Time to Play China’s Semi-Hot Real-Estate Market?

By Stocks FOXBusiness

Investing in InterMune worth the risk?

FBN's Charles Payne, Penn Financial Group founder Matt McCall and Divine Capital CEO Dani Hughes debate the outlook for InterMune.

Let’s talk about E-House China Holdings Ltd (EJ).

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E- House is a real, complete real-estate proxy play for China's real estate market.  Now, I know, before we get up in arms, it’s been a pretty sloppy market. Even the management of this company admits there’s been a lot of softness in certain cities, and it’s going to linger. But here’s the thing: it can also create opportunities, there’s going to be pricing discounts, there’s probably going to be some relaxed policies -- and all of that generates activity. This company makes a lot of money from that activity, not just the prices of homes going up or down. 

In fact, in the second quarter, they had standout segments including: e-commerce (up 238%), sales agency service (which is traditional up only 5%, but still up in a sloppy market), online real estate (up 97%), real estate information (up 52%). And execution is phenomenal. In the last four quarters they beat the Street by 83%, 43%, 18% -- and the last time out 100%. Revenue was up more than 40%.

I see one more hurdle: $12. After that, I think this stock rallies to $16.

Now, let’s talk about InterMune (ITMN).

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InterMune is a biotech company that just received "breakthrough therapy designation" from the Food and Drug Administration for treatment of Idiopathic Pulmonary Fibrosis (IPF). This designation – given to treatments of patients in serious or life-threatening conditions --means the FDA will expedite the development and review. 

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However, they already have approval in most of Europe and Canada for mild to moderate cases of IPF, which is a chronic disease that causes inflammation and scarring of the lungs. The IPF market should be $1 billion by 2017, and probably will grow larger from there. And while this is not full approval, it certainly takes it one step closer.

The news makes this company a very attractive takeover target in an industry that's seeing a tidal wave of acquisitions. Even without a deal, I think this stock could drift higher and rally up at least to $55. I will say, because of the nature of this stock, I’m going to give you guys a stop-loss at $41.

DISCLOSURES

E-House China Holdings Ltd (EJ)

Owns

Family Owns

Firm Owns

Investment
Banking

CHARLES N N Y N
MATT N N N N
DANI N N N N

InterMune (ITMN)

Owns

Family Owns

Firm Owns

Investment
Banking

CHARLES N N Y N
MATT N N N N
DANI N N N N

 

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