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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.