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 115,000-plus investors in Motley Fool CAPS. Our data 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

Blinkx

NR

MIVA

**

$39 million

JDA Software

***

i2 Technologies (NASDAQ:ITWO)

**

$346 million

Mitsubishi UFJ Financial

NR

UnionBanCal

*

$3 billion

Middleby (NASDAQ:MIDD)

*****

TurboChef Technologies (NASDAQ:OVEN)

*

$200 million

CVS Caremark (NYSE:CVS)

****

Longs Drug Stores

**

$2.9 billion

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

Power up
The warm, sunny clime of California is just what drugstore chain giant CVS Caremark needs to brighten up its industry-leading position. By acquiring Longs Drug Stores, which services several western states and Hawaii, it pushes past struggling Rite Aid (NYSE:RAD) to become the largest chain in the state. Equally important, however, CVS gets hold of Longs' prescription-benefits-management service, which it can use to fight back against the encroachment of Wal-Mart (NYSE:WMT).

Although regulators may require CVS to divest some of its California properties to approve the acquisition, CVS has already indicated that the land Longs owns could be a source of cash for it; the company wouldn't hesitate to enter into sale-leaseback arrangements to monetize that real estate.

CAPS member oxsigtech finds CVS' nationwide reach an attractive quality:

This company has been spreading out accross America pushing out stores like Savon & Rite-Aid for a few years now. They haven't overgrown yet. I think this last pull back is a great time to jump in here. Steady growth in rev's, EPS and div's for the next three years.

A full supply of options
Supply-chain management software has been a difficult field for i2 Technologies in recent years, as Oracle (NASDAQ:ORCL) increasingly moves in on its turf. So while it's not exactly a shotgun wedding, i2's decision to say "I do" to JDA Software creates an independent option for businesses looking to manage logistics. CAPS member JMPingFool recognized back in April that i2 was the last man standing in supply chain management: "buyout target - last pure play SCM vendor."

Cooking up profits
Restaurant ovens don't tend to have that sexy investment angle most investors seek. Yet for Middleby, that hasn't mattered. Since the industrial-oven maker was first chosen by small-cap investment service Motley Fool Hidden Gems, shares have nearly quintupled in value. Compare that to a less-than-25% return from the S&P 500.

The market mustered little enthusiasm for Middleby's purchase of TurboChef -- not surprising, considering the wider loss the latter company just reported. But Middleby can turn this acquisition to its benefit, since TurboChef's ovens are a strong product used in a variety of fast-food operations like Subway and Dunkin' Donuts. Middleby's ability to make smart acquisitions attracted All-Star CAPS member JDSancho:

I expect [Middleby] to attain $5 earnings per share by 2010.... it's one of the top 5 largest holdings in my personal portfolio. Of course, this assumes future acquisitions go according to plan. I have faith in the skill of CEO S. Bassoul seeing as he's done an outstanding job thus far, and his is the largest shareholder. As a bonus, Ken Heebner of the CGM Fund Family has a large stake in [Middleby] (through is Capital Development Fund ...). I think very highly of Mr. Heebner and I don't think anyone can go wrong investing along side of him.

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.

Middleby is a Motley Fool Hidden Gems pick. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of Wal-Mart, but he does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.