Searching, searching for areas where the deals are next to come and the fundamentals are strong (just in case you need to worry about earnings season).
We have a host of them: tobacco, telco, entertainment, medical products, drug companies, but how about point-of-sale plays? How about thinking about the companies that make the transactions happen now that there's so much activity at the register for bar coding. Mobile payments and supply chain management?
Right now three companies come to mind, one that's cheap because of some missteps and two that are expensive because of potential for high growth or better execution through a merger.
First, and most obvious is point of sale giant NCR (NCR). We all know that it hasn't been able to capitalize on its dominance, but I know from discussions with both Sonic (SONC) and DineEquity (DIN) that point of sale and digital menus are the rage and NCR is the logical player. We have had too many retailers and restaurants to make this bet, but with a better consumer that might no longer be the case. NCR has terrific self-check-out systems, too.
I have felt that VeriFone (PAY), if it ever got its act together, could be a logical fit for anyone trying to establish dominance at the retail register. That time has come and Verifone stands right in the middle of an important upgrade cycle for electronic payments that has been shown to stop fraud rather dramatically. All the major credit companies are behind EMV, the embedded chip system, and a survey by NXP Semiconductors (NXPI) released last week shows that the consumer is at last ready for them both and the bank and the retail level. As long as Verifone had some accounting issues it was pretty much out of the question to be able to buy this company. That's no longer the case. Seventy percent of all U.S. credit cards should have this technology by 2015. I think Verifone is in the sweet spot because of its knowledge of EMV technology.
Zebra Technologies (ZBRA) is the biggest wildcard because it just acquired Motorola Solutions to track all of the connectivity out there -- the trillions of touch points -- to make an enterprise more intelligent. The company's theme is "making a smart and connected enterprise a reality" and few can doubt that this is the company at the forefront of barcode and RFID technology. Just keeping track of inventory in this day in age is often the secret for so many companies, particularly retailers and warehouse distribution centers, and that's more than enough business for Zebra. The Motorola deal won't close until the end of 2014, but I suspect the synergies could be huge and the cost takeout gigantic, making Zebra one of those high-growth names where numbers are too low almost instantly.
Zebra's primarily known for thermal printing solutions for mobile printers that allow retailers and pharmacies to change prices on the fly and keep track of inventories for fewer out-of-stock items. These are labor-saving devices that Zebra says companies can save up to 40% on labor costs after installation. It's hard to doubt that claim.
Remember, I like to win both ways, fundamentals and takeovers. All three of these fit the bill.
