The stock has gained 9.01% over the last year.

7. OfficeMax Incorporated (OMX): Distributes business-to-business and retail office products. Market cap of $408.21M. Takeover/LBO rumor sourced from CNN Money. Of the 14 analysts that have set a target price on the stock, the lowest price target stands at $5.00. This implies a current upside of 19.33% from current levels around $4.19. This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). The stock is a short squeeze candidate, with a short float at 17.07% (equivalent to 6.38 days of average volume). The stock has had a couple of great days, gaining 15.89% over the last week.

8. DSW Inc. (DSW): Operates as a specialty branded footwear retailer in the U. Market cap of $1.81B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 9 analysts that have set a target price on the stock, the lowest price target stands at $52.00. This implies a current upside of 18.32% from current levels around $43.95. The stock has had a couple of great days, gaining 7.17% over the last week.

9. Vertex Pharmaceuticals Incorporated (VRTX): Engages in the discovery, development, and commercialization of small molecule drugs for the treatment of serious diseases worldwide. Market cap of $6.10B. Takeover/LBO rumor sourced from Minyanville. Of the 19 analysts that have set a target price on the stock, the lowest price target stands at $32.00. This implies a current upside of 17.09% from current levels around $27.33. The stock has had a couple of great days, gaining 9.96% over the last week.

10. Finish Line Inc. (FINL): Operates as a mall-based specialty retailer in the United States. Market cap of $1.10B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 11 analysts that have set a target price on the stock, the lowest price target stands at $23.00. This implies a current upside of 16.99% from current levels around $19.66. The stock is a short squeeze candidate, with a short float at 12.43% (equivalent to 6.41 days of average volume). The stock has had a couple of great days, gaining 12.85% over the last week.

11. The Men's Wearhouse, Inc. (MW): Operates as a specialty retailer of men's suits in the United States and Canada. Market cap of $1.42B. Takeover/LBO rumor sourced from Seeking Alpha. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $32.00. This implies a current upside of 16.79% from current levels around $27.40. The stock is a short squeeze candidate, with a short float at 8.84% (equivalent to 6.04 days of average volume). The stock has had a couple of great days, gaining 5.05% over the last week. The stock has performed poorly over the last month, losing 10.1%.

12. Patriot Coal Corporation (PCX): Engages in the mining, production, and sale of thermal coal primarily to electricity generators in the eastern United States. Market cap of $917.46M. Takeover/LBO rumor sourced from CNBC. Of the 13 analysts that have set a target price on the stock, the lowest price target stands at $10.00. This implies a current upside of 15.21% from current levels around $8.68. This is a risky stock that is significantly more volatile than the overall market (beta = 3.11). The stock has had a couple of great days, gaining 23.8% over the last week. The stock has performed poorly over the last month, losing 16.75%.

*Target price data sourced from Thomson/First Call (via Yahoo! Finance), all other data sourced from Finviz. To access the complete list of takeover targets, click here.

Source: 12 Takeover/LBO Targets Trading At Significant Discounts To Target Price