The bidding battle for railroad operator Kansas City Southern demonstrates that investors can still find undervalued stocks in the market, CNBC’s Jim Cramer said Wednesday.

The “Mad Money” host said he understands those who are concerned about a generally frothy environment, pointing to the exploding interest in the cryptocurrency dogecoin, NFTs and SPACs in recent months.

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“But every time I start to worry about the craziness, we get a reminder that maybe stocks are a lot less expensive than you think, at least in terms of what other companies are willing to pay for the whole enterprise even if you won’t,” Cramer said.

Just take a look at the competing bids for Kansas City Southern, he said.

On Tuesday, Canadian National Railway announced its offer to acquire Kansas City Southern in a deal that valued the company at $325 per share.

That’s higher than a proposed transaction unveiled late last month from rival Canadian Pacific, which said then it had a stock-and-cash deal to combine with Kansas City Southern that valued the Missouri-based firm at $275 per share.

While Canadian Pacific has criticized Canadian Nation’s “unsolicited offer,” Cramer said the situation offers lessons for equity investors as they analyze the market.

Kansas City Southern, with its exposure to Mexico and the country’s auto industry, has a really important business that appears to have been overlooked, Cramer said.

“The market clearly had this one completely wrong — otherwise you wouldn’t have gotten not one, but two huge takeover bids,” Cramer said. “That tells you Kansas City Southern was massively undervalued before the first offer from Canadian Pacific. And yeah, I think the other railroad operators have a better handle on what KSU is worth than Wall Street does.”

It’s important to not extrapolate too much, Cramer cautioned. “That doesn’t mean every company is a bargain. Some of them are too big to be acquired, some of them are truly too expensive,” he said, while adding antitrust concerns will stand in the way of other deals.

At the same time, he contended, “there are plenty of companies like Kansas City Southern out there.”

“This deal, you’ve got to think about it the next time you hear someone whining about how stocks are too pricey,” Cramer said. “Sometimes companies in the same industry are willing to pay a lot more for a stock than the market is. I regard that as a very encouraging sign, so don’t be discouraged when so many people insist on buying things that you think may have no value at all.”