Invest Where Other Companies See Value

One way to find market-beating trades is to look at companies that have suitors. A company that receives an unsolicited buyout offer can get a sense of what their shares would be worth if they were taken over.

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  • If the company rejects the offer, it may be a sign that they see even more value to their shares. That could lead to a higher offer, or a bid from a third company that sees an opportunity.

    Such a move is underway in the hotel sector. Wyndham Hotels & Resorts (WH) received a buyout offer at $90 per share.

    Wyndham rejected the offer, but shares still jumped 9 percent to about $75. A higher offer could lead to further appreciation for the hotel.

    Wyndham operates a variety of hotel brands for all budget needs. And shares trade at less than 17 times earnings, a slight discount to the overall hotel space.

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  • It’s also valued at under $8 billion including its debt, which makes it a solid size for a buyout offer.

    Action to take: Shares look like they have more upside from here, especially if a higher offer comes in. Until then, shares pay a 2 percent dividend.

    For traders, the January 2024 $100 calls, last going for about $0.35, saw some heavy trading relative to their volume. If a higher offer comes through in the coming months, the options could jump higher.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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