The case for SOHU to rally to $150

Sohu (SOHU - $82.50) - Sohu is a leading Internet portal in China (similar to Yahoo). They also have a very popular online games that helped them report huge earnings 2 weeks ago. Revenues surged 156% and earnings exploded by 256% last quarter. They have beat analysts estimates by an increasing % each of the last 4 quarters (I can’t remember ever seeing that). The trend is they have beat estimates by 15%, 19%, 25% & 48% the last 4 quarters. This indicates the analysts still do not have a full understanding of how fast they are growing. SOHU is the official online sponsor of the 2008 Olympics in Beijing. This could become the next BIDU type stock ($90 to $300 in 6 months)…at least that is what is starting to crystallize in my head. What I like is, SOHU is still relatively small with just a $3 billion market cap (for comparison, Baidu is $12 billion). I now think SOHU can get to $5-6 billion market cap pretty easily, especially with them on track to make $3.35 next year (PE is very cheap at just 24x earnings). Put a 45x PE on next years earnings estimate (still way too low in my opinion) and you get $150 stock. For comparison…BIDU sells at 55x 2009 earnings and a whopping 16x revenues so there is reason to believe SOHU can get a much higher valuation. I can visualize Sohu galloping higher day after day as multiple growth funds continue to build a position of hundreds of thousands of shares each.
I like the stock and have made the Decemeber $135 calls a new POWER PLAY.

ENER pays off - BIG!

Patience and persistence paid off this week after ENER reported earnings and their shares surged 45%. Not only was the stock a big winner (we had a 3x position bought 3 weeks ago), but most of us also got a major home run with the September $45 calls ($1.70 to $9.10 +435%). Energy Conversion Devices (ENER) is a stock that I have followed for over 4 years. This company is really 3 stories rolled into one. They make batteries for hybrid cars, the make thin film solar, and they are working on phase change memory which some expect to be the next big thing in memory for all devices. In another example that stock picking matters...despite the markets being down over 2% on the week, it was one of the best weeks of the year for Trade in the Zone subscribers. Onward on upward.