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Look For Strong Fundamentals When Investing In Acquisition Targets

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Look For Strong Fundamentals When Investing In Acquisition Targets

When LinkedIn Corp (NYSE: LNKD) agreed to sell itself to Microsoft Corporation (NASDAQ: MSFT), the stock surged higher by more than 45 percent in a single day.

Investors looking to capitalize on a similar one-day return could do so if they accurately predict the next major M&A announcement. However, doing so is more difficult than it sounds.

Investopedia's Dan Moskowitz has a list of eight technology companies that could very well be the next acquisition target.

The Great 8

1. GrubHub Inc (NYSE: GRUB) has been profitable over the past four quarters and holds no debt. Meanwhile, shares have lost 25 percent over the past year.

2. Twitter Inc (NYSE: TWTR) has shown investors it can grow its top line, but failed to show a profit over the past four quarters. The company's 310 million monthly active user base could be of value for a strategic buyer but it would still be a risky move.

Related Link: Wal-Mart Finds A Big Partner In China

3. Shake Shack Inc (NYSE: SHAK) has seen its stock fall more than 50 percent over the past year, but "there is little doubt" the company will be "much larger" in 10 years than it is currently.

4. Yelp Inc (NYSE: YELP) has issues with turning a profit, but there is "likely enough value" in the company to attract the interest of a buyer.

5. Tripadvisor Inc (NASDAQ: TRIP)'s stock is trading at 60 times earnings and has shown a profit in each of the past four quarters. The company may not be on the selling block in the near term, but a sale of itself is possible over the next few years.

6. Fitbit Inc (NYSE: FIT) is a consistently profitable company, but its best days in terms of innovation and future products are still ahead.

7. Groupon Inc (NASDAQ: GRPN)'s level of growth may have slowed down, but the stock is trading more than 40 percent lower than it was a year ago. An acquisition is "possible" although the Groupon brand has peaked.

8. Pandora Media Inc (NYSE: P) has been consistently losing money, and the stock's 31 percent decline over the past year makes it a potential strategic and defensive move within the streaming music space.

Latest Ratings for FIT

DateFirmActionFromTo
Aug 2019MaintainsNeutral
Jul 2019MaintainsNeutral
Feb 2019UpgradesNeutralBuy

View More Analyst Ratings for FIT
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Posted-In: Acquisitions Dan MoskowitzAnalyst Color Long Ideas M&A Analyst Ratings Media Trading Ideas Best of Benzinga

 

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