Jim Cramer makes major shift: Buy a small portion in Bed Bath & Beyond

Bed Bath & Beyond is a stock worth buying now that the company has a CEO who is "competent," CNBC's Jim Cramer said Thursday.

The "Mad Money" host has long advised viewers to stay away from the home retailer. Not anymore.

"I think it's time to go positive on this one," Cramer said. "Bed Bath's been punished enough. Now that they've got a competent CEO, better than that, a great CEO coming in, I'm betting the stock could have a lot more upside."

Bed Bath & Beyond's stock rose 21% Thursday, one day after former Target executive Mark Tritton was tapped to become its president and CEO. He is set to start Nov. 4.

"Bed Bath wants to make itself relevant again and he's the guy to do it," Cramer argued.

Most recently Target's executive vice president and chief merchandising officer, Tritton played a crucial role in making shopping seamless for customers whether they were in store or online.

Cramer said Tritton also helped turn around Target's private-label business and keep its suppliers in line to avoid major impact from tariffs.

"Other than Amazon, Target's been Bed Bath's worst enemy," Cramer said. "But now they've got one of Target's best executives running the show."

It's not just Tritton's strong track record at Bed Bath & Beyond that instills confidence in Cramer. Cramer said he likes that stock is a critical element to Tritton's compensation package, rather than a large signing bonus.

"He's betting on himself, and I want to bet with him," Cramer said.

Plus, Cramer said Tritton wouldn't have taken the job if he didn't believe he could turn around the company, which has seen its stock fall from around $80 in 2013 to below $8 in August. It closed just over $12 Thursday.

"I think the fundamentals are better than most people seem to appreciate. There were some genuine positives in that last quarter," Cramer said, pointing to earnings of $.34 per share, beating Wall Street estimates of $.27.

Bed Bath & Beyond is selling at 6.4 times this year's earnings, which Cramer said is a good bargain if you believe the company will come close to beating expectations.

"At these levels, you have to stop fretting about what can go wrong. You got to start imagining about what can go right," he said.

Cramer said he also is pleased by what he heard on Bed Bath & Beyond's conference call — specifically, how it has saved hundreds of millions of dollars by improving its sourcing model and its plans to sell off smaller business units and real estate to raise cash.

"Management wouldn't put a specific number on it, but I bet it could be somewhere in the neighborhood of $1 billion," Cramer said. "That's a big deal. Why? Cause Bed Bath's only a $1.5 billion company. Oh, and they already have about a billion dollars in cash on the balance sheet."

With plans to remove $350 million in "stale inventory" before the holidays, reducing the number of clearance items that drag down gross margins, Cramer said he is anticipating a boost in full-price sales.

"Bed Bath is back," Cramer said. "In a major change for me and Mad Money, I'd buy some of this stock here, and then if you get a pullback, you know what turnarounds do take a little time, I would definitely buy more."

Read More