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Cleco Corporation has had a good run, generating investors substantial returns in the form of dividends and capital appreciation. But now, the story is closing, with a potential acquisition granting investors an automatic 10% upside. Invest in Cleco now for the high probability of receiving this upside. Even if the deal falls through, this well-run company can still deliver more upside over a longer time frame. As investors know, small cap companies provide investors with overall better-than-expected returns than mid caps or large caps, and as a whole, they definitely provide a better return than the S&P 500. Small caps are an excellent way for investors to add some more growth potential to their portfolios if they are willing to also pump in more risk as well. However, most investors who are looking for stable returns are unwilling to pump in more risk-these investors like the idea of the company handing them a steady quarterly paycheck, and they are willing to sacrifice the potential large capital gains in exchange for peace of mind and a good night’s sleep. But what if investors want the best of both worlds? Is it possible to get both growth and stability in one investment? Some industries with highly inelastic consumer demands such as the utilities industry or large diversified business segments such as the industrials industry can provide investors with stability, but not growth. But what if investors combined the small cap size of a company with industry stability? That would lead to the small cap utilities company. Enter Cleco Corp. (NYSE: CNL ), a small cap utilities company that serves customers in Louisiana. Cleco is a holding company composed of both Cleco Power, which is the actual regulated electric utilities firm that serves customers in Louisiana, and Cleco Midstream Resources, which is an energy services company. The two different functions that Cleco’s business segments have enable Cleco to vertically diversify some of its operations and offer investors greater stability in the form of supply chain protection and/or stabilization. While the Company has done an excellent job serving its customers over the years and would be an excellent investment in and of itself, there is something going on with the Company that would enable investors to profit without staying invested for too long, as we’ll see later. As investors can clearly see, just from the stock chart, the Company has done investors well over the past five years. Capital invested at the onset of calendar year 2011 would have generated a total return on investment of about 100%, which is excellent given the fact that this is a utilities company we are talking about. In the recent year, the stock price has been stagnating; volatility from normal market fluctuations is clearly visible in the years leading up to 2015, but since then, the stock price has barely budged at all from about $54. Only recently has the stock dipped to about $50.50. This drastic drop in volatility is due to an event we will go more into later on. From a technical perspective, the 50-day moving average has been dancing above the 200-day moving average for quite some time, with occasional dips back down but never staying below the 200-day moving average for long. Recently, the two indicators have converged on each other due to the decreased volatility in share price. (click to enlarge) Source: Stockcharts.com In terms of fundamentals, the Company’s two business segments, Cleco Power and Cleco Midstream Resources, generate a substantial amount of free cash flow for investors to feast on. While free cash flow was mostly negative in prior years, for the past five years, the Company has generated positive free cash flow, which signals a better handling on the businesses’ operations. Dividends have seen increases in the past five years from a constant $0.90 per share up to $1.60 per share TTM; these dividends have been increasing on a non-stop basis since the 2008 financial crisis. Margins have also seen improvement through the Company’s earlier 2005-06 years, and liquidity ratios have mostly held steady. But what’s more important to investors is the potential deal to acquire the Company that could close very soon . This deal would essentially allow Cleco’s shares to be acquired for $55.37 per share, which represents about a 9.3% premium over the current market price within this week. This deal was announced last year and is expected to close in the 2nd half of 2015, although investors are waiting to see whether this deal will get approved by regulators. The most important regulator in this deal is the Louisiana Public Service Commission, and without the approval of this regulatory body, this deal will fall through. Some members of the commission are leaning against the passing of the deal , but members are keeping an open mind. Should the deal close, an automatic almost 10% return on investment would be cherry on top of an already great investment that has generated investors substantial capital appreciation and dividends. While the latter has passed already, an investment in Cleco now will yield a good chance of a 10% return given the high probability of the deal passing through.