Could This Decliner Bounce With a Vengeance?

With shares down about 40% in a year, Cramer said this stock "has catalysts that could help the stock bounce back with a vengeance."

He was talking about Magnum Hunter, a small oil and gas exploration and production outfit with assets in the Bakken shale in North Dakota, the Eagle Ford in Texas, the Utica shale in Ohio, as well asnatural gas exposure from the Marcellus shale in Appalachia.

Looking at the sharp turn lower, Cramer explained that a series of catalysts worked against the stock.

- The company shut in a bunch of its natural gas wells and curtailed production.
- They had an accounting error and replaced their chief accounting officer.
- Magnum Hunter issued a big secondary offering back in May that just crushed the stock.
- They missed the numbers when they reported their most recent quarter in November.

As a result, Cramer said the stock "was put through the meat grinder."

However, Cramer thinks new catalysts are beginning to emerge that could stem the downturn and in fact, cause shares to work higher.

"Over the last year Magnum Hunter has moved away from natural gas and towards oil, to the point where it now gets nearly 63% of its production from oil and liquids," he said. "It has massive production growth, up 137% in the latest quarter, and the company doubled its proved reserves over the course of 2012."

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In addition, Cramer said, the company is expected to sell either part or all of its Eagle Ford assets in the early part of this year, which could bring in as much as 750 million. Also, he said, Magnum Hunter intends to spin off its midstream subsidiary as a master limited partnership sometime in the second half of the year.

That's not to say there aren't worries - there are. "Magnum Hunter reports on Monday and they missed last time," Cramer reminded.

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Nonetheless he likes the risk versus the reward.

"Magnum Hunter is only for speculation," he added, "it has a market cap of roughly $650 million—very small." However, as we said above, if you're willing to take the risk, there are "catalysts that could help the stock bounce back with a vengeance."

Call Cramer: 1-800-743-CNBC

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