Red-hot takeover rumors mean it's time to "fall out of the Gap ( GPS)," 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), 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) or Verizon ( VZ). 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) 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."
At the time of publication, Cramer had no positions in stocks mentioned.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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