The Motley Fool has already revealed Wilsons equities strategist Rob Crookston's best growth and asset-rich ASX shares that could become takeover targets.
The theory is that buying up stocks that are tempting for acquisitions could be "lucrative" because takeover offers are often far higher than market prices.
"As we start moving into 2023 we still believe there will be bids made on the Australian market as there are still well-priced equities that represent value for the right buyer," Crookston said in a memo to clients.
"As institutional money continues to flow in the quest for yield, private capital is increasingly looking for opportunities in the listed space."
A third area where such candidates pop up is among resources companies.
Here are Crookston's best ideas from that area:
Image source: Getty Images
Looking forward to 'a robust year' for resources shares
Crookston is anticipating "a robust year for resources stocks".
"[This] will include M&A activity as the sector undertakes growth and consolidation to take advantage of strong balance sheets after a bumper 2022."
Electric vehicle and battery ingredients will be in hot demand for years to come, as the world transitions to a zero-carbon future.
"We believe the large major miners are looking to diversify towards EV minerals," said Crookston.
"We saw this with BHP Group Ltd (ASX: BHP)'s bid for Oz Minerals Limited (ASX: OZL) last year."
The gold industry has been in a frenzy for a while and, according to Crookston, 2023 will be no different.
"Gold miners have also continued a five-year trend of deal-making which has largely been driven by an arms race between the two biggest miners Newmont Corporation (NYSE: NEM) and Barrick Gold Corp (NYSE: GOLD)," he said.
"We saw this with the recent bid for Newcrest Mining Ltd (ASX: NCM) from Newmont in January 2023."
So considering these drivers, Crookston's team came up with four stocks that they consider prime takeover targets:
- Mineral Resources Ltd (ASX: MIN)
- Allkem Ltd (ASX: AKE)
- Lynas Rare Earths Ltd (ASX: LYC)
- Northern Star Resources Ltd (ASX: NST)
Northern Star is a gold miner with operations in Australia and the US. Its share price is up 8.3% over the past 12 months.
Allkem and Mineral Resources both have credentials as lithium producers, seeing their stock prices rise 32% and 86% respectively over the past year.
Lynas is one of the few major producers of rare earth minerals outside of China. Despite this, the share price is down 3% over the past 12 months due to licensing issues with the Malaysian government.
