How to Profit This Earnings Season

Robert Hsu, July 28, 2009

In this Issue:

Better-Than-Expected Earnings Drive Shares Higher
Impressive Earnings Results
China's Strength Spurring Asian Economies Forward
Invest in Taiwan Today
Bet on China's Housing Market Boom

Bet on China's Housing Market Boom

There's no denying that China's real estate market is red hot. So far this year, China's money supply has grown 28%, driving property prices higher and higher. And I've actually observed this increase in prices on recent trips to China.

Back in 2000, I contemplated purchasing a courtyard home in Beijing. In the past nine years, that house has more than quadrupled in value. Condominiums that I looked at in 2006 have now doubled in value. And more recently, housing prices in Beijing and Shanghai have leaped 15% to 20% higher in 2009 alone.

What's the best way to take advantage of the strength in China's housing market? Buy shares of E-House (NYSE: EJ), the largest real estate services company in China. And you're going to want to be on board before the company reports earnings on August 17.

Here's why: Back in April, I visited E-House headquarters in Shanghai to gain a better grasp on the company's outlook for 2009. What I learned was extremely exciting as the company is benefiting greatly from sharply higher real estate sales volume in China.

While the company reported a slight 1% drop in revenues and an 18% decrease in income for the first quarter, shares still jumped 14% on E-House's earnings report back in May. That's because, as I said above, business was picking up rapidly with the value of new properties sold in the first quarter jumping 88%.

Plus, company management has been extremely optimistic about the second quarter, projecting better results. In fact, E-House is expecting an increase of 14% to 19%. Based on the dramatic turnaround in China's housing market, I'm confident that the company will be able to achieve this guidance.

And that's why I'm telling you to get on board now. We still have two weeks before E-House's earnings release on August 17, but I don't want you to dawdle. Shares are already up a whopping 125% year to date, and you can bet they'll push higher on a positive earnings report.

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