I originally bought Del Monte Foods when it was called the California Packing Co. and Del Monte was their main brand name. It was one of those slow but steady companies. Slowly increasing their dividends and earnings which sometimes took a dip when they tried to expand their horizons... like making their own cans at one time. After they changed their named to Del Monte Corp. they got bought out by General Foods, the maker of Jello and Minute Maid Rice and lots of well known other brands... they made the price of Del Monte Corp jump about 45% when that happened. You could take a combo of all cash, all stock or 50% each. I opted to take all stock of Gen. Foods because I liked the co and for tax reasons. Then in a year or so General Foods was bought out by Kraft Foods.... which in turn was taken over by Phillip Morris . Since I did not want to be a owner of a tobacco stock I sold ... but catching that multiple buy out can increase your wealth in short order.
Mentioned this because sectors catch fire after years of slowly improvement in earnings and dividends but litter recognition in the stock prices. All it takes is one sudden over the week end merger and every stock in that sector gets new attention. Back in the mid 1990's this happened to the sleepy Gas Utility sector. Nicor and Nisource bought out smaller companies as did the old Brooklyn Union.
This action often happens to a sector not only slowly improving that gets no respect from the markets but is most likely to happen when we are at the beginning of coming out of a market bottom.... beginning to sound familiar ?
Very often the best of breed in the sector gets taken over first... but not always. Since the deals have a nasty habit of being announced over the weekend before the market opens.... you normally have to already owned them to get the best percentage gain... although buying quickly at the start of the market --- even though you might pay more.... can still give you a pretty good percentage gain. The ploy is not to be complacent. After you get your quick profit then check out the competitors and take you profits and spread it around the two or three most likely candidates that might get taken over also. NOTE... only do this if you like them long term on their own merits because sometimes it takes a while for the next merger to happen. With the two examples named in the Food and then Gas Util. the merger process happened over a two to three year period. Noted only because there had been almost no mergers at all for quite a while before then in these sectors.
Coming out of this bottom and number of industries look promising on their own merits but also could be ripe for the merger game... one of the is the specialty chemical business since so many of these firms are midsize. So do your own research since it is your money and not mine. Here are a few stock symbols to help you out and get started... ALB, EMN, FUL, SLC, KWR, and many more out there to be discovered.
***PinewoodsBear***
