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Whether or not Rupert Murdoch bags Dow Jones (DJ
) with his surprise $5 billion bid, some investors say the stock to buy is News Corp. (NWS
), which he controls. With Dow Jones, owner of The Wall Street Journal and other properties, News Corp. would become "one of the premier players in the news business," says Sarat Sethi, a partner at Douglas C. Lane & Associates, which owns shares. On May 1, when the $60-a-share offer was revealed, Dow's stock jumped nearly 60%, but News Corp. slid from 24 to 21--and is now at 23.25. Dow Jones represents a "very valuable asset for Rupert," says Sethi. "It would fit perfectly into his media conglomerate" as the company launches Fox Business Channel. Sethi sees News Corp. jumping to 30 if it wins Dow Jones. "But by no means do its fortunes rely on a Dow deal," he asserts. The point most investors miss, says Richard Greenfield of Pali Research, "is that the bid shows how strongly News Corp. believes it is performing." Greenfield rates News Corp. a buy. Based on his earnings forecast of $1.30 a share for 2008, he says the "valuation has become compelling." Even if News Corp. pays $65 a share for Dow Jones, it would dilute profits in 2008 by only 2 cents a share and in 2009 by 4 cents, he says. As it is, News Corp. can expand earnings by 17% a year from 2007 to 2012 (ending June 30), "significantly higher than its peers," says Greenfield. He sees earnings of $1.02 a share in fiscal 2007, up from 2006's 83 cents.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial