After the stock of Lululemon jumped 15 percent in after-hours trading after the company reported a strong quarter, Jim Cramer did not know what to think.

"I wavered. More specifically, the stock made me waver," the "Mad Money" host said. "The darned thing is so darned volatile that it's very hard to game even when you get the darned story right."

The athletic apparel retailer's previous quarter did not serve it so well. The company missed estimates and its stock plunged from $66 to $50 in a single session.

"Look, I've like Lululemon for years, but lately I've been trying to pull back from the stories I like if their stocks are capable of being too toxic," Cramer said. "The fact is, there are very few investors who are capable of taking that kind of near-term pain to get some level of gain in the future."

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And Cramer got worried after the company's last report. It botched the numbers so badly that it made the "Mad Money" host think that it was not just a momentary slip-up, but a larger issue entrenched in the highly competitive apparel retail space.

After Lululemon's latest report, however, Cramer learned three things, the first of which was that last quarter's problem truly did have its roots in the company's execution.

"Three months ago, the company told us that the last month of the disappointing quarter had been a strong one and it came in with a full head of steam, and that turned out to be true," he acknowledged.

Second, the introduction of new styles and colors to Lululemon's racks served the company well, driving sales higher.

Third, the company got a handle on its past supply chain problems and continued its global expansion, with demand in China red-hot.

"[The] $1600 per square foot of sales out of China? That's breathtaking, and a further testimony to my initial belief that there's much more to this company than just bricks and mortar," Cramer said. "You don't get a more than 200-basis-point expansion in margins, a need for more stores quickly because of worldwide demand, and 39 percent same-store sales in some of their items of clothes unless things really are smoking."

Still, even as Lululemon's numbers justify the strength of the company, its stock behaves frantically, almost separate from the retailer's fundamentals.

And when it comes to Cramer's standing on the stock, he can see both its favorable and unfavorable prospects.

"If you put a gun to my head ... I would've paid 25 times earnings. And sure enough, that gets you to $57, which is pretty much where it is. But on the trading desk? I probably would've said I ain't playing. Why? Because the risk from being wrong turned out to be much bigger than the reward from being right," he said.

"So if you can't help yourself, I could justify buying Lululemon under $57, but honestly, here's where I really come out: very, very good company, but the stock, it sure ain't for the squeamish," the "Mad Money" host said.

In response to Cramer's analysis, Lululemon CEO Laurent Potdevin told CNBC in an email that his company is always evolving and refining its strategy.

"Today, Lululemon is a very different organization than it was three years ago," he said. "We've articulated a clear strategic 2020 growth plan to double revenue to $4 billion and more than double earnings. We're delivering against that plan every quarter, firmly in control of our destiny with a clear vision and investments both human and financial to support our ability to scale globally as the brand defining an active, mindful lifestyle."

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