Buyout Bonanza: 7 Undervalued Gems Ripe for a Private Equity Takeover


  • E2open Parent Holdings (ETWO): ETWO stock has surged since it became an activist target, but it still could be a takeover target.
  • Indie Semiconductor (INDI): Private equity rumors have recently emerged about automotive chip play INDI.
  • Nordstrom (JWN): JWN’s takeover catalyst has gotten stronger, now that a private equity firm may be interested in making an offer.
  • Each of these seven buyout stocks to buy has been or could soon be the subject of private equity takeover talk.
buyout stocks to buy - Buyout Bonanza: 7 Undervalued Gems Ripe for a Private Equity Takeover

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With global mergers and acquisitions (M&A) volume set to rise by 50% this year, you may be interested in some of the top buyout stocks to buy. After all, when financial acquirers, like private equity firms, make an offer for a public company, they typically pony up a big premium to the stock’s trading price.

This creates an opportunity for profit. However, dabbling in takeover stocks can be a risky endeavor. Even if there are buyout rumors abound, rumors do not always translate into bona fide deals. Such stocks can quickly reverse course if and when chatter about a possible transaction subsides.

Hence, it’s typically recommended not to buy a stock just on takeover speculation. That said, there are currently many stocks out there that, besides offering good value and big rebound potential, have been or could soon be the subject of takeover talk.

That’s the story here, with the following seven buyout stocks to buy.

E2open Parent Holdings (ETWO)

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E2open Parent Holdings (NYSE:ETWO) operates a cloud-based supply chain management SaaS [software as a service] platform. Since last October, shares in the tech company have been the target of activist investor Paul Singer’s Elliott Management hedge fund.

At that time, the fund not only disclosed owning 13.8% of all outstanding shares of ETWO stock, but also disclosed that it may decide to engage in an M&A transaction with E2open, “as an acquirer, investor, and/or financing source.”

So far, Elliott or any other potential has yet to make a bid for the company.

However, even as E2open shares have bounced back substantially since the activism news, the fund has yet to exit its position. The potential for a takeover remains, but shares could also keep on rallying thanks to strong fiscal results. In its latest quarterly earnings release, E2open beat on both revenue and earnings.

Indie Semiconductor (INDI)

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Indie Semiconductor (NASDAQ:INDI) makes chips and software for use in driver assistance systems and autonomous vehicles. Indie’s corporate name may suggest that this company is willing to go at it alone. However, its days as an independent, publicly traded company may be numbered.

At least, based on recent takeover speculation. As Seeking Alpha reported on April 23, private equity firm Silver Lake is reportedly interested in making a bid for all outstanding shares of INDI stock. Since becoming one of the buyout stocks to buy, INDI has moved moderately higher.

However, given that this stock, trading for around $6 per share today, once traded at double-digit prices, if a deal arises, the takeover premium could be material. Even if the Silver Lake takeover talk doesn’t make it past the rumor stage, factors like a forecasted swing back to profitability next year could drive a further surge higher for shares.

Nordstrom (JWN)

A Nordstrom (JWN) storefront in Toronto, Canada.
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As I recently discussed, Nordstrom’s (NYSE:JWN) takeover catalyst was something that called into question mixed sentiment from the sell-side community. Back in March, the founding Nordstrom family expressed interest in taking the department store chain private.

Since then, the takeover catalyst has become even stronger. Shares have trended higher, since Reuters reported that private equity firm Sycamore Partners was also interested in taking Nordstrom private. Yet while JWN stock has climbed back towards its 52-week high, don’t assume it’s too late to buy this potential takeover stock.

JWN remains relatively cheap, at 12.2 times forward earnings, especially when you consider the retailer’s salable real estate assets. A private equity bidder may have to pay a big premium to the stock’s current price. Outside of a takeover, positive surprises are something else that could propel shares higher. Following the latest guidance update, investors have seriously walked back expectations.

Paramount Global (PARA)

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In recent months, Paramount Global (NASDAQ:PARA) has become one of the buyout stocks to buy. As you may know, the entertainment conglomerate is, in Wall Street parlance, “in play.”

Both strategic and financial buyers have expressed interest in acquiring the company. Yes, so far bids have yet to result in a deal to buy Paramount. Sony (NYSE:SONY), along with private equity firm Apollo Global Management (NYSE:APO) have made the latest bid. However, Sony is reportedly thinking of backing out.

Although this uncertainty over would-be acquirers has led to mixed price action for PARA stock, make no mistake. This catalyst has not gone away. Given Paramount’s low valuation of 9.7 times forward earnings, plus its diverse portfolio of media assets, the company remains an attractive takeover target. Even if Paramount stays public and independent, PARA could unlock value through other “strategic alternatives,” like non-core asset sales.

Peloton Interactive (PTON)

Peloton (PTON stock) sign on city storefront. Peloton layoffs
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Peloton Interactive (NASDAQ:PTON) is a low-price stock, but plenty would beg to differ if one were to call it a value stock. Given how the home fitness company continues to report declining revenue and high net losses, its current low valuation appears justified.

However, in the eyes of private equity, PTON stock could be a diamond in the rough. A growth-focused buyout could potentially acquire Peloton, turnaround its operations, then take it public again at a higher valuation. With this, there may be validity to recent private equity takeover rumors.

Although PTON has rallied by more than 20% on this takeover speculation, there may still be opportunity for those wanting to wager on a potential deal. Better yet, rather than getting turned around by a buyout firm, Peloton’s own turnaround efforts could produce a similar comeback. In such a scenario, turnaround gains would accrue to existing shareholders.

Rapid7 (RPD)

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Following a poorly-received quarterly earnings release, Rapid7 (NASDAQ:RPD) has fallen to prices so low, it could soon become one of the buyout stocks to buy. Largely, because the market’s response to the latest results and guidance may have been an overreaction.

Rapid7 beat on both earnings and revenue, but guidance for the coming quarter fell short of expectations, although just moderately. RPD stock Currently trades for 17.5 times forward earnings. That’s a reasonable valuation compared to peers in the cyber security space.

Last August, a private equity firm reportedly made a bid for the company. With the stock now near new lows, a new private equity takeover offer could emerge. Just like with other companies listed above that are facing growth challenges, a financial buyer could buy Rapid7, pivot it back into growth mode, and take it public again at a big profit.

Under Armour (UA)

Under Armour on Michigan Avenue in Chicago
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Shares in athletic apparel company Under Armour (NYSE:UA) have fallen considerably in recent years. Chalk this up to both weak levels of revenue growth, plus the impact of high inflation on its profit margins.

In an effort to improve the company’s performance, Under Armour’s founder, Kevin Plank, returned to the CEO role last month. While not certain, Plank’s return could be the prelude to a major strategic alternative. In March, analysts at Morgan Stanley argued that Under Armour is a top buyout candidate. Plank owns a 16% stake in the company. He could easily team up with private equity to take UA private in a management-led buyout.

Shares are relatively cheap at 13.6 times forward earnings. A possible bid would likely be at a big premium to current prices. Again, this is a long-shot catalyst, but one worth considering if you’ve been mulling whether to buy UA stock.

On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Thomas Niel, contributor for, has been writing single-stock analysis for web-based publications since 2016.

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