| Best of the Best: Today's Top Investment Ideas |
| Core long-term plays on China |
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| Tuesday, 26 August 2008 | |
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In Personal Finance, the advisor explains, "Our strategy for investing involves sticking to a handful of core strategic areas, where we've picked a collection of stocks in key industries." Here, he looks at some favorite ideas. "The Chinese economy is large, amounting to approximately $3.6 trillion annually, and it's expanding at a rate of 10%. "Industrial production, the heart of the economy, is gaining at a rate of 16.3% a year and is keeping a transforming labor force fully engaged; unemployment is a scant 4%. And retail sales are climbing at a hefty rate of more than 23%. "All of this comes at a price: Inflation is a biting 7%-plus. Pollution is another economic stressor. The major underpinnings of the Chinese economy are still works in progress; although there's a lot to be gained, those gains never come in a straight line or without some challenges. "Our strategy for investing involves sticking to a handful of core strategic areas, focused on energy, environment/infrastructure, commodities and agriculture sectors." "On the energy front, oil is crucial to China. This means China is helping to propel profits from producers worldwide. Offshore drilling in the South China Sea is a no-brainer, which means Acergy (NSDQ: ACGY) is well placed and remains a buy under 27.50. "Shipping more to China is a benefit to Frontline (NYSE: FRO), one of the leading tanker companies. Fat revenues and dividends make Frontline a buy under 72. "An increased need for cleaner water isn't just an issue in China but across the globe. Billions more dollars need to be invested, with some 300 million Chinese citizens clamoring for more clean water. "While succumbing to the current market woes, we continue to favor one of the world's top leaders in water and water treatment businesses, Veolia Environnement (NYSE: VE), which is a bargain buy under 65. "Commodities are the fuel for China's growth. We're there on the raw side of that deal with the Deutsche Bank Commodity Index Tracking Fund (AMEX: DBC), which gives us direct participation in the values of all of commodities. "And agricultural goods for food and alternative fuel remain a successful focus for us. Buy Deutsche Bank Agricultural Index Fund (AMEX: DBA)." |
"Investing in China is about picking the right segments of the economy and the companies that will make it for the long haul," notes
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