-- Enterprise value (the combined value of a company's stock and debt) divided by Ebitda (earnings before interest, taxes, depreciation and amortizing) of five or less. This EV/Ebitda ratio is often used by companies scouting for acquisitions.
-- Total debt no more than 75% of shareholders' equity (corporate net worth, or assets minus liabilities).
-- Cash or safe short-term investments of $75 million or more.
-- Stock price no more than 1.5 times the company's sales.
When I ran this screen on May 4, only 39 companies met all the criteria. Here are seven that look to me like they have takeover allure, and should be decent investments even if no suitor calls.
Coventry, GameStop
The largest, with a market value of $4.9 billion, is Coventry Health Care Inc. of Bethesda, Md. Selling for only 1.15 times book value, I think it is alluring bait.
Coventry, which provides managed health care services, has been the subject of takeover speculation. In the summer of 2008, for example, the stock jumped on speculation Aetna Inc. would take it over.
GameStop Corp. of Grapevine, Texas, is the world's largest video game and entertainment software retailer, according to its Web site. Its stock peaked at more than $63 in late 2007, and sells for a little more than $25 now.
With GameStop shares fetching less than 10 times earnings and 1.3 times book value, it appears to me to be a potential magnet to buyers. In March 2010 the stock ran up 27% amid acquisition rumors, which later subsided.