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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)."

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.

Booking Gains

" Barnes & Noble ( BKS) came out with a really strong fourth quarter and, sure enough, the stock responded," Cramer said, noting that the stock jumped 10%.

"Now this was not an up-10%-good quarter ... even with the high guidance," he said. The reason the stock jumped and the company beat estimates so handily is, he said, because "Barnes & Noble has become the secular house of worship in this country.

"It's because of the atmosphere. ... It's becoming Starbucks ( SBUX), but with books. It's Starbucks for the literate."

But, Cramer demanded that viewers wait before buying the stock. "You are never permitted to buy after a stock leaps 10% on a great quarter," he said. "There will always be a pullback on a 10% move."

He said this is because people who own the stock will want to lock in profits after such a monster move, and that it has already given back more than a dollar.

He said that if it went down $1.30, he might think about being an incremental buyer of the stock, but he said it could fall even another dollar. "You might want to be patient," he said.

It's essential, he said, to understand why the stock is a buy after the next pullback, and why it is not overvalued.

The company reported accelerated earnings growth and beat estimates, he said. Along with hard and fast numbers, there are "intangibles that pushed it to those heights."

"People go for more than books," he said, noting that it's the nation's second-largest coffee house. You can get the books cheaper on Amazon.com, he said, but people are willing to pay a premium at Barnes & Noble.

"That's exactly what Starbucks does," he said. People go to meet people, not just buy books.

The stock is exactly where it was in the late 1990s when people thought that Amazon ( AMZN) would kill the company, he said. But Barnes & Noble has come up with a way to peacefully co-exist with Amazon and will continue to go higher.

Hershey Hearsay

Monday's BusinessWeek mentioned Hershey ( HSY) as a takeover target, and the stock went higher. But Cramer said that the stock could dip on Monday because the head of the Hershey trust denied the story.

If the stock goes down, that could be your chance to buy, he said.

Even if the company is not taken over, it's hovering near $54, $4 over its 52-week low and $13 off its high. "It's a bit of a steal right now."

He said that the company has been one of the worst-acting food stocks, but that the stock and its fundamentals are improving. However, you could sit in investment purgatory for a while before it moves, he added.

Some analysts believe the stock could go as high as $70 to $75 if it gets a takeover bid, and Cramer believes it won't fall below $50.

"Four down and 20 up is the kind or risk reward you can't afford to miss," he said.

Wrigley ( WWY) and Cadbury ( CSG) make sense as buyers, he said. And if there's no takeover the company still has things going on in its favor.

We've had high sugar prices, in large part because this year's hurricanes knocked out sugar refining in Florida and Louisiana, he said. "Any decline in sugar prices should mean a boost to Hershey's bottom line," he said, which in turn will increase the company's margins.

The company has forecast decreasing cocoa prices, even though a recent article said that Chinese chocolate demand could cause a cocoa bean shortage and prices to rise. But either way, Cramer said either scenario could help Hershey.

The company has new products, including one of the fastest-growing mint products on the market, he said, adding that its acquisition of premium-dark-chocolate maker Scharffen Berger could help Hershey, too.

Plus, the company is laying off people and buying back stock, which will boost its bottom line, he said.

Treading Water

Cramer said that he bought Aqua America ( WTR) for his ActionAlerts PLUS charitable trust and was disappointed by its poor earnings.

The stock got hit pretty bad, Cramer said, adding that he bought a little more on the pullback.

The company's chief executive, Nicholas DeBenedictis, phoned in to the show to explain the shortfall, saying that the company was in good shape because "water is no less precious than it was a quarter ago."

Last year's earnings were inflated by a one-time property sale, DeBenedictis told Cramer, adding that this may have inflated expectations for the stock. When you miss the estimates and you're a momentum stock, they take you down a lot, he added.

But DeBenedictis also said that the company is up 14% on net income, which he believes is good for a utility, and that the company has been averaging 20% shareholder growth for the last 20 years.

Mea Culpa

Cramer wore a post-it note with ViroPharma's ( VPHM) ticker on his forehead, admitting that he his earlier bullish call was wrong.

Lightning Round

Cramer was bullish on Encore Medical ( ENMC), Valero ( VLO), Transocean ( RIG), Nabors ( NBR), Schlumberger ( SLB), Dow Chemical ( DOW), Constellation Energy ( CEG), Essex ( KEYW), Manulife Financial ( MFC), Watsco ( WSO), Hexcel ( HXL) and Airgas ( ARG).

Cramer was bearish on: Holly ( HOC), Parker Drilling ( PKD), Helix Energy Solutions ( HELX), Intel ( INTC), NYSE Group ( NYX), CyberSource ( CYBS), Homestore ( HOMS) and CarrAmerica Realty ( CRE).

For more of Cramer's insights during the most recent Lightning Round, click here .


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At the time of publication, Cramer was long Aqua America.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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