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A Risky, But Exciting, E-Commerce Play

Friday, the speculative play Art Technology Group, a little $4.53 stock has a market capitalization of slightly less than $580 million. This is a play on e-commerce software, if you’re willing to take the risk, Cramer said.

E-Commerce is still a huge and a growing market; just look at the earnings' report of Amazon.com. With people doing more and more purchasing on-line, even companies like WalMartare reorganizing and retooling their e-commerce business to help them play catch up with the rest of the space.

ARTG is a way of playing e-commerce without placing your bet on any specific merchant. Cramer said if investors want to bet on an individual company, then Amazon is clearly the way to go.

Art Technology Group makes the software that enables companies to directly sell to customers over the Internet. Also, the company now has products that encompass many different channels used my consumers by helping merchants advertise, inform and sell through social networks and mobile devices. These are being carried along by the mobile Internet tsunami that Cramer talks about because of the multi-year gains it’s generating.

ARTG became public in 1999 and has bounced around for years. The stock shot up quickly above $100, then fell drastically when the dot-com boom went bust. It’s been trading in the single digits since 2002. Cramer thinks this stock has the potential to move high because e-commerce has become a powerful force.

And unlike most stocks that trade under $5, ARTG has over 900 customers including J.C. Penney , LEGO, Mercedes Benz, Best Buy, Procter & Gamble, Verizon Communications and Amazon.com. The company has a strong revenue base with 68% recurring, but management thinks it could hit as much as 75%. ARTG has a solid balance sheet with $74 million in cash, roughly 58-cents a share and no debt. Also, the business has been active in the mergers and acquisitions market, buying InstantService, a company that helps on-line merchants set up a chat service for live support with its customers when they are shopping.

The downside? ARTG’s biggest competitor is International Business Machines. But, the company has a 50% impressive win rate for contracts where it competed directly with IBM.

Right now the stock has a 21% long-term growth rate, which makes it inexpensive. That said, Cramer warned investors not to buy until the earnings' report comes out on Tuesday.

"Remember, speculation means extra homework, wait at least five days if you want to buy, and always use limit orders," Cramer said.

Cramer's charitable trust owns Procter & Gamble.

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