Where the Smart Money Is Investing in China
If you’re looking to make money in stocks, you better start searching for companies that do business outside U.S. borders. More specifically,
I think you should direct your search east — and by east I mean way east. In fact, so east, it’s actually called the Far East. I am referring
here to what I think is the one country that should be irresistible to nearly every investor: China.
However, proclaiming that we should all invest in China is something of a vague proposition. I mean, with all of the Chinese companies out there,
how do you tell the polished jewels from the fool’s gold? The answer is the same way you’d determine any good stock to invest in: You
do your research, you seek out trusted sources, then you proceed with caution, based on your own tolerance for risk.
While you’ll have to assess your own risk tolerance, I’ve done the research for you. Here is where the smart money is investing in China.
China Stock #1 – Baidu (BIDU)
If you think the 1990’s Internet boom was big here in the U.S., then buddy, you ain’t seen nothin’ yet. In 2008 alone, China’s
Internet population grew over 40% to nearly 300 million users. That growth has continued this year as well, and at the end of June, China’s
Internet population jumped to 338 million. That’s more Internet users than the entire population of the United States. And keep in mind, this
growth has occurred despite the global economic slowdown.
And where are all of these Chinese Web surfers going with their newfound connectivity? They are going to Baidu (BIDU).
The search engine site handles nearly three out of every four Internet searches in China. By comparison, Google (GOOG)
has a mere 20% market share in China.
But Baidu isn’t resting on its laurels. The company recently surpassed Yahoo (YHOO) to become
the world’s second-largest search engine. Now that’s progress. Oh, and when it comes to searching for shareholder value, Baidu knows how
to deliver the hits. The shares are up more than 200% year to date.
China Stock #2 – China Green Agriculture (CGA)
I consider China Green Agriculture (CGA) to be the salt of the earth when it comes to China stocks.
Well, maybe not salt in the literal sense, but certainly in the metaphoric sense. Literally, China Green Agriculture is a maker of fertilizer. The
company’s organic liquid compound fertilizers help enrich the soil needed to grow the food that sustains China’s 1.3 billion citizens.
The company produces approximately 119 fertilizer products, and it markets those products to private wholesalers and retailers of agricultural farm
products. It certainly seems like CGA knows how to fertilize their share price, too. With gains of 362% over the past 12 months, you can see why I
think that even the fertilizer in China smells irresistible.
China Stock #3 – E-House (EJ)
E-House (EJ) thinks of itself as an asset-light real estate services firm that helps real estate developers
sell properties. Because of the huge increase in China’s monetary supply, the country has seen an enormous increase in property sales volume.
For the second quarter alone, the company reported a 172% increase in revenues over the same quarter last year. That, as they say, is not too shabby.
But what’s perhaps even more bullish for E-House is the theory that my friend and China expert extraordinaire Robert Hsu proffers when it
comes to the Chinese property market. Hsu thinks that the Chinese
real estate market is still in the nascent stages of a huge bull market. He argues that demand for Chinese real estate will remain high, and that
E-House is perfectly positioned to benefit from this new bull in the months ahead.
I concur, and apparently, so do investors. They’ve bid up EJ shares 288% over the past 12 months.
China Stock #4 – Universal Travel Group (UTA)
As China’s economy grows at a breakneck pace, the new, cash-rich Chinese middle class has taken flight — literally. Providing the travel
arrangements for this newfound class of Chinese travelers is Universal Travel Group (UTA). The company
provides domestic and international airline ticketing services, along with cargo transportation agency services. But it’s not just flights that
UTA helps citizens book.
The company also provides hotel reservations, tour planning, ground transportation, railway and express delivery and air delivery services. UTA
is the travel agency in China, and considering the shares have booked a 395% gain so far in 2009, it certainly seems like the sky is the limit
China Stock #5 – iShares FTSE/Xinhua China 25 (FXI)
If your investing proclivities point you away from stocks and toward exchange-traded funds (ETFs), then there is no reason for you to feel left
out of the China boom. My fifth and final irresistible China stock isn’t really a stock at all. Rather, it’s an ETF that’s pegged
to the performance of China’s biggest market index, the FTSE/Xinhua China 25.
This ETF is the iShares FTSE/Xinhua China 25 (FXI), and I like to compare this fund to investing
in the Chinese version of the Dow Jones Industrial Average. With FXI you are getting a virtual basket of the largest companies that trade in the Chinese
stock market. And while this basket of large-cap Chinese stocks hasn’t burned up the performance charts the way our previous picks have, it
still has given investors a 43% return year to date.
Not too shabby. You see, I knew you’d find China stocks irresistible.
Your Free Guide to Profiting From Asia’s Explosive Growth
- How to Profit from China’s Travel Industry
- Top 5 Stocks for October
- 7 Anarchy Stocks for Peaceful Profits
- 5 Tips for Buying Cheap Stocks
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