Cramer’s Down and Out Turnaround Play

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Cramer has been looking at long-term losers to see if any show potential. He's found something.

"What I've found is a classic down-and-out speculative turnaround story," Cramer said. "I'm talking about the once-great medical device maker, Boston Scientific, a stock that has been on a long painful slide lower for the last eight years."

The Mad Money host has pored over mountains of research and learned that Boston Scientific has faced headwinds, rather strong headwinds. They include:

- The company's stent business slowed as the stent market became saturated.
- Boston Scientific bought Guidant for $26 billion, however the acquisition brought with it product recalls and lawsuits.
- Boston Scientific has received FDAwarning letters for quality control issues.

Those kinds of headwinds sent shares tumbling. "In 2005 Boston Scientific peaked at $45 a share but for more than three years the stock couldn't break above $10," he said.

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However, after digging even deeper Cramer has come to believe the winds may be shifting. "The company has moved into a bunch of new areas that are growing or expected to grow incredibly fast," Cramer said.

For example, "They bought a company called Asthmatx that gave them an advanced machine for treating severe asthma. Also, they're selling subcutaneous implantable defibrillators that go right in under the skin."

"On top of that they've developing a new product to help prevent strokes, and they have a minimally invasive device that helps relieve hypertension."

"They're also developing a deep brain stimulation device, kind of like a pacemaker for the brain that helps with a number of neurological problems," he added.

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All told, Cramer believes any or all all of these new developments should spark significant growth and therefore boost the bottom line. "All of these new areas together are expected to post a 57% compound annual growth rate from 2014 through 2017," he said.

If Cramer is right, metrics suggest that the stock is cheap.

"Right now Boston Scientific sells for 12.5 times next year's earnings estimates," Cramer explained. However rival Abbott Labs, sell for 16 times earnings. If Boston Scientific can keep executing on this turnaround, then I could perhaps see it trading up to Abbot levels, which would put the stock at $11.48, or 26% higher than where it is right now, and that could be just the beginning as the revenues from many of those new products start to kick in."

Now, that's not to say this stock doesn't warrant caution – it does.

"None of the new products will start moving the needle until at least next year, and some of them haven't been approved yet," Cramer said. "That means Boston Scientific is still speculative."

There's always a chance that they won't get approvals or the products won't be well received.

Nonetheless, Cramer thinks the risk/reward is too great to ignore. "At these levels my gut tells me, it's worth a shot," he said. "I really think Boston Scientific has bottomed and may be able to breakout to the upside."

Call Cramer: 1-800-743-CNBC

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