Investing

Analyst Says to Buy These Top Companies That Are Getting Bought

ITC

This electric transmission company confirmed late last year it was considering a possible sale after Bloomberg named National Grid and Iberdrola as potential buyers. ITC Holdings Corp. (NYSE: ITC) functions as a conduit, allowing for power from generators to be transmitted to local distribution systems through its own systems or in conjunction with neighboring transmission systems. It owns and operates high-voltage transmission facilities in portions of Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.

According to Wall Street analysts, the company could sell for as high as $45 per share, and it is unlikely that there would be regulatory issues that would prohibit a transaction. That can always change, depending on who the buyer turns out to be. This is far more speculative for investors as no deal actually has been announced, and there is always the possibility that the company does not find any buyers willing to pay the price sought.

ITC shareholders receive a 1.84% dividend. The consensus price target is $41.75. The stock closed most recently at $40.68.

SanDisk

This is another top chip company that many have felt will be a winner in the storage migration. SanDisk Corp. (NASDAQ: SNDK) is a global leader in flash storage solutions. For more than 27 years, SanDisk has expanded the possibilities of storage, providing trusted and innovative products that have transformed the electronics industry. Today, SanDisk’s quality, state-of-the-art solutions are at the heart of many of the world’s largest data centers and embedded in advanced smartphones, tablets and PCs.

Western Digital had put together a deal back in October to buy the company for $19 billion. It was announced this week that China’s Unisplendour had scrapped its planned $3.78 billion investment in the company, a move that in turn alters the terms of Western’s deal for the company. Reportedly the company will now present an alternative offer for SanDisk consisting of more Western Digital stock and less cash, giving the deal an overall value of $15.78 billion. The value of the deal for SanDisk is now $78.50 per share, down from $86.50 when it was originally struck, according to Sumit Sadana, a SanDisk executive vice president.

Again, this wrinkle in the deal makes things a little more dicey, and should be monitored closely.

The consensus price target is $78.16, and shares closed on Wednesday at $69.90.


While the potential for all these deals looks solid, it should be noted there is no firm guarantee that any of them get done in their current form, or perhaps at all. Buying any of these stocks is only for extremely aggressive accounts that can tolerate big moves in capital. With that in mind, the discounts to the target pricing are solid and make sense for risk-tolerant investors.