From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. For help with telling the deal-makers from the deal-breakers, we'll turn to the 120,000-plus investors in Motley Fool CAPS. Our data suggests that top-rated stocks offer the best opportunity 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.

Breaking down the buildup
Here are 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

Johnson & Johnson (NYSE:JNJ)

*****

Omrix Biopharmaceuticals (NASDAQ:OMRI)

*****

$438 million

King Pharmaceuticals (NYSE:KG)

****

Alpharma (NYSE:ALO)

***

$1.6 billion

Roche

NR

Memory Pharmaceuticals

*****

$50 million

Esterline Technologies (NYSE:ESL)

****

NMC Group

NR

$90 million

L-3 Communications (NYSE:LLL)

****

Chesapeake Sciences

NR

undisclosed

US Bancorp (NYSE:USB)

****

Downey Financial

*

NA

US Bancorp

****

PFF Bancorp

**

NA

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

A merger of equals?
Apparently, one of the bargain-basement bins to shop in these days is pharmaceutical stocks. Some of the biggest names in the industry have been using the opportunities found in the troubled financial markets to snatch up low-priced biotechs as a means of bolstering their pipelines.

Johnson & Johnson, for example, saw the chance to rid the market of a potential rival with its acquisition of Omrix. The smaller company had announced last month that mid-stage clinical trials showed its blood-clotting pad was superior to one produced by J&J, even though the next day it had to suspend the trials to investigate a report of post-operative bleeding. That hasn't deterred J&J from buying Omrix out, and undoubtedly combining the research of the two into a stronger whole.

CAPS All-Star member TheGarcipian looks at Johnson & Johnson as the closest thing you'll find to a recession-proof pharmaceutical stock, writing early today:

"Long term, solid company. A vast stable of staples, products that consumers will want and need to buy regardless of the recession/depression. It's hard to imagine any company as being recession-proof, but I think Johnson & Johnson comes very close to that wishful ideal. During the recession of 1992-1993, it lost about 20% of its value, but other companies lost much more. During the gloomy times of mid-2001 through 2003, it traded sideways while most other large-cap companies lost money. It currently has nice profit & operating margins.... Hopefully, that will continue."

Bank on it
The other industry providing extremely low valuations is financial services, and US Bancorp wasted no time scooping up two distressed institutions that failed over the weekend. By gaining access to the deposits of both Downey Financial and PFF Bancorp, US Bancorp finds itself in a position to expand its presence in both California and Arizona. CAPS member RMFIII figures that with the growing number of deposits on the books, a good quarter will be forthcoming:

"I have been wanting to take a position in a consertative financial. I found that it is hard to find a more conversative bank than USB. Sure it had exposure to a few bad real estate loans but the majority of the bad loans were in construction. With the downturn of consumer feeling on financials USB's deposits are growing and their consumer loans are increasing. If the public feels good about depositing their hard earned money into this institution I feel good investing for the long term with this bank."

A value-added offer
What's your take on these deals? Let us know on Motley Fool CAPS. And while there, you can start your own research on these or other stocks. 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. Join us for free; we can't build the world's greatest investing community without you.

US Bancorp and Johnson & Johnson are Motley Fool Income Investor picks. Omrix Biopharmaceuticals 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.