The Berkshire club are without a win in five Championship matches and next face promotion contenders Leeds United at Elland Road on Saturday.
Reading fans have been wondering what has gone wrong, with Stam's side sitting in 20th just a few months after the Dutchman took them to the brink of promotion in his first season in charge.
"There's a long way to go and still so many points to play for and anything can happen in the Championship," McDermott told BBC Radio Berkshire. "I look from afar and I have to say, the manager's done a fantastic job there.
"The summer he came in, I know he had a huge rebuilding job to do. He brought the club within a penalty kick of the Premier League in his first season, which is an unbelievable job."
McDermott endured a similar run of results at the start of the campaign when he guided Reading to the Championship title in 2012.
"After six games, I think we also had one win, one draw and four defeats and in this day and age, that can be enough to get you the sack," he recalled. "But, we went on to win the league that year.
"Stam deserves a lot of credit in my opinion as they really punched above their weight last season and with the Championship, anything's still possible this season."