Jim Cramer's Stop Trading! Fall Out of the Gap

Red-hot takeover rumors mean it's time to "fall out of the Gap (GPS Quote)," Jim Cramer said Monday on CNBC's Stop Trading! segment.

Gap shares jumped 8% Monday afternoon on reports the company hired Goldman Sachs to find a buyer. But Cramer said the problem with the stock at these levels is that "the fundamentals are so bad" that no buyer is likely to pay a premium to Monday's prices.

"This is a challenged company," Cramer said. "Sell it right here."

Cramer also would sell oil tanker builders such as Nordic American (NAT Quote), nothing that there is a glut of double-hulled tankers coming onto the market. Cramer said most companies in the sector are well managed, but he urged investors not to be tempted by the big dividend yields offered by these stocks.

"You don't have the support of the dividend" with these companies, Cramer said, pointing out that these companies are not earnings machines like Exxon (XOM Quote) or Verizon (VZ Quote). He said dividends in the sector are likely to fall along with their cyclical earnings, and that tanker lease rates already have begun sliding.

But Cramer likes defense contractor General Dynamics (GD Quote) off an upgrade by Cowen, saying he expects to see the stock "much higher" even after Monday's 3% rise. Cramer, saying Democrats don't want to be seen as weak on defense, gave the stock "two thumbs up."