Jim Cramer reminded investors that after the vicious beating that the market took on Friday, not every stock deserved to go lower. There are still plenty of companies that are in control of their own destiny, especially with Mattress Firm's most recent acquisition of Sleepy's.
"I think you should take the opportunity to buy their stocks when the market throws a sale, like it did today," the "Mad Money" host said.
On Nov. 30, Mattress Firm, the top mattress retailer in the U.S., announced it was buying Sleepy's for $780 million in a transformational deal that would make it the only coast-to-coast mattress chain in the country. The deal would expand Mattress Firm's footprint to 3,500 stores from 2,400 locations, and give the company access to markets that are considered very difficult to penetrate in the Northeast that could be lucrative.
However, the stock is down more than 18 percent for the year despite the news. Could Friday's pullback be a chance to buy this high quality mattress retailer at a discount?
In Cramer's research he found that the mattress industry is incredibly fragmented. While Mattress Firm could be the top player, it still has less than 14 percent of the market share.
This transaction is expected to close during the first half of 2016, and Mattress Firm expects $40 million in annual synergies by the third year after the deal goes into effect. But the real gem of the deal is less about cost savings and more about scale.
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By snapping up Sleepy's, Mattress Firm would transform into a nationwide bedding retailer. The combined company will also be able to squeeze more value out of its distribution network and ad campaigns.
However, Cramer did have some concerns about the deal. The implied price of $780 million seemed to be very expensive for Sleepy's, especially given that its growth has been stagnant in the past few years even though there has been strong growth in the mattress business.
"I think many of these worries are being blown out of proportion. Mattress Firm has a long history of making acquisitions like this one," Cramer said.
Ultimately Cramer does not think there are enough stocks out there that are plays on the rising household formation, and nothing speaks more to household formation than mattresses! He put this company on his radar as one to look at after the Fed rate hike, as many housing related stocks might take a beating.
So for those investors that want to speculate on a mattress retailer, Cramer gives his blessing to buy Mattress Firm.
"I believe the bulls will be proven right, but you should still be careful and only buy Mattress Firm into weakness because it would be easy for the company to screw up the acquisition of Sleepy's," Cramer said.