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2 Under-The-Radar Companies Are Potential Takeover Targets For Their Cash

The M&A environment often offers opportunities where there is a spread between the stock price and the potential acquisition price.

Many investors fish for profits in takeover targets by exploiting this disconnect.

Africo Resources Ltd. and PhosCan Chemical Corp. are two debt-free plays with a significant spread between their stock prices and their potential acquisition prices.

The investors have to bear in mind that these two opportunities are not risk-free.

Although the event-driven strategy is often associated with hedge funds who seek to exploit pricing inefficiencies that exist before or after a corporate event, such as a bankruptcy, merger, acquisition or spin-off, there are also many retail investors who are trying to make money by determining the likelihood of an acquisition occurring and capturing the spread between the current stock price and the potential acquisition price. And, this investment strategy has a significant advantage over other strategies especially when we are in a flat or down market. This strategy is fairly uncorrelated with the market. On that front:

1) I suggested the subscribers to my Newsletter buy Xueda Education Group (NYSE:XUE) when the stock was below $5.03/ADS. A few weeks later, when the stock was at $5.08/ADS, I wrote an article about Xueda Education Group for my SA followers, given that the company had received a buyout offer at $5.50/ADS. Xueda Education Group currently stands at $5.27/ADS, and I am waiting for an update with respect to the completion of the deal.

2) I suggested the subscribers to my Newsletter buy grossly undervalued Metalico Inc. (NYSEMKT:MEA) at and below $0.35/share in early June 2015. Back then, Metalico was undergoing a strategic review and finally announced a buyout offer at $0.60/share in late June 2015. The deal went through as planned, and those who bought at $0.35/share had a return of approximately 65%.

After all, many investors would want to know that the following two companies could offer significant returns in this flat or down market, if the strategic reviews are successfully completed and the companies are sold for their full cash values:

1) Africo Resources Ltd. (OTC:AFCRF).

2) PhosCan Chemical Corp. (OTC:PCCLF).

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