With gold prices surging, I can’t afford to by my wife actual jewelry for her birthday, but I can afford to buy some shares in these two little-known Israeli stocks, and they are sure to be DIAMONDS in the rough.

Elbit Medical Imaging(EMITF) stock has dropped nearly 20% in the last few weeks. The real estate and bio-tech company was a big winner for investors in ‘07 and even with a slow start to ‘08, I look at Elbit Medical as a star performer this year as well. It is opening a mall in Poland (maybe I can get some cheap jewelry there) which is a continuation of the company's plans to continue building out the real estate holdings in Eastern European along with some new projects in India. As I have mentioned before, the real story with Elbit Medical is their very large stake in two of the most exciting private (though an IPO is definitely in the cards) companies Israel has to offer. Insightec Ltd., develops a product that combines MRI technology with focused ultrasound in order to treat serious diseases such as bone, liver and brain tumors, without the invasive procedures that are currently used. The other private company is Gamida Cell. Gamida Cell is developing, along with the aforementioned Teva, a line of cell therapy products for the treatment of such diseases as leukemia and lymphoma.

Elbit Medical Imaging’s (EMITF), subsidiary InSightec has raised $30 million in an internal financing round. Investors were Elbit Medical Imaging subsidiary Elbit Ultrasound (Netherlands) BV, General Electric Company (GE) subsidiary GE Capital Equity Holdings Inc., MediTech Advisors LLC, and some InSightec directors and officers. Elbit Ultrasound invested $19.8 million, boosting its stake in InSightec to 53%.

InSightec develops a product that combines MRI technology with focused ultrasound in order to treat serious diseases such as bone, liver and brain tumors, without the invasive procedures that are currently used.

With Jim Cramer, the “Booyah” man himself launching a Chinese version of his "Four Horsemen," I felt it appropriate that we should also have an Israel version. So back up the truck into the stable, and let’s unveil the Israeli "Four Horsemen:"

Teva Pharmaceuticals (TEVA), the world’s largest generic drug maker is money in the bank. With a great pipeline for ‘08, Teva looks like Seattle Slew galloping towards the triple crown.

We all know that real estate is a dirty word these days, but still, to maintain the name 'medical imaging' when you build and manage shopping centers is a bit confusing. It's time to change the image.

Elbit Medical Imaging engages in the initiation, construction, operation, management, and sale of shopping and entertainment centers mainly in Central and Eastern Europe, Israel and recently in India. As Roger Nusbaum discusses the appeal of international real estate, Elbit Medical’s portfolio maybe enough to justify the $1.1 billion market cap the company sports.

As CEO Motti Zisser says,

The company's stock has been, without doubt, one of the most successful in terms of return since the slump in 2002. Between September 2002 and February 2003, its price ranged from $5.50 to the $3.70 low it reached in February 2003. Since then, it has risen elevenfold in value, 1,100%, excluding the generous dividends that the company has distributed. In February 2005, Elbit Medical Imaging distributed a dividend of $1.717 a share; in December the same year it distributed a further dividend of $1.11 and last week it announced a dividend of $1.51 a share, which means that if we calculate the dividends in percentile form, anyone who bought shares at $4 each at the beginning of 2003 has made more than 1,200% on his investment, or an annual return of more 300%, without doubt a handsome sum.

People keep asking me how long this can last. My answer is simple. This stock is a supplier of dreams that come true against all odds. Elbit Medical Imaging's band of supporters just keeps growing, as it becomes ever increasingly clear that a) the company keeps its word (loyalty); b) the dreams it spins never seem to run out and c) this is the premium that popular managers usually get on Wall Street.

I would describe Elbit Medical as the ‘ETF for entrepreneurship.’ Anyone interesting in investing in entrepreneurship will find a fair deal in Elbit Medical, especially considering that this unusual ETF is headed by people such as chairman Motti Zisser, president Shimon Itzhaki, and his recently appointed deputy, Adv. Abraham (Rami) Goren.

Alongside its real estate development activity, which is already bearing fruit, Elbit Medical has two other arrowheads, both of which have tremendous value potential. One is the company’s technological holdings in InSightec Ltd. and Gamida-Cell Ltd., and the other is the company’s real estate project in India. Anyone who examines the latter more closely will see that this is Elbit Medical’s largest ever real estate project - much larger than its central European ones -- and based on a model that has been a success in Europe.

Based on what I’ve heard from knowledgeable people, Gamida Cell has a number of products that appear good and promising, especially products for rebuilding parts of the heart. An investor should realize that nothing significant will happen on Main Street before 2009 at the earliest, but several things can happen on Wall Street.

Elbit Medical Imaging (Nasdaq: EMITF) is still, in my view, one of the most interesting holding companies over the long term. I don’t take any notice of the latest quarterly reports since, to the best of my judgment, there are some values here that are only just beginning to come to the surface, with the principal value still unknown to investors and to those analysts that do not cover the company. From the technological standpoint, InSightec (in the short term), and Gamida-Cell (in the long term), are diamonds whose polishing process has only just begun.