From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. How can we tell the dealmakers from the dealbreakers?

Breaking down the buildup
To help, we'll turn to the 110,000-plus investors in Motley Fool CAPS. Research suggests that top-rated stocks offer the best oppportunity to capture the best returns. A combination of two companies with high CAPS ratings should bode well for the new firm's future results, while a high-rated company that joins a lower-rated one may benefit one set of investors more than the other.

Despite troubles in the capital markets, the deals won't stop; they simply might involve more stock and less cash. Here's a handful of recently announced deals, and the ratings for each participating company on CAPS' five-star scale:

Acquirer

CAPS Rating

Target

CAPS Rating

Deal Price

Exterran Holdings

**

Discharge Technologies

NR

$108 million

Cypress Semiconductor (NYSE:CY)

****

Simtek

NR

$46 million

Aegis BPO

NR

PeopleSupport (NASDAQ:PSPT)

*****

$250 million

Tower Group

****

CastlePoint Holdings

****

$490 million

Planet Hollywood

NR

Buca

NR

$9.7 million

General Maritime (NYSE:GMR)

***

Arlington Tankers (NYSE:ATB)

*

1.34-1 stock swap

Nationwide Mutual

NR

Nationwide Financial Services

**

$2.4 billion

CAPS ratings courtesy of Motley Fool CAPS; NR = not rated.

Power up
Without SunPower (NASDAQ:SPWR) to fuel its results after its coming spinoff, parent Cypress Semiconductor needs something to charge up its semiconductor business. That could be Simtek, which manufactures nonvolatile RAM chips that Cypress says it will incorporate into many of its own products. Earlier this year, Simtek had rejected Cypress's $2.20-per-share offer as undervalued; the current bid is $2.60 per share.

CAPS member PizzeriaMan recently figured that the tight association between Cypress and Sunpower was still worth something, much the way EMC (NYSE:EMC) got a boost from its position in VMware (NYSE:VMW):

Stake in [SunPower] is valued at more than [Cypress'] entire market cap. Low risk way to ride the solar rocketship. See: EMC-[VMware].

Perfect timing
Consider it a case of "saved by the bell." Motley Fool Hidden Gems Pay Dirt recommendation PeopleSupport swung to a second-quarter loss as the weakening economy and a Phillipine peso hedge hurt results. Shareholders, though, found their stock shooting up 25% the next day, as India-based outsourcing firm Aegis BPO offered to acquire PeopleSupport for $250 million. Whew!

Even before the buyout offer, investors supported PeopleSupport. Despite its disappointments, CAPS member cfactp08 had kind words for the company: "[It has a] healthy balance sheet and long-term growth perspectives. Earnings have disappointed but current multiple is much lower than historical average."

A value-added offer
What's your take on these deals? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Tell the CAPS community whether the urge to merge is good to go -- or whether you think it's better for the firms involved to remain independent.

PeopleSupport is a Motley Fool Hidden Gems Pay Dirt pick. VMware is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.