Cramer's 'Mad Money' Recap: Buybacks and Takeovers May Pay Dividends

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

---

There are three sectors, even in this market, where market players can make some money, Jim Cramer told viewers of his "Mad Money" TV show Thursday. He advised his viewers to look into regional banks, utilities and real estate investment trusts.

People could look at this market and give up since the tech sector, industrials and even retailers are performing bearishly, he said. They're either all losing money or looking way too risky to invest in.

Cereals and soups are defensive stocks that are working, but companies without dividends and buybacks are not doing well, he said, adding he has never seen such bad pin action from defenseless stocks.

While people could call it a bear market and sit on the sidelines, Cramer suggests they look for opportunities instead because the market is full of them.

He said he wants people to find groups that have solid dividends, so that if the stock goes low the high-yield action can act as a cushion. Also look for cheap stocks with buybacks or ones that are takeover targets, he said.

Given how bad the market is, there aren't too many takeover bids, he said. But he does see takeover prospects in the regional banks, utilities and REIT sectors.

Also, Cramer told viewers to look at a company's European exposure before buying the stock because a lot of weakness has been coming from Europe, he said.

Take It to the Banks

Starting with regional banks, he said nobody wants to buy banks when interest rates are rising, but hopefully with just one more rate hike, this could be a worry of the past.

They also have serious cash, he said. This makes them leaders in lending growth and acquisitions. When rate hikes ease, banks become cheap, and then they become takeover targets, he said, adding that we are currently in this environment.

For this sector, Cramer provided an example: National City (NCC Quote) buying Harbor Florida Bancshares (HARB Quote).