eHi Car Services

01/13/2015 7:00 am EST


Timothy Lutts

Publisher, Cabot Heritage Corporation

This year, I’m going very aggressive in selecting my top speculative idea for 2015, asserts Timothy Lutts; the editor of Cabot Stock of the Month emphasizes that this idea is meant only for those who can tolerate high risk.

And here’s why. The choppy past nine months have built a great base while lowering expectations, the blast-off of December 18-19 was an extremely bullish sign, and the market usually does well in years ending in 5.

So, my pick is eHi Car Services (EHIC), a little Chinese business that’s tied in with both Enterprise Holdings (the largest car rental company in the world) and Ctrip, one of China’s largest travel agencies.

eHi has operations in 90 Chinese cities, more than 700 service locations, and 24-hour service. Revenue growth has averaged well over 40% per quarter during the first three quarters of 2014, but the company has yet to book a profitable quarter—it’s been too busy expanding.

For 2015, however, analysts are expecting earnings of $0.34 per share. EHIC just came public on November 18, so very few investors know about it.

The stock was initially caught in the broad market’s downtrend, slumping from 12 to 8, but buyers then began to take control, and I’m optimistic that a buy here could work out very well…for investors who can tolerate high volatility and risk.

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