On 4-27-07, Cramer told viewers that the next stock to get taken out by private equity money and pay a big premium to its shareholders might very well be Penn National Gaming. Penn is in the gaming industry and is making a lot of money. It gives people the ability to "foolishly" flush their hard-earned money down the drain, he said. However, market players know the private equity guys are interested in this sector since Harrah's Entertainment (HET) got taken out, Cramer said. Compared to Harrah's, Penn is small, which makes it a great target. Plus, it is driven by new projects -- casinos that are being put up in areas "where there's nothing else to do," he said. It has low risk and high returns, but private equity firms could increase the returns here. In addition, Penn, on its own, is worth owning as well, Cramer said. "It could make you over 30% if you play your cards right."

Cramer named Darden Restaurants (DRI) as his next pick for a prime private-equity takeout target. Darden, he said, owns Red Lobster and the Olive Garden, which is one of Cramer's favorite places to eat. Private-equity firms like to buy companies with "massive" cash flow, "something Darden has from all of its core restaurants," he said. Private-equity firms also like companies that aren't managed well. Darden, Cramer believes, has just enough problems to attract private-equity money. He sees a 20% premium for Darden.

Cramer's next private equity target is Cheesecake Factory (CAKE). Cramer has mentioned that private equity firms are sitting on billions of dollars and will be looking for companies like CAKE to take private. CAKE has big cash flow, a "pristine" balance sheet with no debt, which is especially attractive to the private-equity guys. CAKE just reported its numbers and met its estimatesand could be a prime target.

ROST has a mountain of cash with not a lot of debt and a fundamentally strong business. It does have some problems with its operating margins and a fix would be just to fire people and shutting down the less profitable stores.

TJX generates its share of cash but the focus is on growth. Margins have been "sacrificed" for growth. The stock has been called the "perfect PE situation." Because they are public they can't do what they need to do and could be taken private "easily."

Cramer kicked off his private equity target series with Actuant, a company involved in tool supplies and engineered solutions. Cramer said ATU is "your classic cyclical stock." It is a "magnificent" cash-flow generator, which has been trading at the low end of its range. "It's a broken stock but not a broken company." He told us that if they do go private a 13 point hike in the price is not out of the question.