Chicago-based Telephone & Data Systems Inc., the parent of U.S. Cellular, has a market value of $3.3 billion. At a time when AT&T Inc. is trying to acquire T-Mobile USA Inc. for about $39 billion, it's not hard to imagine this company giving up its independence.
Telephone, Oshkosh
Telephone & Data is profitable, yet has struggled with growth. It has $592 million in cash and near-cash along with $300 million in short-term investments. To me, it looks ripe for the plucking.
With the U.S. defense budget under pressure, mergers may pick up among defense contractors. Oshkosh Corp., which makes military transport vehicles and specialty trucks such as fire engines and cement mixers, could be picked off by a larger competitor. The Oshkosh, Wisconsin, company's stock languishes at five times earnings.
Seacor Holdings Inc., located in Fort Lauderdale, Florida, transports men and material to and from offshore oil platforms. Selling for about 1.2 times book value, it could probably be acquired for less than $3 billion.
In the semiconductor-equipment industry, I favor Kulicke & Soffa Industries Inc. of Fort Washington, Pennsylvania. At five times earnings, it strikes me as a very cheap stock.
One more candidate is RadioShack Corp., based in Fort Worth, Texas. It earned $1.84 a share in 2000 and $1.68 a share in 2010. A larger retailer could probably milk more growth and profitability out of this well-known brand.
Disclosure note: I own Kulicke & Soffa personally and for clients. I have no long or short positions in the other stocks discussed in this week's column.
(John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)