Cramer: To Buy Dell or Not to Buy Dell?

To buy Dell or not to Buy Dell, with apologies to Shakespeare, that is the question.

Shares of Dell surged this week after published reports suggested that Dell is talking with private equity firms about a potential buyout.

According to the report, a deal could be inked in 6 weeks with Michael Dell at the helm. Shares shot higher on the news – to around $13 by Tuesday's close.

At these levels investors are faced with a real conundrum. "At these levels, the stock, is precisely where the risk reward is almost exactly even," said Cramer.

"If Dell does go private, it will probably go out around $15. I think that's the most that the bankers and Michael Dell will pay," he said. "But if there is no deal than I'd presume that the stock will work its way back down to $10 because there isn't enough earnings momentum to keep it up here," Cramer added.

That puts the stock in no-man's land. What to do?

If you're already long, "I think the closer Dell comes to $14, you should sell," Cramer said.

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However, if for some reason the stock slides back down to $10, Cramer thinks you should ask yourself a few strategic questions– do you think the personal computer is going the way of the typewriter? Or do you think it will it always be the backbone and gateway to the data bases and information that every enterprise stores?

If you're like Cramer and think it's the latter, "then at $10 you should be in Dell," he said.

Here's why.

"At that price it is not discounting a possible turn in spending globally, and remember half of Dell's business is global. It is not factoring in the prodigious cash flow that even makes the notion of a buyout affordable. And it isn't including the possibility that we develop a tax regimen in this country that encourages repatriation, allowing the sizable chunk of cash that Dell has overseas to be used to fund a buyout," said Cramer.

"And, equally important, it doesn't include the notion that perhaps there's money out there, such as a big sovereign fund, or a wealthy player who believes in Dell's vision," said Cramer, "someone who could step in unexpectedly."

In other words, Cramer thinks the catalysts outlined above should provide a floor.

"This stock, I believe, isn't going back to $9, not after this news. But you better wait until it cools down because at $13 we are in no man's land, and that's not where I want to buy. "

Call Cramer: 1-800-743-CNBC

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