Cramer's 'Mad Money' Recap: Dolby Stock Still Hums

Click here for an archive of Cramer's "Mad Money" recaps.

---

Although Dolby (DLB Quote) has had a big move over the last month, it is still a buy, Jim Cramer told viewers of his "Mad Money" TV show Thursday.

"We're not concerned with what has already happened at Dolby, but what is going to happen there in the future," he said. After reporting a "great" quarter last month, the stock soared, but according to Cramer, it did not soar high enough.

Dolby reminds Cramer of MasterCard (MA Quote). Cramer said when he first recommended MasterCard the stock was in the $40s and after it went higher he recommended taking some off the table.

He reminded viewers that when the stock hit $60 he advised people to get back into it, as it kept going higher. Cramer believes Dolby should also continue to go higher, even though it has had a big run.

The company raised its 2007 estimates by 8 cents a share, which Cramer believes is too conservative, considering this year was a bad year and the company still managed to earn 80 cents a share. Cramer said Dolby should earn at least a $1 a share in 2007.

Also, not only does he consider Dolby "a great play on the flat-panel TV upgrade cycle," but the company is also reaching into gaming consoles, which is a lucrative market.

Plus, 79% of Dolby's revenue comes from licensing its products, where the margins are "so, so big," Cramer added. And during an investor meeting on Thursday, Dolby talked about new initiatives in the video market, which should further increase its licensing revenue, he said.

When you see Dolby, think of a stock that is going higher, Cramer said.