As detailed in a previous article
on www.smallcapnetwork.com, KSW (NYSE: KSW
) is a very appealing small cap stock. Operating as a general contractor in a very solid industry, heating and air conditioning systems, KSW has strong earnings growth, strong sales growth and little debt. It was so attractive that a takeover bid was announced by Related Companies., a private firm, at $5 a share, a 23 percent premium. Along with price rises in home builder stocks such as Beazer Homes (NYSE: BZH
) and DR Horton (NYSE: DHI
), this is another bullish sign of the return of the real estate sector.
This takeover should go through as it is an all cash offer. Both of the companies have worked together on projects. KSW closed at $4.97 yesterday. If there is any slippage in the share price, there will be an opportunity to profit from arbitrage.
That could take place as some shareholders may decide to sell now. In addition, the speculators who drove the price up yesterday after the offer from Related Companies was announced has probably cashed out. While there will most likely not be much of a decline, it is a sold opportunity for profits.
What was also solid was KSW as a stock. It paid a dividend of over 4% with a very healthy dividend framework. The company had little debt with a solid balance sheet. Just as the rebound in the real estate sector benefits the shareholders of DR Horton and Beazer Homes, those owing KSW have also gained.