Blowing off steam in China
Today's Financial News - Posted November 13, 2009
Obama is on the ground in Asia. What does it mean for investors? For the few of us paying attention, it is good news.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Get ready to hear a lot about China over the next two weeks. With Obama directing Air Force One to the heart of Asia, the nation will switch its attention from Carrie Prejean and Levi Johnston to Akihito and Jintao.
Okay, I’ll admit that may be a stretch, but at least a few folks on Wall Street will be watching the action in Asia for clues of the future.
With the dollar fighting for every penny of its worth and the trade deficit climbing faster than expected, it is important that Obama impresses the region’s leadership with more than just well-honed words.
They want action.
And so do we.
It is impossible to deny that China’s economic situation is stronger than what we are dealing with here in the United States. Whether the reason is strong economic stimulus, a manipulated currency or natural business expansion does not matter.
What matters is there are money-making opportunities to be had.
Follow the money
By now, you have got to know my thoughts on China and its role in the commodities market. If not, search the site and you will find more than enough information.
But commodities are not the only moneymaking opportunity. Anything that deals with the country’s unyielding demand for bigger and better infrastructure has the potential to make you money.
One stock worth studying today is Wuhan General Group (NASDAQ:WUHN). It is a tiny company with big potential.
Essentially, the Wuhan makes blowers for China’s steam-driven power plants. With a country that is supposedly building two new power plants each week, this is not a product salesmen have a problem unloading.
No wonder shares of the company are up by over 20% today.
When the pressure from today’s spike subsides, there is more room to go. In the last year, shares of Wuhan stretched as high as $5 each.
Today, they go for just $2.30 or so, with a recent high of $4 reached in August.
If things continue to do well in China thanks to a quickly expanding economy and a favorable currency situation, Wuhan and any of its industrial brethren will put on a very good show for the next year or so.
With interest rates low and currency risk high, I am a big fan of the small cap market. Give me a Chinese small cap with a popular product and I am all smiles.
Do some digging and you will find plenty of similar companies ready to hand their investors big rewards.
Next Article: TFN eNews 11/13/2009: How are things in your neck of the woods?
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