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Cramer: Ugg Maker Becoming Aha Stock?

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For about a year, the price action in Deckers Outdoor was been so bad, you'd think it had changed the name of its trendy boots from Ugg to Ugh!

"It had been one of the hottest footwear stocks of the last decade, but then, over the past year the business hit a wall and the stock just imploded," explained Cramer.

The stock peaked at $115 a year ago, and since then it went down practically in straight line until it finally bottomed around $28 in October.

Largely everything that could go wrong — did.

(Read More: Cramer's Top Dividend Stocks of 2012)

Last year the Northeast had a very warm winter, and as a result sales of Ugg boots were crushed. Also Uggs are made from sheepskin and prices of the commodity increased, sharply.

"Deckers was forced to raise prices drastically in order to compensate; demand fell off a cliff," said Cramer.

All told, "Deckers was left for dead by the Street," Cramer added. "Everybody assumed that Uggs, their main brand, had gone out of style — that it was simply another fad which had finally run its course."

Then, suddenly, the price action took a sharp turn higher with shares surging more than 30 percent in only a month.

So, what happened?

Part of the enthusiasm stems from a turn lower in sheepskin prices. Another part of the enthusiasm has to do with an upgrade from Sterne Agee.

But most of the the increase in share prices likely has something to do with chatter about how Deckers could get taken over.

Although the chatter isn't new — if the fundamentals at Deckers are getting better, then the potential of a takeover becomes that much more likely. (After all, who wants to acquire a company with declining fundamentals.)

And that begs the question — who might be willing to acquire Deckers?

"I think the most likely acquirer is VF Corp., the parent company of North Face and a dozen other terrific brands," said Cramer. "In the summer of 2011, VF Corp. bought Timberland, another boot company, for $2 billion, and that's been an incredibly successful deal. I think UGGs and Teva, Deckers two key brands, would fit in perfectly."

Considering VF Corp. bought Timberland at a 25 percent premium to the company's historical sales — if they were willing to pay the same for Deckers, Cramer said,"I could see this company being bought for about $50 a share, or a 20 percent premium to where it's trading right now."

So what should you do?

"I would put on half my position now, because even though the stock has already had a big run, it might never come back to these levels — after all, it's only trading at 11 times next year's numbers — and we care where a stock is going, not where it's coming from."

"Then, you should wait for a pullback, and if we get one, you can put on the other half of your position," Cramer said.

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