Monday, August 18, 2014

Chinese Real Estate Company Prepares to Breakout on Earnings - Leju Holdings (LEJU)

Leju Holdings (LEJU), a Chinese online to offline real estate company, is reporting earnings on Wednesday, August 20th, before the opening bell. Analysts are expecting the company to report a profit of $0.15 and sales of $109M, which would represent growth of 88% and 52% respectively. Over the next three years, the company is expected to grow sales and earnings by 31% and 37% respectively. The company beat analyst estimates by 100% in its first earning's report as a public company.

The stock broke out of a cup and handle base on July 23rd, in volume almost 500% above average, but shook out most traders and investors as it fell 8% below the handle high along with the market. Volume on the shakeout was tepid, a good sign. It has recently formed a three week tight pattern on top of the cup and handle base and has been attempting to breakout since.

Based on current valuations and growth rates, the stock could double over the next 12 to 18 months on continued strong earning's reports. Look for a breakout out above the $14 - 14.75 range in heavy, above average volume. Protective stops should be placed around $13. The stock is thinly traded and should be expected to trade in a volatile manner.

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