Is the M&A crowd trying to tell us something about equity valuations? Monday’s buyout-paced stock-market strength suggests an affirmative answer. The bad news is that it’s not easy to anticipate which stocks will next attract the dealmakers.

Here’s a solution: Look for stocks where a reasonable investment case can be made apart from buyout possibilities and where the math raises at least a reasonable inference that the market is pricing the business below some rational definition of fair value. We’ve attempted to do this with the list below.

The general investment case for each stock starts with its presence on at least one Reuters Select stock screen. Among the 600-plus stocks on that list, we sorted based on a score we calculated by ranking the companies under the following criteria:

• Short covering (weighted 5 times)
• Bullish analyst ratings (weighted 4 times)
• Trailing 12-Month Relative (company-to-industry) P/E (weighted 3 times)
• Relative (company-to-industry) 5-year sales growth rate (weighted 3 times)
• Relative (company-to-industry) 5-year return on investment (weighted 3 times)
• Favorable change in analyst rating, past 8 weeks (weighted 2 times)

We flagged those companies where shares are priced at least 10 percent below our back-of-the-envelope estimate of fair value (how much surplus pretax income we figure would be available to service debt issued by a hypothetical acquirer, assuming there would be in interest coverage ratio of 2.0.) Our list excludes foreign firms and energy companies. We also omitted situations where the valuation gap exceeds 100 percent, since these seem likely to be influenced by data oddities such as unusual factors impacting reported pretax earnings.