M&A is about to really heat up, and these stocks could be takeover candidates, BTIG says

Published Mon, Jun 28 202112:30 PM EDTUpdated Mon, Jun 28 20212:32 PM EDT

Corporate America is poised for an M & A boom with the U.S. economy and markets in full-rebound mode. M & A activity often coincides with a well-performing market and high stock bets on margin, according to BTIG, which identified several companies with increasing shares, valuation and strong earnings prospects that could become buyout targets. Those companies also carry potentially burdensome debt loads and may soon be faced with a dealmaking opportunity. BTIG chief equity and derivatives strategist Julian Emanuel likened the current state of the stock market to the American television game show "Let's Make a Deal," in which contestants are offered deals and choose to keep what they have or trade it for a potentially bigger win (or loss). One door leads to strong economic and earnings growth into at least 2023. Another door leads to "zonks" – favorable interest rates, credit spreads and financial conditions posing asymmetric risks of eventual deterioration. Behind the third door is inflation, supply chain disruption and labor market stress. Emanuel is doubtful the current inflation are transitory. "Whether inflation proves 'transitory' or not, we continue in the long term – particularly since the Fed has made it crystal clear that it will not allow negative interest rates (unlike Europe and Japan) – to view the 39-year bull market in yields as having ended at last summer's near zero approach," Emanuel said. Hess , Carrier and Marriott Vacations are among the companies BTIG screened for with attractive characteristics for both buyers and sellers — meaning that the valuations are rich enough for the companies to want to sell, but low enough that buyers will think they are still getting a deal. Many are industrials firms but energy, health care, consumer discretionary and real estate are also represented. The companies included in the list are Russell 3000 components with market caps of less than $50 billion whose shares have at least doubled since March 23, 2020. The list also includes Russell 3000 shares that are down as much as 15% over the same time period. They were also screened for EPS growth, valuation and debt. This is a proprietary BTIG stock screen and not based on any specific news or speculation about potential M & A.

Marriott Hotels with a pedestrian walking by.

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Corporate America is poised for an M&A boom with the U.S. economy and markets in full-rebound mode.

M&A activity often coincides with a well-performing market and high stock bets on margin, according to BTIG, which identified several companies with increasing shares, valuation and strong earnings prospects that could become buyout targets.