In a new report, analysts at Credit Suisse discuss the building merger and acquisition wave and the best way for traders to profit from future deals. The report includes a group of 11 U.S.-listed stocks that Credit Suisse sees as potential buyout targets.
Will The Wave Continue?
Analysts discuss four reasons why the M&A wave is set to grow in coming months.
- According to the report, 73 percent of European companies and 63 percent of U.S. companies have a free cash flow (FCF) yield greater than their respective corporate bond yield.
- Corporate confidence levels are consistent with well above-average levels of M&A, yet activity levels are slightly below their long-term average.
- When many potential buyout targets cost less than replacement value, it becomes economically prudent to buy rather than build.
- Private equity buyers are seemingly willing to pay higher multiples than strategic buyers.
Analysts specifically mention the smartphone revolution as a potential driver for M&A activity. According to the report, 2017 global smartphone penetration rates are expected to reach 56 percent.
As every company is forced to adopt an Internet/mobile strategy, business models will be subject to dramatic change. “The result of this, in our view, is that companies may have to adapt very quickly, and it is often quicker to buy than grow organically,” analysts explain.
Credit Suisse lists the following 11 stocks as potential U.S.-listed buyout targets:
Lam Research Corporation LRCX 1.05%
F5 Networks, Inc. FFIV 1.4%
Broadcom Corporation BRCM 0.44%
NetApp Inc. NTAP 1.49%
HollyFrontier Corp HFC 2.34%
Take-Two Interactive Software, Inc. TTWO 2.83%
National Oilwell Varco, Inc. NOV 2.82%
FMC Technologies, Inc. FTI 3.86%
Myriad Genetics, Inc. MYGN 1.49%
Western Digital Corp WDC 1.99%
Fossil Group Inc FOSL 0.26%
Read this article and all my other articles for free on Benzinga by clicking here
Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!