Many companies are likely this year to become takeover targets of corporations that benefit from the new federal tax cuts. The companies being acquired will provide new avenues for growth to the corporations acquiring them…and could reward investors with a stock price surge.

To find likely takeover candidates to invest in, look for the same traits that acquiring companies do—a number-one or number-two ranking in a niche type of business…a solid balance sheet…and a stock that appears undervalued due to short-term problems or investor misperceptions. Make sure that the target still can do well on its own in case a takeover does not occur. Two potential takeover targets…

Briggs & Stratton (BGG) makes small gasoline-powered engines for lawn mowers, generators and other applications. It dominates the US market in this business, but the stock has been hurt by fears that US consumers will increasingly prefer electric tools and machinery over gas-powered. Despite that trend, gas power will remain popular for many years. Meanwhile, the company would be a great fit for a foreign buyer aiming to expand Briggs & Stratton’s business overseas.

Mattel (MAT), whose toy lines include Barbie, Hot Wheels and Fisher-Price, has seen its stock tumble 40% in three years as it lost a key Disney licensing deal and suffered weakness in some key brands. It should be able to halt a slide in sales as retailer inventories become lean…as it starts selling toys from its new Jurassic World franchise…and as it focuses on ­Internet-connected toys. A takeover by a more profitable toy company such as Hasbro would provide significant cost savings as the market for traditional toys shrinks.