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How to Win a Bidding War
(Without Even Trying)

Parker-Hannifin ( PH) and Eaton ( ETN) are in a bidding war for British-owned filtration company Domnick Hunter, but the real winner will be either Donaldson ( DCI) or Flanders ( FLDR), said Jim Cramer Wednesday on his "Mad Money" TV show.

Whichever company -- Parker-Hannifin or Eaton -- loses the battle for Domnick Hunter is likely to look elsewhere for an acquisition, said Cramer. He believes either Donaldson or Flanders will be the target.

Donaldson has been a "solid" performer and would make a good investment regardless of whether it receives a takeover bid, said Cramer. Flanders, on the other hand, although it hasn't performed as well as Donaldson, is perhaps better positioned.

Thus, Cramer would "buy a little of both."

China Demand Commands Attention

Cramer changed his tune on a stock he panned Tuesday, China Medical Technologies ( CMED). Cramer usually avoids recommending Chinese companies because of the relatively lax investor protections there and the country's history of being "less friendly to capitalists."

However, China Medical Technologies makes ultrasound machines that break up tumors, which is a "good line of work," said Cramer. Additionally, General Electric ( GE) owns 15% of the company, and that gives him reassurance. "This stock gets the seal of approval from good old fashioned American capitalism, not just the PRC."

China is investing heavily in its health-care infrastructure, and "some of that money is bound to come China Med's way," he said. The company, which recently became public, is profitable and "cheap," said Cramer, who expects "imminent" research coverage.

"I was wrong. I want you to buy China Medical Technologies ... before it goes even higher," he said.

Meanwhile, due to seemingly insatiable demand from China, it's time to back up the truck on the commodities, said Cramer. One play he likes is Rio Tinto ( RTP), one of the world's largest mineral companies. Over half of Rio Tinto's business comes from copper, iron, coal and molybdenum, all of which are in heavy demand from China.

Although the stock closed the regular trading session Wednesday at $156.85, it's not expensive on a P/E basis, said Cramer. "I think it's a great buy."

A caller wanted to know if environmental cleanup stocks still make sense as hurricane plays. Cramer said companies like Shaw Group ( SGR), Fluor ( FLR) and Clean Harbors ( CLHB) are running up again on Hurricane Rita fears after having already run up after Hurricane Katrina. These stocks are on "quicksand," he said, adding that they're a "sucker's play." He would "ring the register."

Picks and Pans

In a segment called "Am I Diversified?" Cramer said these things about stocks in viewers' portfolios.

  • Textron ( TXT): "I really like that ... great aerospace play" as well as defense.

  • Yum! Brands ( YUM): "They keep delivering the numbers."

  • Royal Bank of Canada ( RY): "Class act."

  • PetroChina ( PTR): "We like PetroChina because Warren Buffett's got the stake in oil and they're not making any more of it."

    Lightning Round

    Bullish

    Cramer was bullish on Qualcomm ( QCOM), Chesapeake Energy ( CHK), NovAtel ( NGPS), Peabody Energy ( BTU), Intel ( INTC), General Motors ( GM), Toyota Motor ( TM), XTO Energy ( XTO), Parker Drilling ( PKD), Ashland ( ASH), Lucent ( LU), The Southern Company ( SO) and GameStop ( GME).

    Bearish

    Cramer was bearish on Wal-Mart Stores ( WMT), Applied Materials ( AMAT), Gibraltar Industries ( ROCK), AmSouth Bancorporation ( ASO), Linear Technology ( LLTC), Seagate Technology ( STX), Synaptics ( SYNA), First Niagara Financial ( FNFG), Montpelier Re ( MRH), Tempur-Pedic ( TPX) and Calpine ( CPN).


    Interested in more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here. It's a series of articles from Cramer on how to become a better investor. The following table lists some of the rules that Cramer dissects.

    1. Pigs Get Slaughtered 2. It's OK to Pay the Taxes
    3. Don't Buy All at Once 4. Buy Damaged Stocks
    5. Diversify to Control Risk 6. Do Your Homework
    7. Don't Panic 8. Buy Best-of-Breed
    9. Defend Some Stocks 10. Don't Bet on Bad Stocks
    11. Own Fewer Names 12. Cash Is for Winners
    13. No Regrets 14. Expect Corrections
    15. Know Bonds 16. Don't Subsidize Losers
    17. No Room for Hope 18. Be Flexible
    19. Quit When Execs Do 20. Patience Is a Virtue
    21. Be a TV Critic 22. When to Wait 30 Days
    23. Beware the Hype 24. Explain Your Picks
    25. Find the Bull Market
    Check back for more of Cramer's Rules

    At the time of publication, Cramer was long GameStop, Lucent and Intel.

    James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for ActionAlertsPLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." Cramer appreciates your feedback and invites you to send him an email by clicking here.

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