3 High-Yield Buyout Candidates To Pad Your Portfolio

I remain intrigued by what I see as an investor hatred of stocks of companies that own infrastructure assets, primarily assets that support the energy sector.   

Despite solid earnings reports, and growing cash flow coverage of dividends, share prices in the group remain low and fall even farther on any piece of perceived negative news. It has been frustrating to own stocks in this sector, yet any review of financial results shows that many of the companies are doing well, and the stocks are deeply undervalued.

I have thought and wondered what might trigger a renewed interest in energy infrastructure stocks, and what might trigger a rebound in share values. Personally, and for my readers, I am comfortable adding shares on the cheap if my analysis shows the dividends are sustainable.

However, I wouldn’t complain if share prices started to move higher, and yields came down back to more believable levels. I think it could be the very high yields themselves that scare investors away from these stocks. 

One potential for share price gains is buyout transactions by private equity making offers to acquire whole publicly traded companies. The private equity money wants to own infrastructure assets that throw off huge cash returns. It’s the general investing public that is having a hard time seeing the value of these companies after recent share value struggles.

Recently I’ve had my eye on three high-yield stocks where the potential of a buyout offer is very much on the table.

This is an easy one. Last week Macquarie Infrastructure Corporation (MIC) made an official announcement that it intends to “actively pursue strategic alternatives including a sale of the Company or its operating businesses as a means of unlocking value for shareholders.”

The MIC share price jumped 8% with this press release. During the earnings call, management said that it would take the rest of 2019 and into the early months of 2020 to evaluate the options. Any deal could push the share price 10% to 20% higher.

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Disclaimer: The information contained in this article is neither an offer nor a recommendation to buy or sell any security, options on equities, or cryptocurrency. Investors Alley Corp. and its ...

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