Time to Play China’s Semi-Hot Real-Estate Market?
Let’s talk about E-House China Holdings Ltd (NYSE:EJ).
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 (NASDAQ:ITMN).
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.
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.
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