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

Breaking down the buildup
To help, we'll turn to the 125,000-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.

Despite troubles in the capital markets, the deals won't stop; they simply might involve more stock and less cash. 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

TRW Automotive

**

Michelin North America's stake in EnTire Solutions

NR

undisclosed

Perini (NYSE:PCR)

****

Keating Building

NR

$43 million

CF Industries (NYSE:CF)

****

Terra Industries

****

$2.1 billion

Qualcomm (NASDAQ:QCOM)

****

Handheld unit of Advanced Micro Devices (NYSE:AMD)

**

$65 million

Riverbed Technology (NASDAQ:RVBD)

***

Mazu Networks

NR

$25 million

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

Single-minded success?
It's a common enough refrain: Do one thing, and do it well. Advanced Micro Devices seems to have gotten that message at last, as it sheds its handheld business in a $65 million deal with Qualcomm. The chipmaker seems to have finally grasped that if it wants to take on Intel (NASDAQ:INTC) -- if not surpass it -- it'll need a single-minded focus. That effort began with the welcome cash infusion AMD got for selling its digital TV chip business to Broadcom (NASDAQ:BRCM) last year, and continued when the chipmaker started spinning off its manufacturing business.

CAPS member TMFZahrim (a.k.a. Fool writer Anders Bylund) appears to like this focused strategy: because it alleviates a lot of the pressure on AMD's leveraged balance sheet:

Fully integrated ATI products (Fusion) start to roll out later this year, and the current Shanghai-ish CPU generation is competitive with Intel again. The Foundry Company strategy takes pressure off a distressed balance sheet, and the company is cutting costs as much as anybody. Worst case scenario, IBM buys AMD for an instant double or triple.

Playing in the margins
While a lot of hope for a number of industries seems to rest with the Obama administration's stimulus plan, the probability that the money won't reach many businesses for a while -- even those that are "shovel-ready" -- is high. According to the nonpartisan Congressional Budget Office, more than half of the $355 billion package for infrastructure improvements is unlikely to be spent by the end of 2010, with the bulk coming in later years, after the recession has hopefully ended.

For contracting and construction management firm Perini, that catalyst might be too late. It's one of the reasons highly rated CAPS All-Star TSIF cautions against getting too excited about the so-called stimulus plan, even though TSIF remains confident that Perini will prosper:

Consistant Growth, VERY low debt. Debt used to expand. ...Good infrastructure play that is not already over bought in overly anticipated hype. P/E sub 6, room to grow. Good cash flow. P/B less than one. Margins not super, but in a recession getting any work to keep your business operating with fiece competition can reduce margins. Building, Civil and management services all growing. ... Be careful that excessive excitement over the Obama Infrastructure plan doesn't cause it to overshoot it's mark.

A value-added offer
What's your take on these deals? Let us know on Motley Fool CAPS. 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. It's a great way to help gauge whether mergers like these will prove magnificent or malodorous.

Intel is a Inside Value pick. The Fool owns shares of and covered calls on Intel. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of and options on Intel but 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.