It happens every year, and 2018 won’t be any different. Larger companies looking to add to growth, in addition to that of the organic or internal variety, scan the field for purchases and acquisitions that are easy to bolt on and that could add returns in a timely fashion. This year the process may even speed up some as the market sell-off that happened last month already may have put some companies in the sights of acquirers.
In what is a yearly and very all-encompassing report, the analysts at RBC go through every sector looking for possible takeover candidates. Last year the company’s screens yielded 20 such candidates that eventually were acquired over the following 12 months.
One screen that should be of interest to many investors is the potential buyout candidates in the technology sector. With constant new innovations, and a growing dependence on the cloud for storage, computing, data and content streaming and much more, the chances for mergers and acquisitions activity to jump are for real.
We cross-referenced the RBC potential takeout candidates looking for the highest profile names and found four that like solid choices.
This company does a large amount of business with Cisco, which could have an eye toward it. Celestica Inc. (NYSE: CLS) provides supply chain solutions to customers in the communications, consumer, aerospace and defense, industrial, health care, energy, semiconductor equipment, servers and storage end markets in the Americas, Asia and Europe.
Celestica offers a range of services, including design and development, engineering services, supply chain management, new product introduction, component sourcing, electronics manufacturing, assembly and test, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics and aftermarket repair and return services.
These products and services are used in various applications, such as servers; networking, wireless and telecommunications equipment; storage systems; optical equipment; aerospace and defense electronics, comprising in-flight entertainment and guidance systems; audiovisual equipment; set-top boxes; printer supplies; and a range of industrial and alternative energy products, including solar panels and inverters.
The 52-week trading range for Celestica shares is $9.79 to $14.70. The stock closed Thursday at $11.33 a share.
This small-cap company could offer large returns for aggressive investors, and it is a potential takeover target. FormFactor Inc. (NASDAQ: FORM) helps semiconductor manufacturers test the integrated circuits that power consumer mobile devices, as well as computing, automotive and other applications.
The company is one of the world’s leading providers of essential wafer test technologies and expertise, with an extensive portfolio of high-performance probe cards for DRAM, flash and system-on-chip devices. Customers use FormFactor’s products and services to lower overall production costs, improve their yields and enable complex next-generation integrated circuits.
The Wall Street consensus price target for the shares is $19.25. The stock closed trading on Thursday at $14.95, in a 52-week trading range of $10.45 to $18.65.
This company just announced a large stock repurchase program. iRobot Corp. (NASDAQ: IRBT) is a consumer robot company engaged in designing and building robots. The company’s portfolio of solutions features various technologies for the connected home and various concepts in mapping, navigation, mobility and artificial intelligence.
iRobot offers multiple Roomba floor-vacuuming robots. Roomba’s design allows it to clean under kickboards, beds and other furniture. The company offers the Braava family of automatic floor mopping robots designed for hard surface floors. The Roomba 600 series robots offer a three-stage cleaning system.
iRobot trademarks include Scooba, ViPR, NorthStar, Create, iAdapt, Aware, Home Base, Looj, Braava, vSLAM and Virtual Wal.
The 52-week trading range is a whopping $55.77 to $109.78. The shares closed Thursday at $69.87.
This company saw some serious institutional buying recently. Sanmina Corp. (NASDAQ: SANM) is an electronics manufacturing services provider serving the following end markets: industrial, medical and defense (43%), communications networks (37%) and embedded computing and storage (20%).
Sanmina has two reporting segments: Integrated Manufacturing Solutions, which accounts for 80% of revenues, and Components, Products and Services, which accounts for 20%. The company derives approximately 84% of its revenues from non-U.S. operations.
While optical revenues have been somewhat weak in the past two quarters, analysts feel those numbers could turn higher as new programs start to ramp up.
The consensus price target is $32.60, and shares closed Thursday at $27.90, in a 52-week trading range of $24.60 to $42.95.
While there is absolutely no guarantee that these companies are acquired, they all are outstanding stocks to own in aggressive growth portfolios on their own. The buyout factor just gives them another reason to be considered.