Merger and acquisition activity could intensify in the fourth quarter, as companies embrace the current White House administration.
Freedom Capital Markets Chief Market Strategist Jay Woods shares with Benzinga two sectors he thinks could see activity soon.
Regional Banks
Regional banks, Woods says, is one sector that has "yet to take off" with the stock market at all-time highs.
The market expert said M&A activity could soon heat up in the sector.
Woods shared that it has been years since a "clean merger" in the space occurred between companies valued at $5 billion or more, done out of a desire to combine, rather than necessity.
Of the companies that could be acquisition targets or those being acquired, Woods shared several ideas.
PNC Financial Services Group (NYSE:PNC) is a company that Woods believes could be on the hunt as it gets into cryptocurrency.
On the acquisition side, Woods said SoFi Technologies (NASDAQ:SOFI) is a stock to watch with its younger audience.
"I could see someone paying $45 to $50 billion," Woods said.
Woods highlighted SoFi's technology and young user base growth that could make the stock attractive.
"I think they could be a target."
Woods said banks known as the "stadium companies," often with stadium naming rights, could be among the names to watch in the space.
M&T Bank Corporation (NYSE:MTB) is another bank to watch, Woods says.
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Software Stocks
Woods also highlighted the software sector as a market that could see acquisitions, as some companies in the space have been struggling.
"I think software may see some activity," Woods said.
The market expert noted that some companies in the software space were expected to experience growth with artificial intelligence. Instead, they are facing tougher competition due to the rise of AI.
Woods stopped short of naming software companies that he would call targets in the space, but said it could be small-cap to mid-cap stocks in the cybersecurity and software sectors.
"Software is the sector where some of these smaller companies may get acquired."
Woods said DocuSign Inc (NASDAQ:DOCU), Workday Inc (NASDAQ:WDAY) and Unity Software (NYSE:U) are some examples of companies that are known for one thing and could grow by joining forces with other companies.
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