Stocks to Watch

The recent market plunge is almost certainly creating investing opportunities. Since pretty much everything is getting cheaper, it can be difficult sorting out the good stuff from the bad.

Anheuser-Busch (BUD) and UST (UST) are two companies that are probably in the good category. I'm putting them on my watch list.

Anheuser, which holds a 48% share of the US beer market, recently received a $70 per share offer from European brewer InBev. The deal is expected to close in the 4th quarter of 2008. As I'm writing, BUD is trading around $64.30 a share, or 8.86% below the offer price. This does not include the dividend payment (probably $0.37 a share), whose ex-date will be in November. A-B shareholders are expected to approve the deal on September 29. Although 19 banks have committed to finance the deal, investors are nervous about the $49 billion price tag, given the credit crisis.

UST, the leading smokeless tobacco maker, received an offer from Altria (MO) for $69.50 a share. The deal is also expected to close in the fourth quarter of 2008. As I'm writing, UST is trading around $66.84, or about 3.98% below the offer price. This does not include the dividend payment (probably $0.63 a share), whose ex-date will be in December. Investors seem to think that this deal is likelier to happen. The price tag is around $11.6 billion.

While both companies are overvalued at the current prices should the deals fall apart, they are decent stocks to own for the long term and will eventually trade higher than today's prices. Both pay good dividends and sell products that tend to do well during tough times.

Disclosure: I hold no positions in any securities mentioned. I am considering buying both stocks, but will wait to see if the market panic will drive their share prices lower. Disclaimer.