Cramer's 'Mad Money' Recap: Limited's Potential

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L'Oreal buys Body Shop for more than $1 billion and Body Shop stock rises 10%. But unless you owned Body Shop stock, Jim Cramer told viewers of his "Mad Money" TV show Friday, the news didn't make you any money.

The financial media love to write about acquisitions because it's an easy story to tell, he said, but the headline that would have made you mad money would have been: "Consolidation in Mid- to High-End Cosmetics; Buy Limited Brands(LTD Quote)."

The key to the L'Oreal deal is not just that the French cosmetics company is buying a British cosmetics chain, but that "they're paying a super amount for a not very good chain," Cramer said, referring to the fact that he doesn't believe the Body Shop has done as well financially as its competitors.

It shows that consolidation is brewing in the industry, and that means everything that can be potentially acquired will get more valuable as people speculate on takeovers, he said.

That brings us to Limited Brands, he said, because it owns Bath and Body Works, a chain he said is "kind of like the company that got the bid today."

If we have more acquisitions coming, I think this division of the Limited could be the next to go, Cramer said.

He reminded viewers that it's never okay to buy a company simply on takeover speculation. A company must have good or improving fundamentals.

He said he believes the Limited's Victoria's Secret brand will report better same-store sales than it has in the past and that Henri Bendel, its high-end name, could also see some growth.

Plus, he believes the Limited brand will do well because casual dress is giving way to a more polished trend in fashion.