Analyst Has 5 Well-Known Technology Buyout Candidates

One great way for companies to expand growth, earnings and product offerings beyond internal organic expansion is to go the takeover route. While sometimes it can prove to be dilutive, especially if the majority of the deal is done in stock, it can also prove to be accretive by adding earnings immediately. A recent report from RBC spotlighted hundreds of stocks in multiple sectors that are small-caps that could have a very real chance of being takeover candidates.

We screened the RBC list of technology takeover candidates for the higher profile and more well-known stocks. These may prove to be solid companies to own even if they ultimately are not bought or merged. With that in mind, buying any of these companies is for accounts with a very high risk tolerance.

Advanced Micro Devices Inc. (NASDAQ: AMD) designs and integrates technology that powers millions of intelligent devices, including personal computers, tablets, game consoles and cloud servers that define the new era of surround computing. The company has had a roller-coaster ride the past couple of years, with analysts very on and off again on the company as it continues to try and remake itself. The company changed chief executives last fall in a move that rattled the markets, but it has made progress in moving to new product silos. For a larger tech company looking for a chip presence, AMD may be a solid fit.

The Thomson/First Call price target for the stock is posted at $3.11. The shares closed trading near that yesterday at $3.06.

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Ciena Corp. (NYSE: CIEN) is a company that many analysts believe could be one of the top beneficiaries of an increase in wireless spending, despite the many fits and starts investors in the stock have experienced over the years. Wall Street analysts have pointed out in recent reports that a majority of enterprise and Web/cloud data centers are in the process of running high-speed 40/100G optical interconnects between their data centers. Ciena could be a solid winner from this theme, and more than 30% of sales are not from the telecom sector. The company could be a good fit for a large-cap tech like Cisco looking to expand into this market, or a big telecom looking to expand.

The consensus price target stands at $23.90, and Ciena shares closed Monday at $20.03.

Jabil Circuit Inc. (NYSE: JBL) is the ultimate outsourcing stock for technology and more. The company offers electronics and mechanical design, production, product management and aftermarket services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, solar, storage and telecommunications industries. A large-cap technology company looking to add manufacturing capacity for current and new products plus additional revenue streams might find the company very attractive.

Jabil Circuit investors are paid a 1.45% dividend. The consensus price objective is $22.93. Jabil shares closed Monday at $22.31.

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Kulicke and Soffa Industries Inc. (NASDAQ: KLIC) is a semiconductor capital equipment company that could be a fit for a chip company or a larger competitor company already in that business. The company designs, manufactures and sells capital equipment and expendable tools to assemble semiconductor devices, including integrated circuits, discrete devices, light-emitting diodes and power modules. The company posted solid fourth-quarter results back in January and could be an accretive purchase for a bigger player.

The consensus price target is $16.33, and the stock closed just below that at $16.10 a share.

ON Semiconductor Corp. (NASDAQ: ONNN) purchased Truesense Imaging last year, a provider of high-performance image sensor devices addressing a wide range of industrial end-markets, including machine vision, surveillance, traffic monitoring, medical and scientific imaging, and photography. The acquisition of Truesense Imaging strongly complements ON Semiconductor’s image-sensor business by vastly expanding its technology portfolio and adding more than 200 new customers. A larger chip company may find the company’s product line a solid fit.

The consensus price target for this Wall Street favorite is $12.42. Shares ended the trading day Monday at $12.02.

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While some of these stocks appear to have a large market capitalization to be designated small cap, they are all stocks that could feasibly make a difference at another larger firm. Again, with no guarantee anybody is interested in them, they all make reasonably good investments on their own.

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