Transocean Inc. (NYSE:RIG) shares added more than 3% earlier this week after the company announced first-quarter earnings that topped analyst estimates. The company attributed the performance to net profits which more than doubled due to high oil and gas prices coupled with flat operational costs.

Transocean's conference call today addressed concerns that their drilling operations are a cyclical business and rig rentals will fall in a year or two along with the stock. A company officer reassured shareholders, saying that there is so much demand for deep water drilling that the current cycle will last well beyond 2010.

The conference call also noted that recent deep water rig rentals from other companies soared to over $500,000 per day - a number well  below what RIG is charging. Obviously, any rise in Transoceans' rates would provide a direct boost to their bottom line. The reality is that oil demand is going up every year while it continues to be a scarce resource.

Meanwhile, the company's fundamentals continue to be attractive. The current P/E to growth (PEG) ratio stands at just 0.46, meaning the stock is extremely undervalued given its growth prospects. The company's forward P/E of 8x also suggests it is undervalued. Combined, these are all factors that make RIG a safe bet in the oil industry for the next few years.

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RadioShack (NYSE:RSH) reported first quarter earnings earlier this week that more than doubled analyst estimates causing shares in the company to rise more than 10% already this week.

The strong report comes despite negative stories out of Barron's and the Wall Street Journal along with a parody in The Onion. So, why is everyone wrong about this company? Well, RSH has recently been restructuring itself by selling off its under-performing stores.

The result has obviously been declining sales, which caused the bearish sentiment we've seen in many financial publications. What many people fair to recognize is RadioShack's gross margins, which have increased from 48% to 52% while its earnings moved from $0.14 to $0.29 per share last year.

The strategy is one that was pioneered by Sears Holdings (NYSE:SHLD) when it moved from $15 to $190 per share during its turnaround. If RadioShack follows the same road, it is likely that analysts will continue to remain bearish on the stock while its same store sales continue to sink. However, investors who are willing to weather this storm and realize the bottom-line improvements will see blue skies. These factors make RSH a stock worth watching closely over the next few quarters!

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Synenco Energy Inc. (TSE:SYN) shares moved up 3.36% today after the company announced that it is conducting a strategic review and has hired TD Securities Inc. and Merrill Lynch Canada Inc. to advise it.

The move to explore strategic options came after the company halted construction of a $4.7 billion refinery upgrade because it was becoming too expensive. The halting of construction may affect Chinese oil giant China Petroleum & Chemical Corp., who invested $119 million for a 40% stake in the project back in May 2005.

The stock caught investors' eyes when the company stated that nothing has been ruled out at this point and that it would consider as many options as possible. These options could include anything from restructuring downstream businesses for economies of scale to an outright sale of the corporation.

Many analysts are pointing to China's Sinopec as the logical buyer for the company at this point given their existing 40% stake in this project. And Sinopec did not deny that they were in talks with the company! More, investors and analysts point to other recent acquisitions in regional oil sands projects like Statoil ASA's recent acquisition of North American Oil Sands Corp. for $1.97 billion. Clearly there is interest in the company!

Whether or not a sale of the company is in the cards remains to be seen, however this stock is definitely one to keep an eye on in the meantime. Any sale of the company could come at a substantial premium to the current market price - even after today's move.

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Cablevision Systems Corporation (NYSE:CVC) shares jumped $2.72, or 8.33%, to $35.39 today after the company agreed to be taken private by the founding Dolan family for about $10.6 billion. We first mentioned the possibility of a raised bid back in early April, where we also suggested other possible targets. The current $36.26 per share offer was an 11% premium to Tuesday's closing price and a 52% premium to Cablevision's price before Dolan's first bid. The board had rejected the family's past bids for the company, that came in at around $21 per share initially, since 2005. The board finally accepted today's bid after careful deliberation with the family.

Now that the heavy investment spending by many of these large cable companies to lay down the groundwork is completed, there is simply strong cash flows remaining for the coming years as their spending declines. This trend led to the buyout of Cox Communications and Insight Communications, which have both recently been taking private by private equity firms and controlling shareholders. Many analysts expect these trends to continue before the valuations of cable companies rise high enough to prohibit such takeovers. And given the multiples we are seeing today, this could be awhile. Two companies to keep an eye on are RCN Corporation (RCNI) and Knology (KNOL), which are both smaller cable operators that have a strong niche presence in their respective markets.

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Dow Jones & Company, Inc. (NYSE:DJ) shares jumped over 50% today after the company received an unsolicited $5 billion, or $60 per share, bid from News Corp. (NYSE:NWS). The move would expand News Corp's reach into business media with the Wall Street Journal and Dow Jones Newswire. While unsolicited, News Corp. insisted that the bid was friendly and the company would not pursue any kind of a hostile takeover of Dow Jones.

It is obvious that Dow Jones is a company that News Corp. wants badly enough that it would bid such a high amount to preclude competitors. Dow Jones investors may be ready for an exit too after the company announced first-quarter profits that fell 63% after revenue at the Wall Street Journal declined. Coupled with a slowdown in the print media industry - which saw newspaper circulation fall 2.1% in six months - the bid should be welcomed by the company's board of directors. However, we'll have to wait and see...

News of the unsolicited bid also sent shares of other newspaper companies up as speculation of consolidation in the industry took over. Gannett rose 5%, the New York Times rose 5% and the Washington Post rose nearly 3%. For now, however, this seems like an isolated incident.

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Agile Software Corporation (NDAQ:AGIL) shares moved up $0.24, or 3.34%, to $7.43 today after the company announced the date of its annual shareholders meeting in a Schedule 14A proxy filing with the SEC. Normally this isn't such big news, but in Agile's case this year's June 20th annual meeting promises to be like no other!

Agile Software has been engulfed in a month-long battle with activist hedge fund manager Robert Chapman, who has been pushing for a sale of the company. And he is not alone - Shamrock Activist Value Fund also voiced its support for the idea along with other large institutional investors.

The two hedge funds are concerned that independent software companies focusing on the product lifecycle management industry cannot compete against their larger rivals. Consequently, a sale of the company may be the only viable option for investors concerned over slow revenue growth and narrowing profit margins.

Agile has reportedly hired Citigroup to help it explore its strategic options, but some investors worry that they may use their large cash position to make an acquisition rather than auction itself off. This is why many large investors are going to be carefully watching the company during its annual meeting this year, hoping to get an idea of where they plan on taking the company.

Meanwhile, Chapman hinted that he would outline his argument for selling the company in a filing with the SEC shortly. We will likely get to see this before June 20th so that it can be discussed during the company's annual meeting. If Chapman and other investors are successful in pushing for a sale of the company, it could mean significant share appreciation. This makes AGIL a stock worth watching!

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Wendy's International (NYSE:WEN) shares jumped over 10% last week after the company announced that it was considering putting itself up for sale. The move comes after billionaire investor Nelson Peltz and former shareholder Bill Ackman pressured the company to boost its stock price. The two first persuaded Wendy's to spin off Tim Hortons, a coffee and doughnut chain, in September and sell its Baja Fresh chain in November. But activist shareholders and finally managed to convince the board that this simply is not enough.

The company still owns a lot of undervalued assets including about half as many locations as McDonald's. Investors argue that there is a lot of money tied up in these assets that could easily catch the interest of a financial buyer or perhaps even a strategic buyer. Financial buyers are attracted to the company's cash flows and real estate, which can be used to repay the debt borrowed to finance the transaction. Strategic buyers may be interested in the large scale of Wendy's operations; however, some argue that it may be too expensive for most strategic buyers. Whether or not a sale actually takes place remains to be seen; however, WEN is definitely a stock to keep an eye on as this situation unfolds!

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Bankrate Inc. (RATE) added 5% to $40.37 today after the company was initiated with a buy rating at American Technology Research with a price target of $48.

Ceragon Networks Ltd. (CRNT) shares jumped over 16% after the Israeli wireless provider reported first-quarter net earnings of $2.62 million, or 9 cents per share, up from $228,000, or one cent per share, a year ago. Revenues rose to $33.9 million from $21.3 million a year ago. Analysts were expected 9 cents per share on revenues of $32.4 million.

Datawatch Corp. (DWCH) shares rallied 25% after the enterprise information management applications provider reported second-quarter earnings of $424,000, or 7 cents per share, up from $227,000, or 4 cents per share, a year ago. Revenues rose 14% to $6.1 million for the year.

Ionatron (IOTN) shares jumped 21% after the U.S. Navy posted a notification on the Federal Business Opportunities Web site about the award of a sole source contract regarding the company's Counter IED technology. Ionatron disclosed the posting of the contract which is worth about $500,000.

Sigma Designs (SIGM) shares dropped 12% after the company was downgraded to sell from neutral at American Technology Research.

Rigal Pharmaceuticals (RIGL) dropped 6.2% after the company said that it plans to sell five million shares under an existing shelf registration statement with an over-allotment option for an additional 750,000 shares to the underwriters.

Citigroup (C) management is reportedly concerned that the company could become an activist takeover target, according to a report by the Financial Times. The executives are concerned that the company may represent an attractive breakup opportunity, while many dismiss the rumors on grounds of its size.

Merrill Lynch (MER) said it would buyback $6 billion in shares.

Dominion (D) agreed to sell its Gulf of Mexico assets to Italian energy group Eni (E) for $4.8 billion.

Hexcel Corporation (NYSE:HXL) shares jumped $0.77, or 3.61%, to $22.11 today after O.S.S. Capital Management disclosed a 5.1% stake in the company and expressed their concern over the company's recent under-performance in a Schedule 13D filing with the SEC. The hedge fund first contacted the company on March 9, 2007 when it sent a letter expressing concern regarding the company's operating performance relative to its peers and management's lack of concern regarding the gap in performance. O.S.S. also noted that one member of the company's board of directors was stepping down and suggested a candidate for his replacement.

The letter cited the company's operating margins - which stand near 10% now - as being the primary issue. While the company has increased this number from 7% in 2002 to 10% now, Cytec Industries' Engineered materials segment is now generating operating margins of 18% while Toray Industries' is even higher. Had the company achieved 17% operating margins on its 2006 revenues, the company would have earned an additional $78 million in operating income. And by applying the current 17x multiple of EV to operating income, this difference would result in a value increase of more than one billion dollars. This equates to more than $14 per share above the current share price! The hedge fund blames this inability to achieve proper valuation on poor management, which it believes needs to be replaced.

The next move came on April 9th when Hexcel Corporation's CEO visited O.S.S.'s offices to discuss these matters more deeply. But these talks seemed to have gone no where after the hedge fund reiterated its concerns shortly later and requested that a committee of independent directors be formed and that the committee retain an independent investment bank to advise as to how shareholder value could be best maximized. The hedge fund simply stated that the company is under-earning, management is not addressing the shortfall in earnings, and the shareholders are suffering. Therefore, an evaluation of strategic alternatives may be the only way for changes to take place. Whether or not this process happens smoothly depends largely on the company's board of directors. If they oppose, we could be in for a battle. However, if they agree, it could mean significant upside for the company's shareholders. This makes HXL a stock worth watching!

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Yahoo! Inc. (NDAQ:YHOO) announced the acquisition of privately held Right Media today for $680 million just a week after Google Inc.'s (NDAQ:GOOG) well-publicized acquisition of DoubleClick. Right Media is a privately held company that enables publishers to buy and sell online ad placements in real time through an auction system - a system very similar to that of DoubleClick. The move will give Yahoo the ability to sell and broker ads outside of its own network of websites and diversify its revenues to better compete with Google.

The move marks continued consolidation in the highly-competitive online advertising market as giants Yahoo, Google, AOL and Microsoft compete to broaden their audience. Notably, Microsoft (NDAQ:MSFT) and TimeWaner's AOL (NYSE:TWX) have yet to obtain a presence in the more traditional banner advertising market to compliment their existing contextual search business. Clearly, both of these companies are interested in such acquisitions since they were involved in the bidding for DoubleClick before Google's blockbuster bid. So, what are some other potential targets for continued consolidation? Well, three key players have emerged: aQuantive (NDAQ:AQNT), ValueClick (NDAQ:VCLK) and 24/7 Real Media (NDAQ:TFSM). Right now, several of these names are down since Yahoo!'s acquisition involved a private company, suggesting that these players are somewhat overpriced. However, given Microsoft's large cash reserves and AOL's need to establish itself in the market, the buyout possibilities for these firms remains strong.

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