“How sweet it is!” comedian Jackie Gleason used to howl on TV’s “The Honeymooners.”

Robert Holmes, a well-heeled Colorado investor and former manager of the Gilford Partners hedge fund, has similar thoughts about Elizabeth Arden, one of the country’s biggest names in perfumes and fragrances.

He’s especially excited over what he characterizes as its “sweet takeover scent.” He’s so convinced that the increased takeover buzz he’s hearing about Arden has such serious legitimacy to it that he’s taken a stock position in the company. “But takeover or no takeover,” he tells me, “I think there’s zero risk in the shares because of the strong growth prospects, good balance sheet, and low stock valuation, relative to other beauty companies. It’s a win-win situation,” he says. “You win on fundamentals or you win on a buyout.”

Analyst Gary Giblen of Brean Murray, Carret & Co., a close tracker of the beauty industry, echoes Mr. Holmes’s thinking about Arden. Its stock closed Friday at $20.26, a shade higher than its 52-week low of $18.28 and roughly 23% less than its 52-week high of $26.50.

Adding to the takeover speculation is the recent above-average trading volume in Arden shares. On Friday, for example, the stock traded 368,000 shares, well above its 30-day average trading volume of 272,000 shares.

Mr. Giblen believes management talks were held several years ago involving a possible buyout of Arden by the French beauty giant Coty, the world’s largest fragrance company with 2004 sales of $2 billion. Importantly, he says, at an industry event in France early last month, Michele Scannavini, the president of Coty’s Paris-based prestige division, Lancaster, essentially laid out a roadmap for acquiring Arden.

In brief, Mr. Scannavini unveiled major new initiatives by Lancaster to drive its recently aggressive American expansion and supplement its $800 million acquisition last July of Unilever’s prestige fragrance brands. Mr. Giblen believes the Lancaster initiatives increasingly point to Arden as a highly logical buyout candidate, which, he feels, could well be worth about $38 a share.

At last month’s French trade event, Mr. Scannavini announced a goal of rapidly becoming no. 1 in all segments of the global fragrance market, which would require acquisitions. Buying Arden, Mr. Giblen notes, would make Lancaster the top dog in virtually every segment.

While he views Coty as the most likely buyer of Arden, Mr. Giblen sees other beauty companies as potential acquirers, such as Estee Lauder, which would like to get into the mass channel, and Avon Products.

Arden, which owns, manufactures, and licenses about 50 perfumes and distributes more than 250 fragrances to mass merchandisers, posted sales last year of $920.5 million. Among its key perfumes, aside from Elizabeth Arden, are White Shoulders, Elizabeth Taylor’s White Diamonds, and Red Door.

Both Coty and Arden declined comment when asked about the takeover speculation.

While Mr. Giblen’s estimated $38 a share takeover represents an astronomical 90% premium to its current price, the analyst thinks Arden is well worth $38 a share, if not more. In terms of strategy and execution, Arden, he contends, is superior to such rival companies as Coach, Avon Products, and Estee Lauder, each of which sports a higher multiple.

He also observes that Arden is the best-positioned beauty company in the industry, with some of the hottest products. These include such fragrances as Britney Spears’s Curious and more recently the pop star’s Fantasy perfume and Prevage, an anti-aging cream that Arden licenses from Allergan, the maker of Botox. On fundamentals alone, Mr. Giblen argues, Arden is easily worth $26 to $27 a share.

What about earnings? The analyst expects $1.27 a share in the fiscal year ending June 30, 2006, down from $1.30 in 2005, a reflection of option expenses. But then he sees a sharp rise to $1.70 in fiscal 2007.

Summing up, Mr. Giblen characterizes Arden as “a compelling growth story at a reasonable price and a highly likely buyout candidate to boot.”