Why Jim Cramer Thinks Yahoo! (YHOO) Should Acquire Twitter

NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Yahoo!  (YHOO) is struggling to grow because display advertising, its principal business, is not doing too well.

To combat this problem, Cramer says Yahoo! can continue to buy back stock, which has worked for the Internet company and worked for IBM  (IBM) for a very long time.

Cramer says Yahoo! could also use the proceeds from the Alibaba  (BABA) IPO to start to roll up a lot of the companies in the Internet space, such as Yelp  (YELP) , GrubHub  (GRUB) , TripAdvisor  (TRIP)  or HomeAway  (AWAY)  to build one-stop shopping for local needs for everybody who needs to do a transaction.

Must Watch: Jim Cramer Explains Why He Thinks Yahoo! Should Buy Twitter

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Cramer says Yahoo! is in the catbird seat, the valuations have come down, and the company's holdings in Alibaba have made it richer than it knows what to do with the money. Therefore, Cramer thinks it is better for Yahoo! to take the Alibaba proceeds and start buying, in a tax-friendly way, the companies that can help Yahoo! have great growth again.

Cramer's top acquisition pick for Yahoo! is Twitter  (TWTR) , which he calls "an under-managed company with a fabulous brand."

YHOO Chart YHOO data by YCharts

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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