Crista Huff contributed to this Forbes story on potential takeover companies: https://www.forbes.com/sites/moneyshow/2018/03/02/why-these-17-stocks-have-takeover-appeal/#2ddfdd32ecb3
Why These Stocks Have Takeover Appeal
Crista Huff, Cabot Undervalued Stock Advisor
If you want excitement via potential takeover stocks, here are three ideas to consider. These three stocks are currently in play, meaning that it’s been revealed that bigger companies are interested in buying them.
These are not just rumors. Meanwhile, none of these growth stocks are trading anywhere near their buyout values. I think owning these three stocks is a fantastic idea.
KLX Inc. — an aerospace and energy services products maker — was approached by several potential buyers in late 2017. KLX responded by hiring Goldman Sachs to handle a potential M&A transaction. Investors have short memories, and have apparently given up on a buyout offer emerging.
The share price is down with the market in recent days. KLX Inc. is expected to report 2017 EPS up 200%, followed by another 25% EPS growth in 2018. The current P/E is 16.6.
I’m moving KLX Inc. from a Hold to a Strong Buy. This is an excellent stock for aggressive growth investors, and for people who have always wanted to own a takeover stock. The odds are with you right now.
Although TiVo is not in our portfolio, I would note that the entertainment technology stock is in the same situation as KLX Inc. The company revealed that potential buyers have shown an interest. The stock jumped, but investors got bored with waiting.
The stock is dirt cheap, the dividend is big, and the earnings growth is solid. Small-cap stocks can be volatile, but I see very little downside on the share price.
XL Group XL +28.85% is apparently also in play. The stock rose 12% on news that Allianz has shown an interest in acquiring XL Group or a similar reinsurance company, in order to expand its presence in the U.S.
XL Group traded below book value of about $38 in recent days, then rose to $42. According to one large investment firm, recent M&A activity in the industry took place at 1.4 to 1.7 times book value, which puts a potential buyout price in the range of $53-$65.
After a 2017 loss of $2.01 per share related to higher-than-normal catastrophe losses, the market is expecting