7 Stocks to Buy Now BEFORE the 2025 Buyout Boom

Summary

This video discusses the potential for a merger and acquisition (M&A) boom under a new U.S. administration, highlighting how a more lenient approach to anti-trust laws could lead to increased deal activity. The host identifies seven stocks that could benefit from this potential M&A wave, including Kroger, Albertson's, Capri Holdings, iRobot, Tempur Sealy, Novant Health, and Spirit Airlines, detailing the current status of their M&A deals and the potential upside if these deals are approved or revived.

Takeaways

• 🤔 The odds are high that Trump may win the presidency in November, which could impact the stock market and mergers and acquisitions (M&A) activity.
• 📈 Mention of a potential 30% return on certain stocks in the event of an acquisition announcement, based on historical average premiums paid.
• 📉 A decrease in M&A activity in the previous year, with a total of $3.2 trillion in deals, the lowest in a decade, and a prediction for an even worse year.
• 🛑 The Federal Trade Commission (FTC) and its Bureau of Competition, led by Chair Lina Khan, are actively enforcing anti-trust laws and blocking M&A deals that could negatively impact competition.
• 🔄 A potential change in the FTC's approach under a new administration could lead to an increase in M&A activity and a revival of previously stopped deals.
• 🛒 The script lists seven stocks to watch that could benefit from a potential M&A boom, including Kroger and Albertson's, which are involved in a contested supermarket merger.
• 🚫 The FTC's lawsuit against the proposed merger between Tapestry and Capri Holdings, which could result in a significant return if the deal goes through.
• 🤖 Amazon's failed attempt to acquire iRobot, the Roomba maker, due to regulatory concerns, and the potential for a rebound if the deal is revived.
• 🛌 Tempur Sealy's acquisition of Mattress Firm, which is currently blocked by the FTC due to competition concerns, and the potential upside if the deal is approved.
• 🏥 The impact of regulatory intervention on hospital M&A deals, with examples of deals being blocked or called off, and the potential benefits for hospital real estate owners.
• ✈️ JetBlue's acquisition of Spirit Airlines, which was blocked by the Department of Justice, and the significant return potential if the merger is allowed to proceed under a new administration.

Q & A

What is the potential quick return on investment mentioned in the script for certain stocks?

The script mentions a potential quick return of 30% on certain stocks in a matter of days, which is the long-term average premium paid for a company's stock in an acquisition announcement.

Why was the merger and acquisition activity down in the previous year according to the Boston Consulting Group?

The script does not provide a specific reason for the 15% drop in merger and acquisition activity to $3.2 trillion, which was the lowest level in a decade. However, it suggests that the current year might be even worse, leaving investors without the expected return on their investments.

Who is Lina Khan and what is her role in mergers and acquisitions?

Lina Khan is the chair of the Federal Trade Commission (FTC) and its Bureau of Competition. She is responsible for enforcing anti-trust laws and examining proposed mergers that may negatively impact competition and consumers. Her leadership has led to an aggressive approach against M&A, resulting in a record number of challenges in 2022.

How does the script suggest that a change in government could affect mergers and acquisitions?

The script suggests that under a different administration, particularly one that might downsize the FTC as hinted by Trump's plans and Project 2025, there could be an increase in new deals announced and a revival of deals that were previously stopped, potentially leading to a buyout boom.

What is the current status of the Kroger and Albertson's merger?

The Kroger and Albertson's merger, valued at $24.6 billion, is currently in courts due to FTC challenges. The deal has faced regulatory concerns, and Kroger even agreed to sell more than 579 of its stores to address these concerns, but the government is still contesting the deal.

What is the potential upside for investors if the Tapestry-Capri Holdings deal goes through?

If the Tapestry-Capri Holdings deal, valued at $8.5 billion, goes through, there could be a potential upside of 116% for investors, as Capri's market cap has settled back to $3.9 billion after the FTC decided to sue and block the deal.

Why did Amazon's proposed acquisition of iRobot fall through?

Amazon's proposed acquisition of iRobot, a Roomba maker, fell through due to concerns from European regulators about the acquisition of a small company limiting competition. The deal was terminated in January, and iRobot's share price has since fallen significantly.

What is the current situation with the proposed merger between Tempur Sealy and Mattress Firm?

The proposed merger between Tempur Sealy and Mattress Firm is currently in a state of uncertainty. The FTC has sued to block the deal over concerns about reduced competition. While Tempur Sealy and another company, Purple Innovation, have worked out a deal to address these concerns, the FTC has yet to approve it.

What impact has the FTC had on hospital mergers and acquisitions?

The FTC has been actively blocking hospital mergers and acquisitions that it believes would decrease the number of beds or services, arguing that such deals could create monopolies and push up prices. This has led to some providers, like Steward and Community Health Systems, facing financial difficulties or bankruptcy.

What is the potential upside for investors if the JetBlue-Spirit Airlines merger is approved?

If the JetBlue-Spirit Airlines merger, initially valued at $3.8 billion, is approved, there could be a potential upside of 430-435% for investors, as shares of Spirit Airlines have significantly dropped since the announcement of the merger and subsequent regulatory challenges.