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When a stock prints a 52-week low pro investors often re-evaluate the fundamentals. And in the case of Energy XXI, you may be inclined to write off the company.
Who could blame you?
"The company has had a rocky time lately," Cramer admitted.
Energy XXI is the fourth largest producer on the Gulf of Mexico shelf, with a mix of onshore and offshore assets. They get about 70% of their revenues from oil and 30% from natural gas.
"Their latest quarter, back at the end of January, was a big 15-cent earnings miss off a 62-cent basis due to a production shortfall caused by Hurricane Isaac. Meanwhile, the guidance wasn't so hot either," Cramer said.
However, if you do turn your back on this company Jim Cramer thinks you'd be making a terrible mistake. He thinks if you dig down, you'll find some fairly attractive catalysts.
"Energy XXI has a terrific long-term track record of making acquisitions where the oil reservoirs turn out to be a lot bigger than was originally mapped," Cramer explained.
That's a positive catalyst. And just such a catalyst may emerge in the days ahead.
"They just did a joint venture last month with Apache in a deal that gives Energy XXI a 25% interest in 135 offshore exploration blocks in the Gulf, along with 21 non-producing leases, and the two companies are going to conduct seismic testing to find oil over a 633,000 acre area," Cramer explained.
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Of course, the Mad Money host realizes that the energy sector is currently out of favor. It will be difficult for one stock to rally if the fortunes of the greater sector are in decline.
Nonetheless, "this stock trades at just 8 times earnings, and when you consider how much oil and gas these guys have found in the past, I think it would be a mistake to write them off now," he said.
Call Cramer: 1-800-743-CNBC
Questions for Cramer? madmoney@cnbc.com
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