Cramer Has Rumors To Profit From

Also on MAD MONEY toght, Jim Cramer wanted to review RUMORS that can make you mad money.

On FEB 26 there was a British report that Dow Chenmical (DOW) could be the biggest buyout, and on the FEB 13 there was a British rumor that Alcoa (AA) could be acquired.  Cramer thinks that where there is smoke there is fire and now that the price has come down you can look at these.  Cramer says both of these are takeover targets but are way down from where they were on the rumor days.  He would walk away if the fundamentals are bad but these are not bad and are both good.  Cramer thinks that lightning could strike there.

On DOW he thinks it could fetch $60.00 or a 39% gain if it happens.  At the current price he thinks it is very interesting and he likes the 3.5% yield.  We actually ran a break-up value of our own on this one too, and here is what we came up with at the time.

On Alcoa (AA), Cramer thinks RIO and BHP could each be looking at this for $40 Billion, but the new rumors are that the bids are north of $40.00.  We also ran this one as one of the 10 most undervalued stocks.  Cramer said the break-up value put Alcoa at $49.00 if it just broke itself up.  Our value was $46.00 back in the day.

Jon C. Ogg
March 13, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.