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Safe Speculation?

Friday, 20 Jul 2007 | 8:44 PM ET

Tessera Technologies, like most speculation stocks, has the potential to make investors mad money. The best part, though, is that Tessera seems to be a safer play than a lot of other small-cap picks, at least as far as Cramer is concerned.

Speculation Friday
Whenever there's a small-cap speculative stock Mad Money host Jim Cramer thinks could make you money, he saves it for "Speculation Friday"

One main reason is that Tessera is a licensing company. It doesn’t make computers or cell phones or videogame consoles, it just holds the patents on the technology used to miniaturize the memory chips in those devices. So while prices for these products might go down, the royalties Tessera gets most likely won’t.

The memory-heavy Microsoft operating system Vista is due for a service pack in the second half of 2007. That should increase demand for the OS, especially among corporations, Cramer said. And the more memory used, the better for Tessera.

Smartphones are also growing in power, and as a result, in memory needs. That, too, bodes well for Tessera. The same goes for the demand for flash memory in MP3 and video players like Apple's iPod.

Tessera does a great job vigorously fighting to protect its patents, and Cramer said every time it wins a case in court, that’s money for shareholders.

This $42.25 stock is four points off its high – a good entry point for those who are interested. And if there are questions about the 28 multiple, just keep in mind Tessera’s long-term growth rate is 31%. Growth fund managers would consider that cheap.

Bottom Line: The way Cramer sees it, the time is right for tech, and the time is right for Tessera.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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