Getting the Street View on Navteq

Cramer has seen this trend before. It happened with Cleveland Cliffs, the U.S. iron company. First, there’s speculation of a takeover. Then the stock spikes and investors start buying call options. The only step left after that is the offer.

This is exactly where Navteq is right now. This $4 billion company is the number-one supplier of digital maps used in navigation systems, location-based services and geographic information systems. Google already employs its services and has spoken openly about buying the firm, so a takeover is almost inevitable at this point, Cramer says. But there’s always the chance that Microsoft gets in the way.

Yes, Microsoft – the runner-up, the follower, the “me too” company, as Cramer calls it. The empire that Gates built is always pulling up the rear in the internet space, taking pot shots at Google’s acquisition targets in hopes of halting its forward momentum. This attitude has Cramer thinking a pre-emptive bid is on the horizon.

Either way, this is good for Navteq investors. According to Cramer, the jump in price the stock has already enjoyed still shouldn’t prevent it from climbing even more if an offer is made. At least, that’s been the trend in M&A lately. And even if a buyout doesn’t happen, the stocks tend to stay up, Cramer says.

A buy on Navteq would also hold true to Mad Money’s strict investing rules, which in this case dictate that one never speculates on a takeover unless the fundamentals are there. NVT occupies a happy duopoly with competitor TeleAtlas and the demand for in-car navigation is only getting stronger.

Bottom Line: Navteq’s up on takeover rumors, but Cramer thinks it goes even higher on an actual takeover from either Google or “me too” Microsoft.

Questions? Comments?