A Hidden Boost for Short-Term Gains

Are We About to Hit America's Final Unwind? America is heading towards an unprecedented economic crisis … and no one is talking about it. On Dec 13, 2013, a financial event is coming that could wipe out markets overnight. To find out how you can shelter yourself from this coming storm, click here for our urgent video report. How to Find the Most Promising Takeover Targets By Jeff Opdyke, Editor of The Sovereign Individual Dear Sovereign Investor Subscriber, Most investors think the only way to score big gains in the stock market in a short period of time is to take a gamble with speculative stocks or options. But that's not true. One of quickest ways to earn a huge return on your investment is to find appealing takeover targets. Once a deal is announced, the stock of the firm being acquired tends to move much higher. Now is a good time to start looking for potential takeover candidates – although merger and acquisition (M&A) activity has been fairly weak so far this year, I expect that trend to change. Advertisement Get the hell out of the dollar NOW! The dollar is in the midst of a 'sucker rally'… And if you get paid in dollars and hold the majority of your assets in U.S. stocks or bonds, then you're wealth is in significant danger. This brief message may infuriate you... but as you'll see – I've found a solution that could get you through it all. Just go here for full details. The recession in Europe, economic slowdown in China and the possibility of a fiscal cliff in the U.S. have created a very uncertain environment. So, it's easy to understand why corporations continue to hold onto an unprecedented amount of cash. Non-financial U.S. corporations now have about $1.74 trillion in liquid assets on their balance sheets, 74% more than they had a decade ago. But once these temporary issues start to clear up, these corporations will start to put that cash to work. That could unleash a boom in M&A activity, as many big corporations use their cash to acquire fast-growing companies. As some of the most likely takeover targets, baby multinationals are set to benefit from this coming M&A boom. Takeover Premiums: The Icing on the Cake I've mentioned before that baby multinationals, small U.S. and Canadian companies that generate most of their revenues overseas, offer a tremendous investment opportunity because they're exploiting the rapid growth taking place in international markets. But there is another factor to consider: some of these companies are also prime takeover targets. As companies in the U.S. increasingly look for growth, they've been snapping up companies with exposure to overseas markets where the real growth is happening. According to a recent study from the consulting firm KPMG, U.S.-based companies were the most active in completing mergers and acquisitions with emerging market companies in the first half of 2012. Buying those foreign companies is one way to get exposure to faster growing markets, but large domestic companies have found an easier way to do it. Instead of acquiring a foreign firm, many big U.S. companies are buying smaller domestic companies that already generate most of their sales overseas. It's an easier transaction because the acquirer is dealing with a known regulatory/legal system instead of having to navigate through foreign rules and regulations. This is important for you, as an investor, because acquirers tend to pay more than market price. If you buy the target before a bid is made, you can make some very nice gains in a short period of time. Let me give you an example: Three weeks ago, I recommended that my Global Growth Strategist subscribers buy Pure Energy Services, a small Canadian company operating in the oilfield-services industry. Here's what I told my subscribers when I first recommended the stock: "A takeover is a possibility as larger oilfield-services companies see the benefit in grabbing smaller players with a profitable footprint in the industry in both the U.S. and Canada." Last week, we sold the shares for a gain of 50%, after a large U.S. multinational swooped in and agreed to pay a big premium to acquire Pure Energy Services. How to Find the Next Takeover Target Although I never buy or recommend stocks based solely on takeover possibilities, finding good takeover candidates can be extremely rewarding. If you do a good job of picking a potential target, the premium the acquirer pays will flow straight into your pocket. So how do you find those targets? There are three main factors to consider. First, you should focus on small U.S. and Canadian companies that generate most of their sales abroad. Their exposure to faster-growing markets makes them good targets for bigger corporations. Those are the kinds of companies around which I've built my Global Growth Strategist advisory service. Second, you want to find companies that are operating in high-growth areas. In most cases, this means companies that have a healthy exposure to emerging market consumers. Sometimes, however, it means companies that are operating in an industry that's experiencing above-average growth. That's the case of Pure Energy Services. Although it generates most of its sales in Canada, the company is playing a key role in the shale-oil industry, where tremendous growth is taking place. Pure Energy Services produces highly specialized equipments used by big oil companies to limit emissions into the air and prevent leaks into nearby groundwater supplies. Companies operating natural gas wells have no choice but to comply with Environmental Protection Agency regulations, and that's what's creating growing demand for Pure Energy Services products. Finally, you should look for companies that are cheap. Acquirers are always looking for bargains. In order to get ahead of them, you will have to do the same. When I recommended Pure Energy, for example, it was trading for just 7.25 times its expected 2012 earnings. That's a very low price to pay for a company whose earnings are expected to grow at a rate well north of 20% next year. If you look at major U.S. exchanges, you will find thousands of small domestic companies generating more than half of their sales abroad. With these baby multinationals, you will not only get exposure to strong overseas growth, but also the possibility of pocketing a big takeover premium. Until next time, stay Sovereign… Jeff D. Opdyke P.S. Baby multinationals, with their ties to booming emerging market growth, offer incredible profit potential for us as investors. Right now, I've found one company in particular that is poised to generate historic growth. An investment in this company today could be like owning Wal-Mart in the '80s or Microsoft in the '90s. To learn more about this incredible opportunity, click here for my latest video report. Related Reading: Finding Explosive Growth in Tomorrow's Multinationals How to Profit from China's Commodity Strategy One Chart Shows the Dollar's Sad Future Is The World's Biggest Ponzi Scheme About to Unravel? RECENT ARTICLES 8/30/2012 To Hell with Politicians: Write Your Own Platform Politicans are stealing your rights. So protect yourself by moving your assets offshore and applying for offshore residence. Create a Plan B 8/29/2012 Why a Bet on Zynga Could Have You Hitting the Jackpot Zynga, the social-gaming firm, is entering mobile gambling. If that happens, investing in this baby multinational could give you profits. 8/28/2012 What to Own as Silver Gets Ready to Rally As the price of silver heads higher, make sure you own physical silver, silver bars, silver coins, and avoid paper silver and silver etfs. 8/27/2012 Today's Risk for Workers Isn't Volatile Stocks... It's Missing Out on Future Growth For the average american, it's important to manage your IRA by investing in stocks - depiste volaility. The real risk is not investing. STATE OF OUR WORLD National Debt Clock: $15,992,396,489,264 BECOME A MEMBER For more valuable information from The Sovereign Society on how to protect and grow your wealth, become a member today. JOIN NOW SPECIAL REPORTS Jeff Opdyke 2012: The Year of Yield Andy Hecht Metals More Precious and Profitable than Gold Bob Bauman How to Escape America, and Where to Go STAY INFORMED Whitelist Us Follow Us on Twitter Like Us on Facebook   Privacy Policy The Sovereign Investor 98 S.E. 6th Ave, Suite 2 Delray Beach, FL 33483 The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: http://sovereign-investor.com/contact-us/ Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. 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