Striking while prices are right

Bigger rivals are making deals for firms like Smith, Airgas and Millipore before prices go higher.

By Jim Cramer Feb 23, 2010 8:01AM
Jim Cramer

By Jim Cramer, TheStreet


Smith International (SII), Airgas (ARG), and now Millipore (MIL) all had one thing in common: They used to be highflying stocks before they were taken down by the Great Recession and, more pertinent, the Second Great Crash.


As we look back at a period when the Dow fell from 14,000 to 6300, we can recognize that many stocks were totally collateral damage.


A filtration company, an oil field services company and an industrial gas company all fit that bill.


Millipore's had a pretty consistent recession-free business for as long as anyone can remember, and I remember because I used to be a trustee of one of the largest holders. It's been a fabulously consistent grower with fabulously recession-resistant customers.


Smith International's the same. As oil has been up consistently for almost the last decade, Smith's numbers have hummed along fine.


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Airgas has the most diversified list of customers out there, including a lot of medical business that is non-cyclical.


All of them are, to some degree, creatures of the stock market cycle, not the business cycle. There should be more companies like Thermo Fisher (TMO), Air Products (APD) and Schlumberger (SLB) out there who, literally, fear the whole stock market coming back and taking these stocks to levels that are too expensive to buy.


I have been waiting for this overall worry that big companies would miss the move and not buy smaller ones to happen for more than a year. But the economy was just too uncertain. No longer. So they are stepping up to the plate.


Look for more of these deals. They are not as opportunistic to the industry as they are opportunistic to the stock market, and there's a sense that the market's not going to go all the way back down again so you have to strike before prices resume their normal levels of before the Second Great Crash.


At the time of publication, Cramer had no positions in the stocks mentioned.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


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