See the Blink to Pick Next Flowers

Most people probably forget that Flowers Foods (FLO - commentary - Cramer's Take) was once a great growth stock. The regional Thomasville, Ga., baker was one of the first companies I ever followed, as a reporter at The Tallahassee Democrat. I bought a huge position in the name in the mid-1980s, catching a gain so great that I named a brown stray cat who adopted us FLO.

But the cat died soon after.

So did the stock.

Vicious competition set in, mostly from Interstate Bakeries, which saturated the Southern region with baking products, crimping the margins on Flowers' Sunbeam, Cobblestone and Nature's Own brands. The company and the stock stalled entirely.

And stayed stalled.

Until April 27 of this year. That was when this $19 duckling turned into a swan, a swan that is still flying high at $27 four months later.

What happened?

It was right there, for all to see. In a bankruptcy filing for Interstate Bakery: "IBC to Consolidate Florida Operations; Close Miami Bakery and Eliminate Excess Capacity."

That's all you needed to know. You didn't even need to think, you just needed to buy.

How can it be that clear? How can it be so obvious? Anytime excess capacity gets taken out, you want to buy an industry and its players if they've been in the doldrums.

Now, of course, some industries need so much consolidation because there are so many players that they can't be counted on and when it will happen also can't be anticipated. Lots of people have been buying SBC (SBC - commentary - Cramer's Take) and Verizon (VZ - commentary - Cramer's Take) and Sprint (FON - commentary - Cramer's Take) believing there's been enough consolidation in that industry, but I say, "Far from it."

I know that I bought Lucent (LU - commentary - Cramer's Take) for ActionAlertsPLUS believing that the telecom equipment industry would have to rationalize. It hasn't. Not at all. And it's really hurting them. I wrote Thursday about Jarden (JAH - commentary - Cramer's Take), betting that industry would be rationalized, but it won't work if Salton (SFP - commentary - Cramer's Take) and Applica stay in the game. You need the capacity actually taken out, stomped, plowed under, the way IBC plowed its capacity under, for things to really fly. You need someone not just to blink, but to hang themselves.

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At the time of publication, Cramer was long Lucent, EnCana and Altria.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for ActionAlertsPLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."