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Ethan Allen Downgrade Was Wrong

If you want a real read on the housing sector, Cramer said Friday, then look at the performance of stocks like Ethan Allen , not “overrated, anecdotal” reports like the Case-Shiller index. While the latter looks at just 20 U.S. real-estate markets, Ethan Allen operates 281 stores across the U.S. And as far as we can tell from the “blowout quarter” reported on Monday, business is good.

But if that’s the case, then why did Goldman Sachs downgrade this interior design and home-furnishing retailer on Thursday? Goldman said all of Ethan Allen’s efficiencies had been realized, the stock is now expensive versus its peers, and the comparisons would get harder for the company going forward.

Cramer, though, thinks this is still one of the best ways to play the stabilization in housing. But, in an effort to get the insider’s take on this situation, “Mad Money” asked CEO Farooq Kathwari for an interview. Watch the video.

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    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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