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Cramer's 'Mad Money' Recap: 10 Money-Making Mergers

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

Although people might be sick and tired of hearing about how Sirius Satellite Radio (SIRI Quote) and XM Satellite Radio (XMSR Quote) intend to merge, there is potential to make some mad money here, Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Cramer smells "desperation" in the anticompetitive merger and believes there is a rush to merge that should spread to other sectors as well, because "corporations are racing against the political clock."

"It looks like the 'government of, for and by the corporation' in pursuit of profits could be on the way out," Cramer said. "The Street has the feeling a Democrat could win the White House in 2008."

If that happens, he continued, it could mean a change in the kinds of mergers that are allowed. However, luckily, "the current Justice Department doesn't know the meaning of anticompetitive," Cramer said.

Therefore, he believes there will be "one last monopolistic deal explosion before the party ends."

"I believe we are going to get a wave of these monopolistic mergers in the next two years," Cramer said.

The following are 10 possible anticompetitive mergers that Cramer believes could get through the Justice Department for a limited amount of time:

Merger Mania

10. Kroger (KR Quote) and Safeway (SWY Quote).

9. Laboratory Corp. (LH Quote) and Quest Diagnostics (DGX Quote), which Cramer owns for his charitable trust, Action Alerts PLUS.

These two diagnostic companies have been "locked in a ferocious price war to win the HMO business," he said. As this is keeping down profits, Cramer believes "it is time for them to get on the anticompetitive bus."

8. Carnival (CCL Quote) and Royal Caribbean (RCL Quote).

7. Office Depot (ODP Quote) and OfficeMax (OMX Quote).

6. Cardinal Health (CAH Quote) and McKesson (MCK Quote).

"The drug distributors have been at war for ages, lowering prices and getting hurt," Cramer said, adding that he believes that the next two years will be a great time for anticompetitive action in this sector.

5. BP (BP Quote) and Chevron (CVX Quote).

Here, Cramer believes that BP could benefit from Chevron's excellent management.

4. Lockheed Martin (LMT Quote) and Northrop Grumman (NOC Quote).

Because the Pentagon doesn't like a lot of vendors, Cramer believes this merger in the defense sector is a high possibility.

3. Comcast (CMCSA Quote) and Time Warner (TWX Quote).

2. Gannett (GCI Quote) and McClatchy (MNI Quote).

His second most favored anticompetitive merger "could save the newspaper business," Cramer said, and "allow them to be a major force again."

Finally, he said, his single favorite potential deal is with the rails.

1. Burlington Northern (BNI Quote) and Union Pacific (UNP Quote).

In addition, he believes a merger between Norfolk Southern (NSC Quote) and CSX (CSX Quote) could also make sense.

All of these, Cramer said, could be "a wave of mergers that will be great for profits."

Am I Diversified?

In his "Am I Diversified?" segment, Cramer's first caller said he owned the following five stocks: Apple (AAPL Quote), Under Armour (UA Quote), NutriSystem (NTRI Quote), Hansen Natural (HANS Quote) and Yahoo! (YHOO Quote), which Cramer owns for his charitable trust.

While Cramer said he prefers Anheuser-Busch (BUD Quote) to Hansen and doesn't particularly like NutriSystem, Cramer said the portfolio was diversified.

Cramer's second caller named the following five stocks: Cisco (CSCO Quote), Boeing (BA Quote), Amgen (AMGN Quote), Wells Fargo (WFC Quote) and Nordstrom (JWN Quote).

Cramer said this portfolio was diversified as well, although Wells Fargo and Amgen are not among his favorite stocks.

His last caller said his portfolio was made up of the following five companies: Home Depot (HD Quote), Bob Evans (BOBE Quote), Medtronic (MDT Quote), JPMorgan Chase (JPM Quote) and Prudential (PRU Quote).

Cramer told the caller he couldn't own both JPMorgan and Prudential. As he believes that Prudential is "best in show," he advised dropping JPMorgan and picking up a defense play.

Cramer welcomed Chipotle (CMG Quote) COO Monty Moran to the show and asked him to explain why taking care of the community and workers is not something that's going to hurt the bottom line but might actually help it.

Moran said the company realized that the most important people for the restaurant chain and the ones that really gives customers the experience they are looking for are the restaurant managers.

When Cramer asked if Mexican food has replaced pizza in popularity, Moran said he's not sure. But he said one thing he does know is that "focusing on a few things and doing them better than anyone else is going to be a winning formula," whether it's pizza or Mexican food.

Further, when asked if Chipotle is more valuable on its own than it was with McDonald's (MCD Quote), Moran said it's not that different.

"McDonald's let us focus and run our company [the] way we do best, so that hasn't changed," he said.

Cramer said he believes that Chipotle is a company that is going much higher and advised people to stick with it.

To view Cramer's interview with Monty Moran, please click here.

During his "Sudden Death" round, Cramer was bullish on Devon Energy (DVN Quote), BEA Systems (BEAS Quote) and Marvell Technology (MRVL Quote), which he owns for his charitable trust, Action Alerts PLUS.

He was bearish on Chesapeake Energy (CHK Quote).

Lightning Round

Cramer was bullish on Under Armour (UA Quote), Crocs (CROX Quote), Yamana Gold (AUY Quote), InterDigital (IDCC Quote), Texas Roadhouse (TXRH Quote), MasterCard (MA Quote), Transocean (RIG Quote), Halliburton (HAL Quote), Onyx Pharmaceuticals (ONXX Quote) and NYSE Group (NYX Quote).

Cramer was bearish on Delia's (DLIA Quote), Goldcorp (GG Quote), Helix Energy (HLX Quote) and New River Pharmaceuticals (NRPH Quote).

For more of Cramer's insights during the Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by clicking here.