NEW YORK (TheStreet) -- "A little speculation goes a long way," Jim Cramer told the viewers of his "Mad Money" TV show Wednesday, as he commented on the rumors that U.S. Steel (X) may be the target of a takeover bid at close to $60 a share.
Cramer said while he doesn't recommend stocks based on takeover speculation and prefers to use good old fashioned fundamental analysis, today's takeover rumors were welcome news on a sharply negative Wall Street.Cramer explained that takeovers require confidence and changes market sentiment. He said with takeovers happening, ETFs don't look as attractive as individual stocks, as they can't offer the upside surprises. He said takeovers also create fear in the short sellers who can't afford to have their cheap stocks taken sharply higher. With merger activity for 2010 already surpassing that of 2009, Cramer said it's clear that things are looking up, and merger mania may be returning to Wall Street. He said in addition to the recent Potash (POT) deal, there have been countless smaller deals, all of which have ben done largely in cash, and at hefty premiums. Take a peek at the 52-week high, and Cramer said you'll find not only great companies like Dominion Resources (D) and Progress Energy (PGN), along with other Cramer favs McDonald's (MCD) and Altria (MO), two stocks which he owns for his charitable trust, Action Alerts PLUS, but also plenty of smaller companies that look just like those already receiving takeover bids. These are the companies that just got a whole lot more interesting, said Cramer. He also there are also plenty of other companies that look just like ones already receiving takeover bids. "The sellers will be proven wrong," said Cramer, "the markets are finally starting to see the light."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV