Cramer likes the sound of Dolby: it's up and heading higher

On tonight's MAD MONEY show on CNBC, Jim Cramer had a new pick that is up and, he says, is heading higher. He was blown away by Dolby Laboratories, Inc. (NYSE:DLB) 45% recent climb. He said it is everywhere and in everything you hear. Cramer calls it "the Microsoft of the digital experience."

It closed at $28.95 tonight, up from $23 recently and up from a low of well under $20 over the last year. He thinks the past doesn't matter and this is going higher. The stock soared after its last earnings release, in which the company beat analyst estimates by $0.11 and management guided higher, but he doesn't think it soared enough. The new information they divulged signals to Cramer that the estimates are too low and need to go higher. The estimate is $0.83 to $0.92 projected for next year, but Cramer said he would eat his yellow hard hat if the company doesn't earn $1.07 next year (he then said he thinks they'll do $1.00 next year).

Naturally Dolby is a leader in the music market, but Cramer said this is also a "stealth play" on the new flat panel TV's because the HD requires to have new Dolby-compliant specs. The company has a huge margin on its licensing, and the company has even been able to squeeze royalties out of Microsoft Corporation (NASDAQ:MSFT), not an easy task. The company's balance sheet is strong, with $4.55 in cash per share. It trades with a lower multiple than its growth rate.

For a reference DLB has been public less than two years, and it came public at just under $25.00 in early 2005. DLB has trailing EPS of $0.80 and has a 36 P/E ratio. Now at $30.00 this is a new all-time high.