Cramer's 'Mad Money' Recap: Tainted Love

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What's in Storage?

"If you really want to understand why a stock trades the way it does, you need to know its history," Jim Cramer told "Mad Money" viewers Thursday.

"There's so much irrational sentiment that gets attached to a stock because of the way it treated people in the past," he said, and knowing the history and the feelings it has created will give you the edge.

Brocade Communications(BRCD Quote) is one stock so tainted by its history that that "it's difficult to even mention it to people," he said. But Cramer believes that now is the time to buy the network storage device maker.

The stock trades at a "nasty discount" to its peer group because people can't forget the fact that it slid from all-time highs near $160 to single digits, where the stock remains today, he said.

And last year the company had to restate three years of earnings because it had not accounted for options expenses, which Cramer said hurt everyone who was in the stock.

It trades at 21 times earnings vs. the 25 times earnings at which its peers trade, Cramer said; and it trades at twice sales vs. similar companies that trade at three times sales.

The bad history goes back a lot longer than a year ago, he said, and included massive internal problems with the Securities Exchange Commission.

But Cramer said the company is set to beat its quarterly earnings estimates because the network storage market is on fire after "four long years of bear market."

The company's products are also some of the best in the market, and even after performing so poorly in the past it is still the market leader in switches.

Cramer said that the new management team is finally trustworthy and the company could be a takeover target because the entire sector is consolidating.

We only speculate on takeovers when the company's fundaments are improving, he said. And he believes that such is the case with Brocade.

"If you pay up to $6, I think you're fine," Cramer says.