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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."