Cramer blesses somewhat controversial stock

It's one of the most controversial stocks in the market, but when bullish catalysts come together, Cramer can't help himself.

The "Mad Money" host thinks Darden, a company that's consistently underperformed recently, belongs on your radar a possible buy.

First, looking at the market, Darden fits Cramer's criteria broadly; "I want to own domestically oriented companies with stocks that, for whatever reason, have been hammered of late, but also have the potential for a major comeback," Cramer said.

However, digging into the specifics Cramer sees a slew of tailwinds that look as if they're going to converge for this company, offsetting the negatives and then some. They follow:




Man with question mark
Rob Lewine | Getty Images

New leadership

After a series of execution missteps, "A major activist fund, Starboard Value, took notice of Darden, and accumulated a 9 percent stake in the company over the past year," Cramer said. "They had been hectoring the board of directors to get their act together. And it looks like Starboard's activism is finally working. Darden's long-time chairman and CEO, Clarence Otis, is stepping down."

New blood is just what Cramer thinks could help drive a turnaround, in part because there are many executives that he says could do wonders with the business

New executive compensation plan

No matter who comes into the corner office, under a new plan they're only going to make any real money if they execute.

"Darden's board decided to realign management's incentive compensation with same-store sales growth, by far the most important key metric in the restaurant industry, rather than overall sales growth," Cramer said.

"If your pay depends on same store sales, that means you have to focus on getting people to come to your existing restaurants and spend money there, whereas if you're being compensated based on total sales, you can just keep putting up new locations to manufacture revenue growth. Under the new plan, 30 percent of the CEOs annual compensation depends on same store sales growth, and 70 percent depends on the earnings per share."

Lower gas prices

For restaurants such as Olive Garden, LongHorn Steakhouse, Bahama Breeze, and Capital Grille, all of which are owned by Darden, gas prices have a big impact on business.

"When gas prices are high, their customers have less disposable income, and they're less likely to go out to eat. But given that prices at the pump are now at the lowest levels in nearly a year, falling 9 percent over the last three months alone, I think that will give a big boost to Darden's business."

Rennovations

As Cramer has said so often, remodeling generates foot traffic, which in turn gooses the bottom line.

And Darden is starting to remodel. "The company plans to renovate 75 additional restaurants this year, and if those locations can produce better numbers, which I bet they will, then I think that could be enough to start convincing investors that Olive Garden, and thus Darden, can be turned around," Cramer said.

-------------------------------------------------------
Read more from Mad Money with Jim Cramer
Post Fed, Cramer's trick for profits
Compelling stock for slowing economy
Billionaire investor about to unlock value
-------------------------------------------------------

All told, given new leadership, the new executive compensation plan, lower gas prices, and a massive remodeling initiative, Cramer thinks Darden is poised for a turnaround. "The risk is that I'm early on this call, but I'd rather be early than late here, especially since Darden's paying you 4.4 percent to wait for the turn," he said.

(Click for video of this Mad Money post)

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Cramer's New Book