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Cramer: Great gains! This stock up 311% ytd!

(Click for video linked to a searchable transcript of this Mad Money segment)

Had you put money to work in this stock, you'd be sitting pretty right about now.

The stock is Rite-Aid and year to date gains are substantial – well over 300% and over 80% since late August, when Cramer profiled Rite Aid as a turnaround play and we wrote about it for the Mad Money website.

Returns such as these get Jim Cramer excited; they're why he believes that the stock market offers millions of Americans a viable path to prosperity. And they're also the reason he's advocates speculation.

"I am totally in favor of speculation," Cramer said.

Robert Decelis Ltd | Stone | Getty Images

When Cramer talks about spec stocks he means stocks that present somewhat higher risk but also offer the potential of higher rewards. In the case of Rite Aid, the stock was trading under $5 and the company was also the subject of negative market rumors. Hence the higher risk.

However, "Rite Aid changed up managements, got much better merchandise, embraced private label items in an aggressive way and used low rates to refinance its balance sheet," Cramer explained.

Had you done homework, as Cramer always advocates, you would have discovered those kinds of bullish fundamentals. Ultimately the homework would have led to those higher rewards.

And the concept of speculation isn't limited to one area of the market; it bridges all sectors with other Cramer spec plays generating significant returns as well.

For example, Alcatel-Lucent gained 229% year to date and over 150% since Cramer made the case for it back on September 6th. Also, Nokia has gained 96% year to date and even more than that since July 2nd when Cramer profiled Nokia on Mad Money.

Again, homework was key.

"Nokia and Alcatel Lucent also availed themselves of cheap financing," Cramer explained. "Alcatel Lucent took some tough medicine, cutting jobs to the bone, while getting the balance sheet fixed. Nokia got out the handset business and became a fabulous play on network infrastructure. Both companies are now winning business back."

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"There are good reasons to own spec stocks, Cramer insisted. Nokia, Alcatel-Lucent and Rite Aid are three of them.

"However, never put more than 20% of your Mad Money portfolio into specs," Cramer added. As noted above along with the higher reward also comes higher risk.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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