E-House Is In High Demand

"Property prices in China have simply skyrocketed. In fact, housing prices in Shanghai and Beijing have jumped 15% to 20% since the beginning of the year and are now rescaling the old peak made in the fall of 2007. For example, the courtyard house in Beijing that I passed up back in 2000 has now quadrupled in value. More recently, condominiums that I looked at in September 2006 have already doubled in value."

Looking at those numbers, it's easy to see why E-House is in such high demand. But Red Hot Summer Stocks is all about finding and buying consensus stocks.

So who else has identified the potential in this company?

None other than world-renowned growth expert Louis Navellier. Louis recommends E-House in his Global Growth newsletter. Making this exclusive list is no small feat. The Global Growth strategy has beaten the market by 20-to-1 over the last decade, and Louis' current picks are certainly keeping up his average.

Timing-wise, both Navellier and Hsu agree that the hit E-House took last year in the depths of the global real estate crisis laid the foundation for a tremendous profit run this year.

Specifically, in the first quarter, the company's earnings declined 18.2% to $7.1 million or 9 cents compared with $8.7 million or 11 cents per share in the same quarter a year ago. But despite this decline, these earnings blew forecasts away. The analyst community was expecting first-quarter earnings of 5 cents per share, so E-House posted an 80% earnings surprise. 

Looking forward, the company expects its sales to be between $49 million and $51 million, which is substantially above analysts' average estimate of $38.3 million. This indicates to me that now is the time to buy E-House so we can get a huge share of the profits as real estate in China continues to soar.

Now for the Bonus Round

It's no secret that the housing market in the U.S. has been one of the big losers in this recession. The most recent data show that new-home sales are still 32% lower than they were a year ago. Existing home prices are also still on the decline — the average home price in May fell 16.8% to $173,000 compared with the same month a year ago.

With these numbers, it doesn't appear that a huge turnaround is in the works.

So how can smart investors play this trend?