Here's Why Kellanova Stock Is Soaring While Most Stocks Are Falling Hard

Shares of Kellanova (K 0.07%) -- a collection of snack and food brands spun out from Kellogg less than one year ago -- are soaring on Monday even though its a terrible day for stocks, generally speaking. The S&P 500 is down almost 4% as of 11 a.m. ET, which is an enormous single-day move for this large index. However, Kellanova stock is up almost 14% because it may be an acquisition target. 

Kellanova is suddenly attracting attention

According to Reuters, privately-held Mars is interested in buying Kellanova. Mars is best known for its candy brands, including Snickers, Twix, M&M's, Skittles, and more. But its business isn't limited to candy -- it has pet brands and food brands as well. And apparently it believes Kellanova's brands such as Pringles and Cheeze-It could be valuable additions to the portfolio.

Kellanova and Mars haven't made official statements yet -- this is all just rumor. But rumor has it that Mars isn't the only interested party. There are also rumors circulating that large snacking companies such as Hershey, Mondelez, and PepsiCo are also sizing up Kellanova.

To be sure, Kellanova's portfolio includes some of the most well-known brands in the world so the attractiveness is surprising. But potential buyers would likely have to pay a premium to acquire it, which is why the stock is up today on the rumor.

Is Kellanova a bargain?

With today's jump in price, Kellanova now trades at almost 27 times earnings, which may be pushing what it would be worth in an acquisition. Consider that the business is low-growth. And while it is successfully working to gain operating leverage, that's still a high price for a low-growth business.

Kellanova is a solid business and I could see a deal eventually coming to fruition. But investors should keep in mind that acquisition rumors are just that -- rumors. If a deal fails to materialize, the stock could easily go back to pre-acquisition rumor levels.

If I were a Kellanova shareholder, I'd keep holding -- nothing changed with the business. But as someone on the sidelines, I won't be buying shares hoping an acquisition sends them higher still. That could be a risky, speculative game to play.