Most investors have written off the student loan giant as a nearly dead entity. But Cramer said during his "Mad Money" broadcast on Friday that SallieMae is his speculative stock of the year, insisting the stock got too low for all the wrong reasons. He says the stock should see a boost in the coming months.
Shares of SallieMae have fallen to $6 a share, as investors fear President Barack Obama may abolish the private student lender in favor of a government-run program through the Department of Education.
Currently, students at some colleges borrow directly from the government, while others get loans from banks, non-profits or state agencies who in turn receive subsidies from Washington. The president's proposal would switch the federal student loan system entirely to direct lending from the government.
SallieMae currently has $2 of earnings power and is trading at just three times earnings, Cramer said. Even if the company were to fold it still has $14 to $15 a share worth of run-off value from its loans already on the books.
Also, Cramer says that most colleges are unprepared to provide direct financing, making Obama's plan unlikely to materialize.
Cramer is not alone in his support for SallieMae.
William Blair & Co. analyst David Long said in a note Monday that the government needs a lender like Sallie Mae to support the infrastructure and volume of student loans.
"We maintain our view that SallieMae should win part of the mandate as it has the critical mass to service (Federal Family Education Loan program) loans more efficiently that its peers," Long said.
Long lowered his 2009 earnings estimate by 9 cents to 66 cents per share, to reflect unfavorable margins in the commercial paper and credit markets.
The company said during an investor conference last week that it expects losses from bad loans to peak this year and stay high in 2010.
Still, Cramer predicted shares of SallieMae could double in the coming months, making it worthy of his speculative-stock-of-the-year title.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.