With stock markets continuing to spiral downward and valuations getting cheaper and cheaper, I wouldn't be surprised to start seeing a big pickup in mergers and acquisitions (M&A). Yesterday came news of the Israeli company NetManage, Inc. (NASDAQ: NETM) being acquired by Rocket Software for approximately $69 million, a 95% premium over the previous days closing price. That is also coming on the heals of Hewlett-Packard Company (NYSE: HPQ)'s purchase of Nur Macroprinters Ltd. (OTC: NURMF.pk) earlier in the week. Israeli M&A is back with a vengeance. A very slow year up until now has suddenly turned hotter than the New England Patriots.

With the focus squarely back on foreign firms picking up Israeli publicly traded firms for cheap, here are 3 M&A picks for to keep an eye on.

Gilat Satellite Networks Ltd. (NASDAQ: GILT) provides digital satellite communication products and services. They are in an industry which I believe will see a lot of consolidation, and with media companies looking to get into the satellite business, it would make sense for them to make an acquisition. Revenues for Q2 '07 were at a 5-year high. Net income grew strongly, and they continue to sign both extensions and new deals. Recently, they signed an expansion deal with Russian telecommunications provider North-West Telecom. North-West Telecom is expanding its Gilat SkyEdge satellite network to bring telephony and broadband Internet services to a growing number of remote communities in northwest Russia. The network expansion will serve many more sites in the Murmansk, Karelia, Komi, and Vologda regions. Heck, if they do a deal in Kamchatka, they would win in RISK.

Ormat Technologies, Inc. (NYSE: ORA) engage in the geothermal and recovered energy power business. They have produced impressive growth with a 13% rise in net income last quarter. With rumors swirling that both Apax Private Equity and Goldman Sachs Group, Inc. (NYSE: GS) are looking at buying a 10% share of the company, and that local business Chaim Katzman (no relation) is continually raising his stake in the company, Ormat is a prime takeover target.

Amdocs Limited (NYSE: DOX), the telecom billings systems firm, has been a poor performer for investors over the last 6 months. But with dominance in the billing field it could be a perfect fit for the likes of an International Business Machines Corp. (NYSE: IBM) or SAP AG (ADR) (NYSE: SAP), as they look to add another product to their offering. With Amdocs starting to focus on mobile applications, this may make them an even sweeter target. While I have mentioned these rumors before, with the stock 15% down, and '08 shaping up to be a great year for Amdocs, the time seems perfect for an offer.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer owns stock and is long ORA,GILT,DOX. He has no position in any stock mentioned as of 12/13/07.