Cramer's 'Mad Money' Recap: Making Gold From Steel

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When does a loser stock make you mad money? When it's US Steel(X Quote), Jim Cramer told on his "Mad Money" TV show Friday.

Even though he's not a fan of the steel sector, US Steel is an incredible takeover target, Cramer said.

That's because there are three companies getting ready to bid for Dofasco, a Canadian steel company that is the same size as US Steel and in the same business as US Steel, he said.

The two companies that don't get Dofasco will be looking for someone else, and US Steel is dirt cheap, according to Cramer. And he thinks that makes US Steel the next logical choice.

CSFB upgraded US Steel partly on the basis of takeover speculation, and that even if consolidation doesn't happen speculation could drive the stock higher, Cramer said.

However, he warned, it's not worth owning if it's not a potential takeover target.

A caller asked whether carbon fibers are a good investment or a speculative play. Cramer said to be very careful about choosing a carbon fiber stock, but recommended looking into Cabot(CBT Quote).

ISE Offers Investment Option

Stock platforms have been on fire, Cramer said, and now it is time for International Securities Exchange(ISE Quote) to play catch-up.

Its stock will move because it's an options exchange, he said, pointing out that the options market has grown at a 17% compound annual growth rate, a lot faster than the equity market.

Plus, he said, there's still pricing power in the options market.

There is no reason to expect ISE's excellent growth picture to change since it has a top reputation among traders for superb execution, he said.

And to sweeten the deal, Cramer said it traded at 30 times earnings, in line with its peers, but is growing faster and taking more market share than the competition.