However, Cramer does see the trend as an incentive when you're making your shopping list. That is, identify companies that can go higher on fundamentals – but could also be a takeout target. That, according to Cramer, could give you two ways to win.
And a stock that Cramer said fits the criteria is Alliant Techsystems.
"The company is the largest maker of small-caliber ammunition in the United States, and they also make larger caliber ammo, as well as precision & strike weapons, missile warning solutions, and tactical rocket motors," Cramer explained.
As we said above, the theory isn't worth a penny unless fundamentals are also strong. Fortunately, "The fundamentals here are in excellent shape," said Cramer
"The company now has a $6.4 billion backlog. They had a book to bill ratio of 1.2, which means Alliant Tech had more business than they could actually handle. Also management raised its guidance for 2013," said Cramer.
"Even better, they boosted the dividend by 30%, something that brings the yield up to roughly 1.6% at current levels; I consider a dividend hike of that size an extremely bullish statement by management that they believe the business is going to get better.," Cramer said.
"Plus, ATK has a $200 million buyback at work over the next two years—that's equivalent to 9% of the market cap, a serious chunk of what's traded."
In other words, the stock could advance for these reasons alone.
However, Cramer thinks this stock could be turbo-charged as a potential target. Here's why.
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Although Cramer doesn't expect draconian cuts to defense now that the
fiscal cliff
has passed – he does think the Pentagon budget will get smaller – and therefore major defense players will find it hard to grow organically.
"Therefore the simple way for them to grow in this environment will be to make some acquisitions, probably smaller, easy to digest defense plays.," he said .