Thursday May 22, 2008
"I believe the #1 rule for making money in the next decade is to get long whatever the Chinese are buying," says Tony Sagami in the Asia Stock Alert.
"China will need to consume an unprecedented amount of natural resources to fuel its red-hot economy," says the advisor who offers his speculations as to the most likely takeover candidates in three areas -- energy, metals and food.
"There's no doubt in my mind that China is on a buying spree. And I'm not just talking about oil, either. Fact is, the Chinese have a ravenous appetite for virtually all commodities.
"While I don't have any inside knowledge about what companies the Chinese have in their sights, I do know what industries are strategically important to their lofty growth objectives.
"China needs energy — and lots of it — so you can expect frenzied buying activity to lock up reliable supplies of multiple sources of energy. In my book, oil, natural gas, coal, and uranium are all key players. My #1 pick for an energy takeover: Cameco (NYSE: CCJ), the largest uranium producer in the world.
"After fuel, the next thing China needs the most are the basic minerals and metals to build things like roads, bridges, skyscrapers, dams, ports, and power plants. That means that China will need all the aluminum, copper, iron, potash, bauxite, zinc, tin, and cement it can get its hands on.
"My #1 pick for a base metals takeover: Companhia Vale do Rio Doce (NYSE: RIO), which is a diversified Brazilian mining company and the largest producer of iron ore and nickel in the world.
"With 1.4 billion people to feed, China has stopped exporting rice. Rice shortages have been plastered all over the news recently and while rice is a crucial staple of the Chinese diet, they also need pork, wheat, soybeans, poultry, edible oils, dairy, and seafood.
"My #1 pick for a food takeover is Sadia S.A. (NYSE: SDA), a Brazilian food company that specializes in poultry and pork — two of China's favorite protein sources."
