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Cramer’s Bigger Risk & Bigger Reward Stock

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If you've got the stomach for risk, Jim Cramer thinks this stock deserves your attention.

"I'm talking about Compuware, CPWR, an enterprise software firm with a variety of products which help ensure that critical business technologies work the way they should," said Cramer.

Although this stock is strictly a spec play – Cramer thinks it's worth a look because it could have multiple catalysts. 4 of them follow:

1. The possibility of a private equity firm taking Compuware private or multiple private equity players getting into a bidding war.

"Back in December, when Compuware was trading around the mid $9 level, it caught an $11 takeover bid from Elliott Management, a very smart hedge fund that wanted to take the company private," Cramer explained. "Then, in late January Compuware rejected Elliott's offer, saying that it significantly undervalued the company. However, management also made it known that they were being advised by Goldman Sachs, and said the company would carefully review and evaluate any credible offer it received, provided they deliver full value to its shareholders."

Cramer thinks that kind of statement can only be translated one way: Compuware is on the block, they're happy to sell; they just want more money.

2. A 4% yield puts a cushion under the stock.

"The very same day they rejected the Elliott Management bid, Compuware did something very clever, they initiated a 50-cent annual dividend, which brings the yield up from nothing to a very respectable 4% at these levels," said Cramer. "You rarely ever see a tech stock with that kind of payout, and I think it's a sign of management's bullishness that they were willing to commit to such a big dividend."

3. A turnaround is well underway.

"In recent years this company has made a number of moves to transform itself back into a growth vehicle," said Cramer.

"Compuware now has a host of different businesses, some of which are expanding quite rapidly. There's the mainframe program business, which is a big cash-cow for the company," Cramer explained. "There's also an application performance management business, and they have a rapid app development division for web and mobile.

Adam Jeffery | CNBC

4. A spin-off could unlock some major upside.

"Compuware has a plan to unlock value for shareholders by spinning off Covisint, their rapidly growing cloud-based engagement platform," Cramer said. "In December the company registered with the SEC to do a possible IPO of about 20% of Covisint's shares, and within twelve months of the IPO, management plans to spin-off the rest of Covisint to Compuware's shareholders. The idea being that this fast-growing division will get a much higher valuation on its own, while the remainder of Compuware will be able to focus on cutting costs in its core business."

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All told, Cramer thinks the risk is worth the reward. However, it's again important to note that this stock is not for the faint of heart.

"Compuware is a speculative as they come," he said. "This is not the kind of name you put in your retirement account. It's not a stock you buy with money that you can't afford to lose."

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