American Greetings (NYSE: AM) knows how to deal with changing times. After all, the company got its start in 1906.

In fact, the company was an early adopter of dot-com technologies (going back about 13 years), and has purchased a variety of digital companies, such as BlueMountain.com.

And yes, American Greetings is also making moves on the social networking front through its popular Kiwee.com destination. In its first six months out of beta, the site has attracted more than 1 million members. A key has been its IM Toolbar, which allows for cool digital icons and expressions for messaging platforms like Microsoft (NASDAQ: MSFT), Yahoo! (NASDAQ: YHOO), and Time Warner (NYSE: TWX)'s AOL.

However, Kiwee is not a social networking site. "There are already strong players in social networking, such as MySpace and Facebook," said Rajiv Jain, the SVP and general manager of Kiwee, in an interview with me Wednesday. "Instead, we focus on our core strength, which is creating great content."

No doubt, the content is pretty cool. Most importantly, there are a variety of tools to allow for customization, letting users easily create unique online personalities.

So far, it seems the formula is getting traction -- and shows that old companies can still find ways to innovate.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

A piece in today's New York Times looks at the ways that American Greetings (NYSE: AM) and Hallmark are trying to compete with online alternatives for consumer greeting dollars. American Greetings is betting that people will respond more to everyday humor, and has signed Ellen DeGeneres to create a line of Ellen cards to appeal to the women who purchase 80% of greeting cards. Hallmark has the Shoebox series, and is increasingly focusing on current events humor.

According to the piece, "While the paper card market is declining, it is still five times as large as the e-card market, according to the Greeting Card Association, a trade group... newer forms of communication - not just e-mail, but also social networks and chat boards - do seem to threaten its relevance."

Are greeting card companies a good investment? My hunch is no. The only major publicly traded option is American Greetings, whose net income has declined in each of the past 5 years, and sales are also trending down. Nearly all college-age kids have Facebook or Myspace pages and, while an online wedding card might be frowned upon by older folks, it seems likely that the next generation will feel differently. I would argue that it's entirely possible that, in 25 years, the greeting card industry will be pretty much gone. Without any catalyst for short-term growth, the stock looks expensive.

The company lists this as a risk factor in its most recent 10-K: The growth of our greeting card business is critical to future profitability and cash flow. But that seems hardly assured, and I would argue downright unlikely.

Did you know that the creator of Care Bears also invented the Strawberry Shortcake and Holly Hobbie characters? No? It's true. In fact, it's a Cleveland-based outfit that has been selling greeting cards for 101 years.

American Greetings Corporation (NYSE: AM) designs, manufactures and sells greeting cards and other social expression products. It offers everyday and seasonal cards, gift wrap, party goods, stationery and giftware. It also distributes greetings over the Internet. The company operates about 500 retail outlets in North America and its products are sold in some 125,000 retail stores worldwide. Target Corp. (NYSE: TGT) and CVS Caremark (NYSE: CVS) are major retail customers.

Investors were pleased last week, when the company reported Q1 EPS of 55 cents and revenues of $418 million. Analysts had been looking for 34 cents and $393.9 million. Management also guided FY08 EPS to $1.35-$1.55, versus Street consensus of $1.35. The stock popped through 30-day and 50-day moving average resistance on the news and has since begun to consolidate the gain in a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers currently recommend the issue with three "holds." Analysts see a 19% growth rate, through the next year. The AM P/E ratio (19.28), Price to Sales ratio (0.87), Price to Book ratio (1.48) and EPS Growth rate (139.13%) compare favorably with industry, sector and S&P 500 averages. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $20.65 and $29.00. A stop-loss of $24.20 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Multi-hyphenate Ellen DeGeneres has already proven herself a successful sitcom star, talk show (and Oscar!) hostess and gay-rights activist. The likable and tireless comedian is now ready for her next project -- sharing her witty observations with the masses through a line of greeting cards. Ms. DeGeneres has inked a deal with American Greetings (NYSE: AM) to design a line of 32 cards, which are slated to appear in stores this summer. A spokesperson with AM said the company is trying to sharpen its focus on humorous cards.

Always ready with a wry quip, DeGeneres noted that "I look at having a line of cards as another extension of being a host; helping you wish your loved ones well, piggybacking on your birthday greetings . . . doing it this way is much easier than crashing parties," she joked.

AM is currently in second place among greeting-card retailers, trailing privately held Hallmark. The stock has dropped more than 1% today, March 26th, as it continues to fight with technical resistance in the form of its overhead 10-week moving average.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.