Taking On Readers' Stock Questions

Question: Could you please discuss Prime Hospitality (PDQ - commentary - Cramer's Take) and Phillips-Van Heusen (PVH - commentary - Cramer's Take)?

-- B.B.

Answer: I no longer cover Prime Hospitality, but I'm bullish on the travel/hotel industry in general. Consumer demand for travel doesn't go away, although it gets deferred, to be sure. The past several months have presented a lot of interesting opportunities to invest in the inevitable turn in travel. I mentioned missing Disney (DIS - commentary - Cramer's Take), for example, in Columnist Conversation several weeks ago.

Phillips Van-Heusen is no longer a holding of mine. It's rolling the dice with the Calvin Klein acquisition. It could pay off big, of course, but the financing that it has arranged is unnecessarily complicated and far too expensive, with double-digit interest rates.

Question: Can you talk about Hasbro's (HAS - commentary - Cramer's Take) prospects and compare it to competitor Mattel (MAT - commentary - Cramer's Take)?

-- J.G.

Answer: Mattel is a great company, but I think it's fully valued at the current quote. I've consistently highlighted Hasbro for RealMoney subscribers: My rough count is about 50 mentions since December 2000, when it was at $10.06 per share. It's now trading at $17.65. It's a reasonable buy now, though I'd be more aggressive if it pulled back a few bucks. I expect this turnaround to be worth about $25 per share in two to three years. Much of the operational overhaul won't be fully realized until then for a variety of reasons. By the way, take a look at Hasbro's free cash flow: It exceeds net income. That's something you don't see very often.

Question: I know you like Ethan Allen (ETH - commentary - Cramer's Take), but does the entrance of Costco (COST - commentary - Cramer's Take) into the furniture-selling business pose any long-term threats?

-- J.S.

Answer: Costco's entrance into furniture sales may impact middle-market furniture retailers, but I don't think it's significant to Ethan Allen, which dominates the high-end, service-intensive part of the market. With no net debt, lots of free cash flow and strong management, Ethan Allen is a terrific company to hold for the long haul. It's a $1.2 billion company that could be a $5 billion company in 10 years.

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Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor and portfolio manager of The Turnaround Fund, a no-load mutual fund. At time of publication, Alsin and/or ACM was long Bristol-Myers Squibb, Ethan Allen and Hasbro, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback and invites you to send it to [e-mail]. Click here to receive Arne's latest favorite stock picks from his newsletter, The Turnaround Report.