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A Play on Retail—and Housing

A company like Ethan Allen Interiors, seller of high-end furniture and home accessories, wouldn’t boost its guidance if the housing and retail markets weren’t turning. But that’s just what the company did on July 20.

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Despite banks like Wells Fargo telling us that there is pent up demand for the homes they own, as well as an improvement in pricing, the press has balked at talk of a recovery. The Fourth Estate also seems to disregard the lowest mortgage rates since the 1950s, and it has all but declared consumer confidence D.O.A. because of high unemployment.

Still, Ethan Allen upped the outlook for its fiscal fourth quarter, which it will report on Aug. 5, to 14 cents to 16 cents per share, higher than the 13 cents that Wall Street is expecting. Also, sales should rise 18% and booked orders jump 23% compared to the year before.

Given that, Cramer thinks this could be buying opportunity in ETH. The stock has fallen to about $15 from its high of the year, $25.19 on April 26, a trend sparked by an earnings miss reported on April 28. But while the share price is down, Cramer said, the company’s prospects are looking up. And maybe they will take the stock back up with them.

That’s why he wanted to check in with Chairman and CEO Farooq Kathwari. What’s in store for the rest of the year? 2011? Watch the video to find out.

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