Jim Cramer, the host of Mad Money, recently highlighted a surge in merger activity, pointing out that we’ve seen a significant uptick in deals over the past few days. He explained that this wave of mergers and acquisitions aligns with what he’s been predicting, a shift in M&A activity due to the change in administration.

Cramer noted that under the Biden administration, the Federal Trade Commission (FTC) and the Justice Department’s antitrust division have been very strict on mergers, often taking an aggressive stance against any form of corporate consolidation. According to Cramer, companies had grown increasingly reluctant to pursue mergers under Biden’s regulatory approach, as they faced the uncertainty of lengthy court battles with little assurance of success.

“And that’s why when Trump won in November, it became very obvious that we were looking at a deluge of M&A deals and these companies couldn’t even bring themselves to wait for inauguration day.”

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“Alright, so what do we make of this wave of deals? First, I gotta say, it’s just nice to see some mergers again and while this deluge was widely anticipated because of the change in administrations, it’s still good to see some confirmation.”

Cramer said it made him more confident in predicting that M&A deals will continue to increase, which is one reason why he recently added Goldman Sachs stock to his Charitable Trust portfolio as it has a major M&A advisory business that had been relatively dormant under the previous administration. He urged investors to consider buying the stock, noting that it’s an excellent opportunity.

More generally, Cramer expressed satisfaction in seeing so many companies once again pursuing mergers that make sense for their businesses. When examining the deals announced in early January, Cramer pointed out that while some of these deals might have faced challenges under Biden’s administration, most appear justifiable.

“So the bottom line: Gotta tell you, I’m just glad we’re back to a place where reasonable arguments like this will be considered fairly by the antitrust regulators rather than the situation we had under Biden where every takeover is considered anti-competitive until proven otherwise.

That’s very good news for the whole market, as lots of stocks will be going away. Given that we have so few IPOs, there won’t be a lot of new stock to replace it and a supply shortage, well, that is always good news for investors.”

Our Methodology

For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 8. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Jim Cramer is Watching These 8 Stocks

8. Constellation Energy Corporation (NASDAQ:CEG)

Number of Hedge Fund Holders: 78

Cramer discussed the recent report surrounding Constellation Energy Corporation’s (NASDAQ:CEG) acquisition of Calpine Corp.

“And today we got a report out of Bloomberg that Constellation Energy, the incredibly red hot independent power producer with big nuclear exposure, is nearing a huge $30 billion deal to buy Calpine, that’s another major power generator that was taken private back in 2017… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense.”

Constellation Energy (NASDAQ:CEG) is a U.S. energy company engaged in the generation and sale of electricity through a diverse mix of resources, including nuclear, wind, solar, natural gas, and hydroelectric power. On January 10, the company entered into a definitive agreement to acquire Calpine Corp. in a cash and stock deal valued at approximately $16.4 billion. The net purchase price, including cash generated by Calpine between the signing and closing date and the value of tax attributes, totals around $26.6 billion.

The acquisition will combine Constellation’s expertise in emissions-free electricity generation with Calpine’s low-emission natural gas and renewable energy assets, creating the largest clean energy provider in the U.S. The merger will allow Constellation to serve 2.5 million customers with an expanded range of energy solutions, including zero- and low-emission sources such as nuclear, natural gas, and geothermal.

Expected to close in the second half of 2025, the deal is projected to add $2 billion to Constellation Energy’s (NASDAQ:CEG) annual free cash flow, with significant increases in adjusted operating earnings per share (EPS), including an anticipated 20% accretion in 2026 and more than $2 per share in the years following the merger.

7. Cintas Corporation (NASDAQ:CTAS)

Number of Hedge Fund Holders: 48

Calling Cintas Corporation (NASDAQ:CTAS) his favorite, Cramer mentioned the company’s “hostile $5 billion-plus takeover” that was reported recently.

“Also, yesterday we learned that another Cramer fave, small business uniform rental provider, Cintas, although they do a lot of other stuff for a small business, was launching a hostile $5 billion-plus takeover attempt of UniFirst, which also specializes in workplace uniforms and protective clothing.”

Cramer commented that when reviewing the transactions that occurred at the beginning of January, he believed that while some might have faced opposition from regulators with an ideological stance under Biden’s administration, most of these deals appeared to be sound and reasonable. He emphasized that, in his view, all of them made solid business sense.

“The only proposed deal that I think might deserve some real antitrust scrutiny is the Cintas UniFirst tie up, which remember, isn’t even an official deal yet, it’s hostile… And even this one only raises eyebrows because Cintas and UniFirst mostly serve the same small business space. I don’t love the idea of squeezing any small businesses, okay? They get squeezed enough by the governments, especially if you’re talking about ingrained services like uniform rentals where there don’t seem to be that many options.

So I went to Todd Schneider, straight-shooting CEO of Cintas, about that idea. He gave us a very thoughtful response. He pointed out that they have all kinds of competition, businesses that can source their uniforms and safety equipment from Amazon, Grainger, Fastenal, or they can go to Walmart or Costco even. Schneider argued that by joining forces, Cintas and UniFirst would be able to provide better service to their clients. And even if they’re allowed to merge, they’d only be serving 2 million businesses out of 16 million total businesses in the US and Canada.”

Cramer mentioned that he had not considered the fact that Cintas is also in competition with major companies like Amazon, Costco, and Walmart to provide everyday supplies to small and medium-sized businesses. He acknowledged that this makes a lot of sense, and the market share figures certainly speak for themselves.

Cintas (NASDAQ:CTAS) provides corporate identity uniforms and related business services along with first aid, safety, and fire protection products and services. In the second quarter of fiscal 2025, the company made acquisitions totaling around $145 million.

In early January, the company made a move to acquire UniFirst Corporation, submitting a proposal to acquire all outstanding shares of UniFirst at $275 per share in cash. This offer, valued at approximately $5.3 billion, represented a 46% premium over UniFirst’s average closing price over the ninety-day average, as of January 6, 2025.

Despite multiple attempts by Cintas (NASDAQ:CTAS) to engage with UniFirst’s Board, UniFirst rejected the offer. The company expressed confidence in its standalone strategy, having previously turned down Cintas’ proposals in November and December after reviewing the offer and consulting with its major shareholders.