My opponent says, "Just bear in mind that the new films have to use characters we haven't yet seen on the big screen."

Except for sequels, how many times have you walked into a Pixar (NASDAQ:PIXR) or DreamWorks Animation (NYSE:DWA) movie and known the characters ahead of time? You didn't, although advertising got you interested in meeting them. It takes great characters (live or animated) and a great story to get the word of mouth that leads to a box office blockbuster.

Pixar, after just six feature films, has $901 million in cash, no debt, and another movie nearing completion. It trades for a premium multiple of 31.5 trailing earnings because analysts expect the company to grow earnings by 21% a year for the next five years (vs. 10.7% for the S&P 500).

Marvel Enterprises (NYSE:MVL) doesn't come with the Pixar-like premium, yet there is $105.8 million in cash and no debt (although there will be a $525 million credit facility in place soon to help the company fund its in-house movies). Marvel is expected to grow earnings 15% a year for the next five years -- yet it trades for 17.7 times trailing earnings and is repurchasing its own shares.

I've already explained why I think 2006 estimated earnings are understated. The same is true for 2007, when Spider-Man 3 arrives from Sony (NYSE:SNE), along with perhaps three or four more movies. 2008 will feature either Captain America or Nick Fury in the company's first wholly owned movie.

Marvel has other revenue streams to tap, including TV. A Fantastic Four animated TV show is in production for late 2006, and cable's SpikeTV is working on a Blade series.

Based solely on expected annual growth, the valuation is low. Add in breakout earnings potential, and the stock starts to look really exciting.

You're not done, True Believer! This is just one pulse-pounding part of a fantastically Foolish four-part Duel! Don't miss Titanic Tim Beyers' bearish beginning, Dazzlin' W.D. Crotty's bullish riposte, and Tim's rebuttal. When you're done, you're still not done. You can vote and let us know who you think won this Duel.

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Fool contributor W.D. Crotty owns shares in Marvel. Click here to see The Motley Fool's disclosure policy.