Jim Cramer's 'Mad Money' Recap: Monday Merger Mania

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NEW YORK (TheStreet) -- If even the worst companies in a sector can make you money, why not stay along for the ride? That was the question Jim Cramer asked his Mad Money viewers Monday as he opined on the two mergers of the day, Dollar Tree (DLTR) buying Family Dollar (FDO) and Zillow (Z) buying rival Trulia (TRLA).

Cramer said in the old days when you spotted the weakest player in an industry, you shorted them and then just waited for the better players to put them out of business. But in today's market when you spot a down-and-out company, you buy the stock because before long someone will swoop in and buy the company.

Dollar Tree's decision to buy Family Dollar makes perfect sense, Cramer continued -- with only two major players left in the market, Dollar Tree can simply divide up the country and stop competing for market share. The synergies will be huge, he said.

Meanwhile, Zillow once again won over its critics by taking out Trulia, its only real competitor. Cramer said Zillow remains expensive on an earnings basis but admitted the company has a very interesting story.

So where is the next takeover target? Cramer theorized that shoe retailer DSW (DSW) remains an attractive private equity target, while a stock like Darden Restaurants (DRI) is ripe for change after its CEO stepped down, sending shares up a quick 5%.

Switching to Hertz

Are things heating up in the rental car industry? Cramer said he thinks they are, especially after fund manager Larry Robbins recommended Hertz Global Holdings (HTZ) at the Delivering Alpha conference earlier this month.

Cramer said he's always been a fan of Avis Budget Group (CAR), but now that the stock has run 45% for the year, he was willing to consider Hertz, which is down 2% so far in 2014.

Hertz has been kept down by recent accounting issues, which in Cramer's playbook always equals "sell." But after reviewing the allegations, it appears Hertz' missteps were minor and have been resolved. That means Hertz, the largest of the three players that control a stunning 90% of the rental car market, may be poised to play catch up to its peers.

Cramer noted that Hertz now has pricing power and is no longer slashing prices in order to win over business. That's a very positive development. Hertz got a surplus of extra vehicles off its books, rightsizing the company for future growth. Finally, Cramer said Hertz is also a breakup story, planning to spin off its more cyclical equipment rental business.

Given all these catalysts and its very cheap share price, Cramer said Hertz has just become his new favorite in the group.

Waiting for Twitter

Sometimes it's just better to sit back and watch the action, Cramer told viewers as he prepared for Twitter's (TWTR) upcoming earnings. He said there are simply too many factors at play to predict what Twitter, the company, and Twitter, the stock will do when the social media firm reports.

The market simply has no patience for companies that can't deliver the trifecta: better growth on both the top and bottom lines, plus raised guidance for the future. That'll be a tall order for Twitter, Cramer said, which makes the risk just far too great.

Cramer said if you price Twitter shares at the same multiple as Facebook (FB) for its 2016 earnings, you get a price that's 44% lower than where they trade today. He said if Twitter is able to reaccelerate user growth, the stock may have a chance to pop; without that, a $30 price tag could be next for Twitter shares.

Cramer reminded viewers that as much as Twitter's users love the service, it's the institutional investors that control Twitter's stock price. So unless there's something compelling on the company's conference call, shares could see some very rocky trading ahead.

Executive Decision: David Brain

For his "Executive Decision" segment, Cramer checked back in with David Brain, president and CEO of EPR Properties (EPR), a real estate investment trust that invests in movie theaters and shopping centers. Shares of EPR sport a 6.2% yield and are up 54%, with reinvested dividends, since Cramer last spoke with Brain in October 2011.

Brain commented on the irregular trading activity that occurred surrounding the company's most recent earnings release. He said the company had no news or surprises on the conference call, yet it appears several volume traders in the stock decided to take action at the same time, sending shares up ahead of the earnings only to have them fall back to historical levels afterwards.

When asked about the business overall, Brain noted that things are going very well. He said that while some investors felt that slow sales at the box office would hurt EPR, in fact as the landlord to many theater operators, ticket sales are not a factor in their earnings.

Cramer said with so many investors looking for yield in a low-rate environment, EPR is a safe and steady place to invest your money.

Lightning Round

In the Lightning Round, Cramer was bullish on FleetCor Technologies (FLT), Exelixis (EXEL), Air Lease Corporation (AL) and Dryships (DRYS).

Cramer was bearish on General Electric (GE) and Taser International (TASR).

No Huddle Offense

In his "No Huddle Offense" segment, Cramer recapped the highlights from a recent fundraising event where he spoke. He said the 400 attendees confirmed three theses he's been working on.

First, Cramer said that people want less politics in their investing. They want the government to stop influencing the markets, usually for the worse. Second, people want to talk to humans about their investing ideas, and not simply trade with the machines. Finally, Cramer said the attendees are still looking for yield in this ultra-low yield environment.

For the last group, Cramer offered up both Verizon (VZ) and Enterprise Product Partners (EPD) as two great investments.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had a position in FB and GE.

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