It was in the 1980s that certain high-profile investors became infamous as “corporate raiders” who obtained sizable stakes in companies and then forced the companies to buy back those shares at a premium to get rid of the raiders’ unwanted influence. Nowadays, most “activist” investors are seen in a different light, prodding companies to make much needed strategic changes that help boost prices for all shareholders. Small investors often can benefit by buying shares of companies that have become targets of effective activist investors such as Trian Partners and ValueAct Capital.

Two undervalued stocks likely to benefit from changes suggested by their activist investors…

Procter & Gamble Co. (PG). Stagnating sales at the global manufacturer of aging household brands such as­ Gillette razors and Tide detergent have caused its stock to badly lag returns of the S&P 500. In November, Trian Partners, which has a $3.5 billion stake in P&G, narrowly won a recount vote to get a board seat for its CEO, Nelson Peltz, and he continues to push for P&G to acquire innovative niche brands, tighten management’s accountability and improve its operating performance.

Rolls-Royce Holdings (RYCEY). This British aircraft engine maker, separated from the luxury-car company in the 1970s, has been plagued by weak revenues, quality problems, unsuccessful expansion into diesel engines and bribery allegations. COO Bradley Singer of ValueAct, which was instrumental in ousting former CEO Steve Ballmer from Microsoft and boosting that tech giant’s share price, was given a board seat at Rolls-Royce in exchange for promising not to publicly call for a breakup of the company or raise its take above 12.5%. ValueAct is pushing Rolls-Royce to refocus on its core businesses and clean up its bloated balance sheet.