Mid-cap entertainment technology firm Dolby Laboratories (DLB) is another name that's enjoying some strong momentum of late; since the calendar flipped over to January, shares of the firm have rallied more than 7%. For comparison, the S&P is down more than 3% over that same period. That sort of relative strength is key to staying afloat when the market's in corrective mode.
Dolby Labs develops surround sound technology for everything from movie theaters to automobiles, TVs and computers. Three out of every four dollars Dolby earns comes from licensing its technology to electronics makers; the rest comes from professional equipment sales. Dolby owns patents that maximize users' audio experiences, and for that, it earns a piece of every DVD and Blu-Ray sold today. While the key Dolby Digital patents are slated to expire by 2017, the strength of the Dolby name and the pace of new content delivery methods should both help to mitigate some of those potential licensing losses. Dolby's mirrored "D" logo isn't likely to disappear from your devices anytime soon.
Better yet, Dolby currently boasts a balance sheet with nearly $1 billion in net cash and investments: enough to pay for almost a quarter of the firm's current market capitalization at current prices. That's also good enough to shove DLB's price-to-earnings multiple back down into the mid-teens.
With rising analyst sentiment in this audio stock, we're betting on shares this week.