Small cap value stocks with potential M&A candidacy - BofA

BofA Securities has updated its small-cap value stocks that are potential mergers and acquisitions candidates.

Mergers and acquisitions (or M&A) have picked up in several sectors, particularly in health care (XLV) and there is more potential for sectors such as staples (XLP) and potentially banks (KBE), if there is a political change for next elections in November, according to BofA analysts in their Small/Mid Cap Strategy report.

These small cap stocks from the Russell 2000 (NYSEARCA:IWM) are value potential M&A candidates based on having single share class; a float of less than 90%; three years of positive operating cash flow (or OCF); three years of positive sales growth; 15% discount to their industry group median valuation on enterprise value (or EV) over OCF, EV over free cash flow, and EV over earnings before interest and taxes (or EBIT); and below industry group median net debt over EBIT.

These are the stocks, with data as of Feb. 14:

• Adtalem Global Education Inc. (ATGE)
• Alkermes Public Limited Co. (ALKS)
• BlueLinx Holdings Inc. (BXC)
• Boise Cascade Co. (BCC)
• Bread Financial Holdings Inc. (BFH)
• Chegg Inc. (CHGG)
• CVR Energy Inc. (CVI)
• Dynavax Technologies Corp. (DVAX)
• Encore Wire Corp. (WIRE)
• Ennis Inc. (EBF)
• Forward Air Corp. (FWRD)
• Immersion Corp. (IMMR)
• Inspired Entertainment Inc. (INSE)
• InterDigital Inc. (IDCC)
• Korn Ferry (KFY)
• Ligand Pharmaceuticals Inc. (LGND)
• Mastercraft Boat Holdings Inc. (MCFT)
• Medifast Inc. (MED)
• Mueller Industries Inc. (MLI)
• Otter Tail Corp. (OTTR)
• Peabody Energy Corp. (BTU)
• Perdoceo Education Corp. (PRDO)
• Resources Connection Inc. (RGP)
• Supernus Pharmaceuticals Inc. (SUPN)
• TEGNA Inc. (TGNA)
• Tri Pointe Homes Inc. (TPH)
• UFP Industries Inc. (UFPI)