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Next M&A Hotbed?

Thursday, 9 Sep 2010 | 6:28 PM ET

The M&A trend has hit agriculture, technology and pharmaceuticals, so what's the next sector to get caught in the "urge to merge?"

If you ask Jamie Baker of JPMorgan, airlines are primed for consolidation.

"With the potential planned closure of United and Continental , there's no reason to think that the wheels of consolidation are going to stop turning at that point," said Baker.

Fall Forecast
What's the next industry with the urge to merge? Jamie Baker, JPMorgan analyst weighs in.

With America West/US Airways in 2005 and Delta/Northwest in 2008, it seems that every two to three years there is another merger in the airline industry. That said, Baker wonders what will happen to names like AirTran , Alaska Air and US Air. He thinks they'll eventually be rolled into the 'Big Three' and would include: American , Delta and United .

Going forward, he thinks such consolidation would help the airline industry. He said it would allow for future capital to be allocated more efficiently, allowing airlines to cleanup their balance sheets and avoid future bankruptcies.

Baker recommends buying American, Delta and US Airways and expects the next takeover to occur in 2013 or 2014.

Watch the videoto see the full interview with Baker.

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Trader disclosure: On Sept. 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merc; Terranova Owns (APA), (AXP), (ARUN), (AAPL), (BMO), (RSH), (FCX), (GS), (IBM), (JOYG), (MRVL), (ORCL), (C), (POT), (GLD), (XBI), (SU), (X), (UPL), (SPLS), (OXY), (QCOM)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ALK)
Accounts managed by Kanundrum Capital own (RAX)
Accounts managed by Kanundrum Capital own (DRIV)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own U.S. Dollar
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (IXG)
Accounts managed by Kanundrum Capital is short (MCO)
Accounts managed by Kanundrum Capital is short (IAI)
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short the Euro
Accounts managed by Kanundrum Capital is short the Australian Dollar
Accounts managed by Kanundrum Capital is short the British Pount

For Jamie Baker
JPMorgan Chase owns 1% of (LCC) Shares outstanding

(LCC), (ALK) (AAI) are investment banking clients of JPMorgan Chase

An employee of JPMorgan Chase sits on the board of (ALK)

For David Riedel
***No Disclosures***

For Jon Najarian
***No Disclosures***

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ALK
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AAL
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CPT
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DAL
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UAL
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