A Growth Stock and a Cigar Butt

Wednesday was a nice takeover day. There was a going-private announcement from American Greeting (AM), a stock I recently suggested to readers. This deal is a bit of a take-under and I would not be surprised to see a higher price before all is said and done, but the stock is up nicely in the last month. We also had a microcap safety-and-construction products company receive a going-private offer from management. Although the companies are in different industries, they have some things in common. Both these management-buyout companies had solid balance sheets, were profitable and traded well below book value.

I ran some screens to find other gems with similar characteristics. There is no guarantee these companies will be the subject of a takeover offer, but they seem to be safe and cheap with solid upside potential. I looked for companies trading below tangible book value with plenty of cash on the books and turning a profit over the past 12 months. Consistent with the screening results of late, there are not many but a couple of them are interesting....494 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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